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As appraisal and bonus-time comes around again, we can all look back at 2003 and feel contented that the year is ending on a considerably stronger footing than it started.
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| Consulting-Times E-zine
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We can also reflect on the fact that this has been a year of pronounced change in the industry. Here are just a few of our news highlights from the year:
1. The roller-coaster ride that was Deloitte’s future. Having fought tooth and nail to keep the consulting and accounting businesses as one, Partners finally admitted that the two would have to be separated and a deadline of early 2003 set to realise the separation. The financing of such a split proved hugely problematic though and a U-turn soon followed. The consulting business would stay, leaving Deloitte as the only professional services firm not to have sold off its consulting arm (though many are now rebuilding…) A rebranding initiative ensued – conservative in comparison with its peers – with the name Deloitte being adopted for all the firm’s global professional services activities.
2. Turmoil at EDS. With earnings targets being discounted and results spiralling downwards, a new CEO was appointed – in the shape of ex-McKinsey man Michael Jordan… Investor confidence was initially buoyed, but the rest of the year has been marred by ongoing financial difficulties – most notably the loss this last week of the Inland Revenue’s multi-£billion ASPIRE contract to Cap Gemini Ernst & Young.
3. Oliver, Wyman & Company merges with Mercer. Having failed to acquire the faltering Arthur D Little in a fire-sale the previous year, Mercer turned its attention Oliver, Wyman & Company – one of the most revered of top-end consulting firms and an altogether different acquisition proposition. A deal was struck and Oliver Wyman & Company announced it would merge with Mercer’s financial services strategy and risk consulting units. The new business, Mercer Oliver Wyman, would become an operating unit of Mercer Management Consulting.
4. McKinsey et al lose none of their allure during downturn. Several prestigious surveys of the global MBA community reveal that McKinsey remains the most desirable employer in the world. Boston Consulting Group and Bain also feature prominently. This despite a two-year period in which strategy consultancies have been forced to slash bonuses, retract MBA job offers and suppress the promotional ambitions of many consulting staff. Oh, the beauty of a strong brand!
5. Consulting firms move offshore and target Chinese market. The year has been peppered with stories of firms expanding their presence in offshore locations such as India, New Zealand and Poland. The implications – that high-value aspects of consulting will continue to be undertaken by traditional consultants, but lower-value tasks such as programming, research and presentation generation will be undertaken overseas. This trend has been well-documented, but a development of at least as much note is the vigour with which consulting firms are investing in the growth market that is China. Expect this trend to accelerate into 2004.
6. Q3 & Q4 results confirm that an upturn is gathering momentum. Q3 & Q4 results – from both consultancies and the industry bodies – confirm that an upturn is gathering momentum in the global consulting market (albeit more pronounced in the UK than in other European countries). Revenues are up, order books are up and utilisation rates are up. Oh yes, and recruitment is significantly up too – with pretty much all the majors now back in the game and chasing talent…
7. Financial difficulties spark a two-tier remuneration path in Consulting. A two-tier remuneration path has emerged in the management consultancy sector this last year, following a difficult financial year in 2002 – according to our salary survey. Where salary rises and bonuses were concerned, it was very much a year of feast and famine – some consultants continued to enjoy sizeable upsides, whilst the majority of consultants found themselves with almost no pay rise or bonus. A secondary finding, which confirmed the suspicions of many in the sector, is that it was junior staff that bore the brunt of last year’s downturn in consulting revenues – with pay rises and bonuses for juniors at an all-time low. These results are likely to mean pay tensions will emerge as the market gathers momentum in 2004.
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