PA Consulting Group (IT Consulting)

  • Overview

Capital ideas

Based in London and fully owned by its employees, PA Consulting Group serves both public- and private-sector clients in over 35 countries throughout Europe, North America, Latin America and Asia.  A former giant in the industry, the now midsized group has enjoyed several years of recent success, and counts some of the world's largest companies among its clients.  Though it works with clients across all sectors, PA specializes in the energy, manufacturing, health care, financial services and telecommunications industries.  It has also had a lot of success in recent years in the venture capital world, so much so, in fact, that it spun off its venture capital arm as a separate entity in June 2008.

Ups, downs and in-betweens

In 1943, three men, Ernest E. Butten, Tom H. Kirkham and David Seymore, sought to take advantage of the U.K.'s need for weapons production during World War II.  Thus began Personnel Administration, with a mission to teach factories how to boost productivity and efficiency.  The firm's first assignment was to train women to assemble the tail gun section of a bomber, thereby leaving the men free for the battlefield.  As those same men re-entered the workforce after the war ended, the founders signed up dozens of them as consultants, increasing PA's workforce to 84 consultants by 1950, and starting an expansion program throughout Europe.

Over the next 20 years, PA became the largest management consultancy in the world, and continued growing until competitors on the scale of McKinsey and BCG began encroaching on its territory in the late 1960s and 1970s.  Still, though, the firm managed to remain profitable until the recession in the late 1980s took its toll, leaving it almost bankrupt by 1992.

That same year, PA hired current Executive Chairman Jon Moynihan, and tasked him with the turnaround, something he appeared to have achieved in just three years, as the firm went on to post record profits in 1995.  In the following years, PA sought to expand into new markets: In 1999, it established a presence in the U.S., entering the playing field a bit too late to take full advantage of the technology boom.  But the firm's timing turned out to be advantageous; it didn't suffer the same fate as a lot of its consulting competitors who sank after their tech clients vanished during the dot-com crash.

Profits, not growth

PA has enjoyed a consistent streak of success since 2004, something that the firm attributes to a focus on profitability over growth.  That focus has seen the firm take some unusual actions (some would say prescient, given the economic turmoil that unfolded in 2008) in recent years.  Those actions include the October 2007 closure of its Australian offices in Melbourne, Sydney and Canberra, a complete withdrawal from the country after 40 years operating there.  The decision followed a strategic review of all PA's Asia Pacific operations, which determined that clients there could be served from other locations in the region.  

The firm's decision to focus on profits over growth doesn't mean that it's given up on expansion altogether, rather, the firm just takes more care about choosing opportunities that are in line with its goals.  One such example was the 2007 opening of a new technology development center in Bangalore, PA's second location in India, a growing market where the firm clearly feels it can increase its profitability over the coming years.

PA's expansion plans also appear to include the virtual realm: In 2007, PA became the first major management consultancy to establish a presence in Second Life, the online virtual community.  The company maintains an "office" in the Second Life realm, which serves largely as a recruitment tool, allowing potential candidates to explore the company while retaining the option of remaining anonymous should they so desire.

A capital venture

Over the years, PA hasn't been afraid to put its money where its mouth is, as far as putting strategy into action goes.  The firm's venture arm was demerged in June 2008 into a separate business called Ipex Capital, but not before racking up some big hits for the firm.  In 1999, for example, PA founded UbiNetics, a company that would go on to become a world leader in 3G and measurement products.  Between May and June 2005, the firm sold both halves of UbiNetics' business, Test and Measurement, and Volume Product Technology, to separate buyers for a total of over $132 million.  An even faster turnaround, meanwhile, was made on a company known as Meridica.  Founded in May 2001 to develop drug delivery devices and products for the pharmaceutical industry, Meridica was sold to Pfizer just three-and-a-half years later for $125 million.

The ventures unit didn't only develop businesses from scratch, however; it has consistently made strategic acquisitions along the way.  The latest of those came in January 2008, when vehicle tracking and in-car telematics specialists Auto-txt limited were brought into the fold.  The last deal the unit conducted prior to the spin-off, it's not likely to be the last time the two firms work together; they will continue to collaborate on existing ventures in the Ipex portfolio, and will even look at new opportunities together, according to the company.  Dare we say business as usual?



PA Consulting Group (IT Consulting)


123 Buckingham Palace Road
London SW1W 9SR
Phone: (0)20 7730 9000
Fax: (0)20 7333 5050
www.paconsulting.com

STATS


  • Employer Type: Private
  • CEO: Alan Middleton
  • 2009 Employees: 2,546

Major Office Locations

  • London, United Kingdom

Key Financials

  • 2009 Revenue: $370 million