The number of job vacancies at UK consultancies dropped by more than 80 per cent last year, as experts park the blame on firms over-hiring coupled with the drop in demand.
According to data from a labour market analytics firm Vacancysoft shared with Bloomberg, McKinsey and Co., Bain & Co., Boston Consulting Group and Accenture posted just 248 jobs in 2023. These figures were a drop on the 1,389 postings in 2022 and an even bigger drop than 1,764 in 2021.
While for the Big Four firms, all UK vacancies dropped by 60 per cent to 2,767 last year, when the previous year, the job postings were more than 10,000.
Speaking to City A.M., James O’Dowd, managing partner at specialist recruitment firm Patrick Morgan pointed out that major consulting firms had an annual churn rate around 20-25 per cent in pre-covid times.
“However, this year, strong economic headwinds have led to a decrease in this figure to as low as 3 per cent, due to fewer opportunities available for consultants to leave their current firms. This, coupled with the over-hiring in 2022, has significantly reduced hiring needs,” he explained.
While Francesca Lagerberg, CEO of Baker Tilly International focused in on the areas of consultancy businesses that are suffering, as she highlighted to City A.M. that “there remains a genuine war for talent in areas of accountancy and consulting like ESG or AI expertise”.
However, she noted that there “has also been a fall out in the last 12 months from post-pandemic over optimistic hiring in advisory”.
She explained that it is common in consulting to have a ‘W’ shaped trend with retraction, then recruitment, then retraction and recruitment again. “It is far more cyclical as a business than audit and tax,” she added.
O’Dowd pointed out that there has been a significant drop in demand for consulting services in the UK. He stated that the UK appears to have been particularly hard hit compared to other markets.
He explained that there is a reduced number of M&A deals and large-scale transformation projects have left many ‘on the bench’.
“This situation is expected to worsen as many of the longer-term transformation projects signed off in 2021 and 2022 are nearing completion, potentially freeing up hundreds, if not thousands, of consultants in the UK,” he added.
It was reported last month that activity in the consultancy sector is set to have single-digit growth this year, according to figures by the Management Consultancies Association (MCA). The data revealed that activity in the sector grew by 11 per cent in 2023.
It predicted it to drop to 9 per cent this year, however, it did note that activity would return to double digits growth in 2025 (11 per cent).
Tamzen Isacsson, chief executive of the MCA noted that “given the huge fluctuations in client demand since the pandemic, some readjustments to workforces and the balances of skills within firms is expected.”
O’Dowd did add that despite these challenges most consultancy firms are now focused on retaining talent, irrespective of whether demand increases.
He explained: “They aim to avoid being under-resourced should the market rebound, which is particularly critical in the current environment where attracting top talent is a significant challenge due to the limited supply.”
Isacsson suggested that London is home to one of the biggest consulting centres in the world and she stated that the industry is “working hard to ensure it meets future client demand and the enhanced support required for AI, technology transformations and support with sustainability programmes.”