UK consulting firms see global export surge

The UK’s professional services recorded their largest rise in overseas income over the course of last year, despite restrictions on trading relationships in the wake of Brexit.

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According to a report in the Financial Times (FT), exports of services by consulting firms doubled in 2021, with an estimated 29% of total fee income generated overseas - up from 16% in 2020.

Unexpected demand for skilled services during Coronavirus pandemic

The Management Consulting Association (MCA), the sector's trade body, said that one of the key reasons for the increase had been an unexpected demand for skilled services resulting from the pandemic."As more employees were forced to work from home under government mandated lockdowns around the world, international companies found that projects could often be served as well remotely from the UK as in their own domestic markets," reported the FT."Meanwhile, UK-based consultants also say they were able to work remotely as effectively as before."Tamzen Isacsson, chief executive of the MCA, told the 'paper that services had been delivered and "major transformations" had been achieved without the need for prolonged periods of face-to-face contact.“The whole way that we have approached exporting has shifted quite fundamentally,” she added.
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A survey across the sector in January showed that double digit growth was expected for the management consulting industry in 2022 as clients turned to the sector to help with post-pandemic recovery and digital challenges.

Digital technology: the largest service delivered

The 'Member Survey 2022' found that growth of 13% was forecast with digital technology continuing to be the largest service line delivered by the sector."Thousands of British and global clients have turned to the UK's leading consultancy sector to transform their businesses digitally and pull through from the pandemic, using trusted advisers to accelerate growth plans and provide greater resilience to supply chain operations," said Ms Isacsson."Consulting sector growth has been driven by work in the private sector with an uplift in exports overseas and this is forecast to continue at a high rate for the rest of this year."

Growth driven because UK firms were better equipped to provide services remotely

Lisa Fernihough, head of financial services consulting at KPMG, told the FT that exports were initially spurred by the ability for better equipped UK-based firms to provide services remotely in the early stages of the pandemic.Many clients were also supporting government Covid aid projects, she said, which led to more work being passed on to UK consulting firms with specialist expertise.“They (the clients) didn’t have enough employees or people who could do the work that needed to be done and they reached out to consulting firms. So it was just sheer capability and capacity of people who could get things done," Ms Fernihough explained.The MCA survey found that the rise in demand last year came from clients across the globe but was particularly high from firms in the US, Canada, Australia and South Africa.Meanwhile, the proportion of fee income coming from the EU remained reasonably stable, but the percentage from the rest of the world rose from 8% in 2020 to 23% in 2021.

Read more news and views from David Sapsted.

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