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IPE special report May 2018

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Hewitt UK head downbeat on revenue growth

UK – The managing director of Hewitt Associates’ UK arm, Hewitt Bacon & Woodrow, says the firm is not seeing the revenue growth it has been used to.

“We just haven’t had the growth in revenues that we’re used to,” Roger Parkin said in an interview. “This year has been a tougher year for the consulting industry than for some time.”

He said that clients were now “taking a breather” after three years of funding problems and that they were “not needing our help to the same extent”. Added to this was little merger and acquisitions activity. But he said: “It’s not a collapse or anything.”

Hewitt Bacon & Woodrow has been one of the drivers of consulting revenue growth at US-based parent Hewitt Associates, which reports second-quarter earnings on May 4. Hewitt bought the Bacon & Woodrow business almost two years ago.

Parkin, the former head of the firm’s actuarial practice who took over as MD at the start of this year, acknowledged that the firm had benefited from the pensions crisis of the last few years. “Clearly we did,” he said. “We got a lot of work from the funding crisis.”

He outlined the firm’s strategy in the face of industry change. He said: “I think the pension consulting landscape is in for a major change in the next five years.”

“We have no god-given right to remain a top three firm. It’s about adapting to change and the type of people we recruit.”

The strategy involves outsourcing – Hewitt’s US arm will shortly have around a thousand people at the end of phones in India – and a focus on integrated human resources. The traditional actuarial practice would be a component of that.

“Actuaries will need to have a broader set of skills,” he said, adding that he saw “relatively limited” growth prospects for the actuarial business.

The move towards outsourcing involves “brand shifting” – though Parkin stressed that it was important not to lose the firm’s traditional strengths and become a “Jack of all trades”.

But he suggested that outsourcing could account for a half of its business in a few years, from the current quarter. It accounts for around two-thirds of business in the US.

And the outsourcing market was “very fragmented”, with potential for consolidation, Parkin said. “It’s not going to stay a cottage industry. Nobody’s got more than 10%.”

Parkin also commented on the firm’s European aims. “We need to be bigger in Germany,” Parkin said, adding it was the main market where the firm was “on the lookout” for opportunities. The market is characterised by a number of domestic firms, and it was hard for international firms to gain market share.

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