Management consultancy 'returns £56 billion per year back to clients' claim

The trade body for the UK management consultancy sector claims its members generate at least £56 billion worth of benefit back to their clients in both the public and private sector.

The news may come as something of an eyebrow-raiser to various House of Commons Select Committees, the National Audit Office, those waiting or using many delayed or broken IT systems installed under the aegis of such firms -  and the government itself, which has set a target of reducing its dependency on external consultants by 50%.

Nonetheless the report's authors, the MCA (Management Consultancies Association), which represents some 70% of such organisations in this country, says the survey is based on extensive research on customer view of value, not supplier estimates.

“This is the biggest ever look at how the public sector in particular views the impact of our members,” said MCA chief executive Alan Leaman.

The group says 58% of clients polled reported they are very satisfied with the work their consultants do and 41% 'satisfied'. For the first group the value of the benefits of using consultancy is estimated at between two and 20 times cost or an average, around 10 times the fees paid. This suggests that the benefits of using consultants are worth around £56bn to UK Plc - a return of £6 for every £1 invested.

The study, The Value of Consulting analyses 1,800 consulting projects and includes in-depth interviews with 30 clients. It claims the majority of projects in both the public and private sectors generate financial returns of between two and 20 times their cost.

In 2008 (the only year covered), the study claims the UK consulting industry was also a positive force in the national economy itself, spending more than £180 million on 'innovation,' £85 million on training and £80 million on pro bono charity work.

“Too many conversations about consulting start and end with the assumption that it is just a cost,” added Leaman. “We can now see that there is a significant return on this investment as well. The UK is substantially better off because it has a vibrant and competitive consulting industry. ”

Tim Morris, Professor of Management Studies at Oxford University, who took part as an advisor to the project, is quoted as saying,
“This was an important but difficult project to carry out. It has involved clarifying how we can understand the ways in which consultants can add value to clients and as a result, the findings and implications are worth taking seriously.”

When PublicTechnology.Net expressed some reservations about the claim, Leaman countered that despite some well-known disasters that have been heavily criticised by MPs and independent auditors, this was still “the biggest survey of public sector client satisfaction ever carried out”.

“When it comes to such examples, they are often on the leading edge of technology and are by their very nature risky. IT is a very complex business to get right. We would in any case always urge our members to work with their clients to make deliverables very clearly defined and we'd welcome as an industry more use of a payments by results approach.”