85% of small UK consultancies need to hire more specialists but only 15% are planning to recruit
London and Cardiff, 15 Sept 2023 – The vast majority of the UK’s small and medium-sized consultancies need to hire more consultants to expand their business but most of the smaller firms won’t be able to make new hires over the next year, according to new research from Sonovate.
In a report entitled ‘The Consultancy Conundrum: growth and the double-edged sword of specialist talent’, Sonovate – the leading provider of embedded finance and payment solutions for the contingent workforce – explores the experiences of UK consultancies aiming to boost business growth and unlock long-term competitive advantage.
The research finds that 85% of small consultancies (those with 10 to 49 people) and 82% of medium-sized consultancies (those with 50 to 249 people) have enough talent in their teams to service their current clients but believe they would need to hire more consultants to expand their business. The need is strong; over half (55%) of medium-sized consultancies say they have lost out on contracts specifically because they do not have the capacity to take on more work.
Subsequently, recruiting more specialist consultants in the next 12 months is a priority for 73% of medium-sized firms, and 65% of large consultancies plan to hire more specialists to give them more ‘hands on deck’ to win new business while servicing their existing client bases. However, this trend notably differs among small consultancies where only one in seven (15%) are intending to increase their headcount in the same time period.
Finding specialists to work for consultancies is a huge challenge that many firms, particularly those of a smaller size can’t contend with. 77% of medium-sized consultancies say that there is a shortage of highly skilled, experienced consultants and they struggle to find and retain enough of them. 95% of medium-sized consultancies add that the talent that highly skilled experienced consultancies have high salary expectations, making them expensive to recruit and invest in.
Cash flow issues caused by late settlement by clients is one key contributing factor to reluctance by smaller consultancies to expand their teams in the medium term. Sonovate’s data shows that late payments are one of the top four biggest contributors to pressure of achieving or maintaining profitability among all sizes of consultancies. The pressure, however, is most felt in small consultancies, among whom one in seven (15%) have taken the hard decision to resign from clients over the issue of late payments.
In an effort to combat this pressure on cash flow, more than one in three (35%) consultancies believe unlocking access to more finance is key to winning more new business. This rises to more than two thirds (68%) of medium-sized consultancies.
Commenting on the research, Damon Chapple, Co-Founder & Co-CEO of Sonovate, says: “Being specialist remains key to most consultancies’ long-term competitive advantage, but maintaining a high level of specialist talent comes at a cost that many consultancies – particularly the smaller sized ones – can’t afford in the current market environment.
“It isn’t fair that smaller consultancies are forced to keep up a near-constant juggling act to off-set the impact of clients who don’t pay them on time. When cash flow issues put significant pressure on small consultancies, to achieve the sorts of growth ambitions they set for themselves, sourcing alternative forms of finance that work harder and more intuitively for these sorts of businesses becomes critical.”
The full report can be read here: https://www.sonovate.com/consultancy-report-2023/
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Notes to editors
Sonovate is the leading provider of embedded finance and payment solutions for the workforce. Its finance and technology services cater to recruitment businesses, consultancies, and labour marketplaces who place contractors and freelancers around the world. Sonovate’s platform and expert service deliver swift credit decisions, same-day funding, credit insurance and collection services as well as timesheet and workflow automation, empowering companies to concentrate on expanding their business, confident that processes and funds are in place to help meet payment deadlines.
Since it started funding in 2014, Sonovate has lent over £4 billion to 3,300 businesses and 40,000 workers in 44 countries.