The Management Consultants industry covers a broad range of consulting services, including strategic and organisational planning, marketing, IT, human resource consulting and business process management. Over the five years through 2022-23, industry revenue is expected to grow at a compound annual rate of 2.2% to reach £70.2 billion. This growth has largely been driven by rising demand for IT consulting services. In addition, regulatory changes in the financial services sector, the industry's largest downstream market, have benefited the industry, as banks and other financial institutions have required assistance to reformulate business strategies and operations in order to comply with new policies.
Plunging business confidence following the COVID-19 (coronavirus) outbreak reduced demand for industry services in 2020-21, as downstream firms held back on expanding their operations in the immediate aftermath of the outbreak. In particular, vulnerable companies in the private sector, such as in the tourism, leisure and retail industries, cut spending on consulting services.
However, as industry services include management consultancy on matters such as restructuring, cost-cutting and risk management, the pandemic presented operators with opportunities to offer such services to clients to help them understand the economic consequences and plan their strategies going forward. In addition, demand from the public sector remained resilient, with large consultancies being awarded lucrative contracts from the government for work related to the UK's response to the pandemic. Surging merger and acquisition activity led to a strong increase in demand for consulting services in 2021-22. However, soaring inflation, tougher regulation and the global consequences of the Russia-Ukraine conflict have led to a slowdown in M&As, with industry revenue expected to grow by just 0.8% in 2022-23 as a result.
Industry revenue is projected to grow at a compound annual rate of 4.5% over the five years through 2027-28 to £87.3 billion, driven by improving economic conditions as the effects of the pandemic fade and strong demand for IT consulting.
The financial sector is expected to continue providing an important source of demand due to the wide-ranging changes in financial services regulations that the government is planning to implement. Nonetheless, industry profit margins are expected to remain under pressure, due to strong competition and rising wage costs.
Industry revenue is projected to grow at a compound annual rate of 4.5% over the five years through 2027-28 to £87.3 billion.
Industry overview provided by IBISWorld.
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