Overseas consultants are advising UK universities on how to keep ahead of their rivals, says Stephen Phillips

As the global competition for students, star academics and cash hots up, many British universities are seeking ways to gain a competitive edge. One way that is becoming increasingly popular is through the use of international consultants. Several universities are looking to the US, where consultancy is more embedded in the system, having emerged as early as the late 1960s in response to cuts in higher education budgets.

Anthony Knerr of New York-based Anthony Knerr & Associates says institutions have to be global in their perspective. He predicts "an enormous competitive threat" from Chinese and Indian campuses. "Globalisation is a big issue. Attracting students and faculty from across the world (will be increasingly important), and also alumni (who are prime donors) will be living around the world."

UK universities are now likely to use overseas consultants as "local agents", often in countries where they are looking to recruit international students as the competition for these intensifies.

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There are other areas in which consultants offer advice. Peter Agar, Cambridge University's development director, says: "If you are trying to explore fundraising opportunities internationally, you may in some cases want to use a consultant to help you." His university, for example, has been using a consultant in Hong Kong to look at and develop fundraising activities there. Cambridge has also turned to foreign consultants to help with alumni fundraising, an area in which the US excels.

Similarly, Oxford University used McKinsey & Company as part of the consultation and development of its academic strategy, which has become the Corporate Plan up to 2010. An Oxford spokeswoman says: "McKinsey carried out a benchmarking exercise and worked with the university during the internal consultation phase to help ensure that the exercise was carried out as comprehensively as possible."

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But Mike Shattock, visiting professor at the School of Lifelong Education and International Development at the Institute of Education, does not expect to see a big rise in the use of US consultants in the UK, not least because they are very expensive.

Christopher Simpson, chief executive of SimpsonScarborough, a strategic communications consultancy based in Virginia, charges up to $350 (?196) an hour for crisis work. His firm recently worked with the University of Colorado to "enhance its image and reputation" after a series of crises that included reports that university sports officials held alcohol and sex parties to recruit athletes to Colorado's American football team at which, it was alleged, several female students were raped.

Another reason may be that higher education is not as profitable a market for US consultancies as, say, the National Health Service. Shattock says few US consultancies based in the UK have higher education specialists, which could also count against them.

Nevertheless, UK universities are seeking advice from US consultants on issues in which they have expertise. The Art & Science Group, based in Maryland, specialises in "market-related issues facing higher education". It undertook "North American market studies" for the Open University seven years ago and for the University of London last year. It has also become involved in a more far-reaching exercise that may have implications for the UK in the era of top-up fees - working with the University of North Carolina (UNC) to understand how high it can raise fees without damaging institutional competitiveness. Universities' "price elasticity" is a complex business. You have to factor in issues such as competing institutions, how far extra fees cash can be ploughed into more generous financial assistance for needy students and differential rates for in-state versus out-of-state students, who are charged a premium.

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"The stakes are high," says Ben Edwards, principal at the Art & Science Group. "Pricing questions have implications of millions of dollars."

The exercise yielded useful insights, says Robert Shelton, executive vice-chancellor of UNC. Market research showed that the university faced competition from a handful of private liberal arts colleges. It also found that there was considerable room to raise fees without any adverse impact on the number of applicants. But UNC did not want to raise fees as much as the consultants recommended, settling for a more modest rise this year, and it saw the proportion of students taking up offered places increase.

The growing complexities of university management are proving a boon to consultancy firms. In the US, University Business magazine lists 158 firms that offer higher education expertise. The most widely used services include student recruitment, fundraising, headhunting top managers and navigating the increasingly complicated regulatory environment at US universities. UNC also used Huron Consulting Group to analyse its record in commercialising intellectual property and in job creation to prove to state officials that it was a "sound investment".

Robert Zemsky, former director of the University of Pennsylvania's Institute for Research on Higher Education, and a prolific consultant, is convinced the increasing complexities of university life will demonstrate the importance of hiring consultants. "You use them (because) you want experts," he says. Referring to Art & Science's pricing project, he adds: "Pricing is a technical subject, not something to do by the seat of your pants."

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Many US consultants are former academics and administrators. Knerr, for example, is former treasurer of Columbia University and Edwards is a former Duke University official. Simpson used to head communications at the universities of South Carolina, Oregon and Indiana. But universities must know exactly what they want from consultants, says Adam Keller, Dartmouth College's executive vice-president for finance and administration. There is also the risk that consultants will dole out generic advice, he adds, which becomes a bigger problem with international specialists who may not have expertise in the UK market.

"The problems consultants are called in to (handle) are precisely those they've dealt with before. That's their appeal, but (therein lies) the risk, too," he says. Ric Porecca, chief financial officer of the University of Colorado, is more sceptical still. "No matter how expert they are, rarely do you get a consultant who understands a campus 100 per cent."

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Their recommendations need to be weighed with institutional self-knowledge, he says.