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The consulting arms of the Big Four professional services firms continue to grow faster than the wider market, in a sign that their investment beyond the core business of audit is paying off, according to a new report.
The consulting divisions of PwC, Deloitte, EY and KPMG grew by 11.5 per cent to £2.55bn last year. The UK consulting market as a whole expanded by 8.2 per cent to £6.79bn, according to Source Global Research, which provides specialist research on the management consulting market.
“Once again it’s the Big Four that have risen to the top,” says Fiona Czerniawska, founder and director of Source Global Research. “This is largely because clients recognise the scale and scope they can bring to bear [ . . .]A busy regulatory environment, especially in financial services, has further served to bolster the Big Four’s position.”
As the audit market has matured in the past few years the Big Four have expanded into consulting, encroaching on the terrain of management consultants such as Bain and McKinsey. They have been snapping up boutique consultants in areas such as cyber security and data analytics.
In 2015, the Big Four’s consulting work was dominated by companies coming out of the financial crisis wanting to make changes to their businesses.
Risk and regulatory consulting was the fastest-growing service line in the UK market in 2015, according to Source’s report, illustrating the opportunities presented by a raft of post-crisis regulation in financial services. Risk and regulatory consulting grew by 11.7 per cent to £507m.
Banks are grappling with a wave of regulation intended to make the financial system safer, including ringfencing rules that force UK banks to separate their retail and commercial operations from their investment banking businesses.
Banks such as HSBC have also sought counsel on their domicile. The bank, which receives strategy advice from McKinsey, spent as much as £40m on advice over whether to keep its headquarters in London.
Source’s report found that the two fastest-growing sectors were financial services, up 14.3 per cent to £2.2bn, and pharmaceuticals and biotech, up 14.6 per cent to £238m.
Ms Czerniawska said: “Pharmaceutical companies need to get costs under control, find new sources of growth and manage the regulatory burden. It’s a mini version of what’s happening in financial services.”
