In the cult-classic 1999 film comedy about workplace drudgery “Office Space,” a software company called Initech needs to cut costs and reduce its headcount. Rather than delivering the bad news to employees themselves, the Initech leadership team calls in the “Bobs,” two outside consultants who are tasked with providing a “hit list” of employees to be fired. The Bobs are a great illustration of an age-old comic about consulting firms.
Do enterprises in the real world sometimes use consultants to provide political cover for unpopular decisions such as downsizing — (i.e., What could we do? The big-name firm recommended these cuts). We’ll leave that question aside for now and, instead, look at the industry as a whole.
Divided into multiple segments, including management (McKinsey & Company), IT (IBM), audit and financial (PWC) and HR/Benefits (Mercer), big consulting is a massive industry made up of global brand name players, boutique firms that narrow their focus and individual experts who work on demand. It’s an industry that generated more than $250 billion in 2016.
The godfather of disruption theory, Professor Clayton Christensen of Harvard Business School, wrote an entire article entitled “Consulting on the Cusp of Disruption.” The title speaks for itself. “Management consulting’s fundamental business model has not changed in more than one hundred years,” writes Christensen. But the industry is now ripe for disruption, he believes, especially as technology and the proliferation of independent experts — many of them former team members of the global players — give organizations the ability to create their own teams on a project-by-project basis.
Factors Driving Disruption
As Professor Christensen makes clear, the century-old business model has become bloated with cost overhead, gaping inefficiencies and inflexibility. And it’s happening at a time when organizations are demanding more agility on multiple fronts, including cost, team composition and quality of deliverables. What worked in the past just won’t succeed today. Let’s examine in more detail the structural challenges consulting now faces, making it ripe for disruption.
1. High Overhead Costs
Best known for its audit services, the London-based consultancy PWC has more than 225K employees spread out over 800 offices in 150 nations. While the company generated about $35 billion in 2016, it also supports huge overhead costs related to real estate — New York, San Francisco and Paris are expensive cities — payroll, recruitment, sales, training and much more. Plus, partners in any large firm expect an annual distribution of profits, so that’s a cost too.
With big consulting, unsustainably high overhead cost structures are passed directly onto their client organizations.
2. Inexperienced Teams
While partners may “sell” the project or solution to a client’s leadership team, it’s typically the junior team members who execute the plan. Partners exist, at least in part, to bring in high-paying clients and revenues for their firms. But while partners may do this by speaking at conferences, joining trade associations or taking prospects out to expensive lunches at lavish restaurants, it’s the entry-level employees fresh out of college or business school who make up the project teams that actually do the work.
A midlevel consultant may supervise the team and a partner may sign off, but juniors are doing that work, often learning the ropes on your dime. One of the main reasons consultants join a big firm is the opportunity to learn, but who is financing the learning curve through billable hours?
3. Lack of Flexibility
With big consulting you’ll experience inflexibility. While you may have some minor input on team composition, the truth of team selection can be pragmatic and ugly. Big firms will offer you the bench of “unallocated resources” — the available consultants.
Does “who is available” equate with “our top talent”? Any partner selling you the project will say yes, but a savvy client might justifiably view the partner’s claim with a grain of salt.
The On-Demand Talent Alternative
Accessing and leveraging the specialized skills you need, when you need it, has never been easier. Big consulting is no longer the only game in town. What does a contingent knowledge workforce offer you?
When you look for high-quality on-demand talent, you’ll find people that have experience working inside the big consulting firms. These experts don’t need to learn on your dime because they already have developed expertise. As soon as you hire them, they immediately add value to your organization.
Customization and Flexibility
Think curation. Instead of working with a team of junior consultants waiting on a firm’s talent bench, you can customize a team that matches your unique needs and business culture. With on-demand experts, you have the opportunity to develop individualized relationships with people who are not hiding behind a global brand with a premium price. The control and agility offered by accessing a huge menu of specialists is something no large firm can offer you.
The best part of not working with a big consulting firm is not paying for the massive overhead costs. While it’s great that a global firm has a gorgeous office in Dubai, filled with expensive furniture and rare art, not to mention expensive talent, that large overhead will not help your project down the line.
With an on-demand expert, a solopreneur who has built up expertise over years and multiple projects (and maybe even worked in the Dubai office of the giant consultant), you’re not paying the overhead costs of plush couches and impressionist paintings. You’re paying only for the specialized skills and value you need, when you need it.
Big consulting may not vanish soon, just as newspapers, steel mills, taxi cabs and analog cameras have not entirely disappeared. But organizations have begun weighing the costs and benefits offered by traditional consultants and are not liking what they see. As alternatives emerge, including the ability to access and leverage teams of on-demand talent with more flexibility at lower costs, organizations are increasingly choosing agility rather than legacy. Only time will tell, but the future of work is looking more agile and more on demand every day.
Are you ready to embrace contingent workforce solutions? Check out Catalant’s Enabling the Future of Work webinar to learn about the benefits of working with on-demand talent.