UK consultant numbers fall as firms cut back on external advice

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The number of people working in the UK's consulting industry fell last year for the first time since 2020 as firms were forced to cut jobs due to falling demand, according to a recent study.

The number of employees in the UK consulting sector fell by 3% last year to around 50,000, according to a report by the Association of Management Consulting, a trade body representing the sector including the Big Four – Deloitte, EY, KPMG and PwC.

Consulting firms cut jobs last year as demand surged during and after the pandemic, with the Big Four each cutting hundreds of jobs.

MCA CEO Tamjen Isakson said the decline was due to consulting firms restructuring their workforces, noting that the industry's turnover rate — the rate at which employees leave each year — has fallen from 17% in 2022 to 12% in 2023.

She said the industry is seeing record hiring and turnover in 2022, along with more normal levels of consulting growth, forcing some firms to slow their hiring pace and others to make layoffs to adapt.

The last time the total number of people in the UK consulting industry fell was during the pandemic in 2020. The MCA said it did not have data showing the last time there was a decline before that. The industry group noted that between 2018 and 2023, the UK workforce grew by two-thirds.

The report also said UK consulting revenues grew 11% last year to $20.4 billion, a notable slowdown from the industry’s 23% growth forecast for 2022 but higher than growth rates in the years before the pandemic. The MCA noted that demand from overseas clients was growing, with exports now accounting for more than a quarter of the sector’s revenue.

As hiring boomed to meet pent-up demand in digital services and M&A following the pandemic, consulting firms began cutting jobs in slowing sectors last year.

Companies will continue to lay off workers in 2024 as activity slows further, with some quietly shedding underperforming employees or moving them to busier locations.

MCA previously forecast the industry to grow 9% in 2024, but industry analyst firm Source estimates the market will struggle this year as companies cut back on spending on corporate advisory.

MCA's latest report is based on a survey of its members and was conducted by independent market research group Savanta.

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