How Your Organisation Can Benefit from the Shift to Independent Consulting
by Claudia Arena on 4 Sep 2018
In this article we will give some of the key trends leading to the disruption in the consulting industry, and the 5 benefits this could bring to your organisation.
There is almost no large company who doesn’t work with big-name consultancies to help deliver strategy and change. Most likely you have several firms delivering projects for your organisation at this very moment.
While we are focused on running and improving our own business, we don’t always realise that the external changes impacting our company also impact the model of our suppliers. We all know the obvious examples of Airbnb and Uber transforming the D2C marketplace, but also the B2B consulting service industry — worth more than $100 billion in Europe alone (Consultancy UK, 2017) — is not immune to digital trends.
In this article, we will give some of the key trends leading to the disruption in the consulting industry, and the 5 benefits this could bring to your organisation.
How technology impacts the consulting value proposition
With the rise of the Internet, a lot of once scarce industry knowledge has become readily available and accessible to everyone, taking away one of the key value adding elements of traditional consulting. Digital technology has also changed the mechanics of doing business and skills need to be continuously adapted. As a result, many of the consulting problem solving methods and frameworks have become outdated. A consultant often advises a client on how to adapt to business changes and this is now as critical for consulting as it is for other industries.
These changes have led consulting companies to start innovation efforts in several areas. For example through specialisation, a focus on technology solutions, or experimenting with alternative (shared) revenue models and collaborative partnerships. Early research in 2016 from Sioo gives a good overview of some of the elements of consulting models subject to change.
Traditional versus innovative elements of consulting models. Source: adapted from Sioo (2016).
However, scaling these innovations is not easy. Deep reconfiguration of the business needs to take place, slowed down by complex partner structures and existing cultural norms. Scaling these innovations is hard and takes time, with changes often still not covering the turnaround in mindset and way of working needed to remain competitive.
Societal trends and the consulting gig economy
Next to a need to pivot the proposition towards clients, a trend that further disrupts the consulting industry is the rise of the gig economy. According to a report in the Financial Times (2016), many consultants have left the legal and financial stability of large consulting firms in favour of independence from rules and bureaucracy, a greater variety of work and more freedom and flexibility as a gig economy worker. Where consulting used to have a good name and reputation for talent attraction, the industry’s lifeblood in the war of talent is slowing and talent retention has become difficult. Platforms, marketplaces and intermediaries have sprung up to become a viable alternative for top talent and highly skilled consultants.
Top reasons for consultants to go independent. Source: adapted from Financial Times (2016).
Seizing the opportunity
Big consulting firms that once served as a benchmark for insights and quality are struggling to keep their grip on the sector due to technology and societal trends. Instead of merely helping other organisations navigate disruption, they are on the verge of getting disrupted themselves.
This has opened up a new space in the consulting market, providing huge opportunities for organisations who buy consulting services to get better outcomes and value for money. Only a few have leveraged this opportunity to the fullest and many still work with lock-in broker models and long term sourcing agreements, with little space for new types of collaborations and services. But the independent consulting industry is definitely worth it.
Benefit 1: Get best practices and insights from highly experienced professionals (not fresh graduates!)
Independent consultants have accumulated years of experience and knowledge in their prior roles, often at more senior level positions and in practical business or industry settings. This enables them to bring a high level of expertise to the table. According to a survey by Eden McCallum about the ‘future of consulting’ over 80% of participating independent consultants had over 15 years of experience, most of them in a specific industry (2016).
Benefit 2: Pay for value instead of brand
Consultants working in the gig economy get paid directly and proportionally for their work based on their level of experience and deliverables to the organisation. For organisations, this means you get more value for your budget and you get to work directly with the people who are most suitable for your project needs. According to a survey from Odgers Connect (2017), organisations expect to use independent consultancies especially in areas related to data analytics (31%) and digital technology (29%).
Areas in which organisations expect to make use of independent consultants. Source: adapted from Odgers Connect (2017).
But there is also an industry trend: Consultancy UK recently published that just 19% of 250 board-level executives in the retail sector said they would rely on a traditional consultancy firm for expertise, with a significantly larger share highlighting that they would tap the skills of independent consultants (2018).
Benefit 3: Get teams of specialists ‘who have actually done the job’ powered by consulting skills
A team of independent consultants means a team tailored to your specific project requirements. The true value in this lies in the possibility to build a consulting project team with a combination of:
Experienced independent professionals who have deep knowledge and expertise around a topic or technology and/or a good understanding of the industry from the ‘client’ side. The table below provides an overview of how specialists can add value to consulting services.
Business trends that highlight the need for specialist consulting. Source: adapted from Sioo (2016).
Experienced independent consultants who have acquired years of valuable experience working at top-tier consulting firms providing structure and systemic thinking.
A diverse team with robust consulting thinking and methodology as well as deep specialist expertise is an outstanding way of creating value and making an impact.
Benefit 4: Large flex pool of professionals
Instead of building capability by hiring and acquiring, independent consulting has a huge advantage: there are no constraints or ring-fencing practices for the best talent and specialist skills. Especially taking into account virtual consulting teams, the pool of talent is unparalleled in size and scope. With the flexibility of contracting highly sought after scarce specialists can suddenly become part of your team. No need to settle anymore for less than best. The only challenge is to find them. A solution here could be consulting platforms that aggregate and vet talent and make it easier for organisations to connect to individuals and build teams with the right skill-sets.
Benefit 5: Don’t pay for huge overheads
Independent consultants don’t have the significant overheads of big consulting firms. Even using platform models to get access to the best talent and project support services doesn’t require the same level of expenses as traditional consultancies. Organisations can save up to 30–40% of the costs when working with teams of independent consultants, while getting the same or better outcomes. This while three quarters of independent consultants surveyed in a report by the Financial Times (2016) still claimed to earn more or the same as before they made the decision to go independent. With independent consulting, fair pay goes both ways.
Although big-name players still dominate the consulting market, independent consultants can be an attractive alternative due to their flexibility, expertise and cost-efficiency. Choosing to work with disrupting network-based consulting models and platforms can provide your organisation with many benefits.
When it comes to large business strategy projects, there’s still an attitude of ‘strength in numbers’ and ‘brand reputation’ associated with well-established firms. However, key areas such as data analytics and digital technology are now falling into the territory of independents, with organisations valuing their in-depth expertise, flexibility and objectivity. Are you up for it?
Interested in reading more?
Here is a selection of articles and reports documenting the changes and developments in consulting that are discussed in this article.