Consultancy boom as employers switch over to shared-service HR

The trend for employers to move towards HR shared-service centres is driving healthy growth in the HR consulting market, new figures have shown.

A report by the Management Consultancies Association (MCA), which represents 70% of consultancies in the UK, said the market for HR consulting grew by 16% in 2005 to reach a value of 757m. The total UK consulting industry is now worth 11.9bn per annum, the report estimated.

Alan Russell, MCA president, said HR was one of the fastest-growing sectors for consulting work.

“Many organisations are jumping on the shared-services bandwagon as it is a proven model to realise a lot of cost savings,” he told Personnel Today. “A lot of firms have already moved finance and IT to shared-service centres, but far fewer have moved HR. It’s an important area of growth for consulting firms.”

Organisations are being more ambitious in what they are trying to achieve with their HR function, seeking not just cost reduction, but also service improvement, Russell said.

The public sector is a particularly heavy user of consultants, driven by the need to increase efficiency as outlined in the government’s Gershon review, he added.

The report showed that public sector employers spent 2.2bn on MCA member consultants last year, a number that does not reflect overall spend as some large consultancies, such as McKinsey, are not included.

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