Contractors working together

[Murder1]

Wasn't sure where to place this but thought this would be the best place to start.

I've noticed that on the large project I'm currently working on that several contractors have grouped together to become equal shareholders in a new consultancy. This consultancy appears to have been simply set up to provide said contractors to current client.

Now my first thought was that this was maybe a way to cut the agent out of the loop but this kind of feels too simplistic. Does anyone know of another reason why they would do this? Are there other benefits to be had by doing this on a project where you could be there for several years?

[aussielong]

Don't know about the UK but in Oz, contractor rates top out at about 1100 AUD/day and to get above that you have to be a consultant proper. (You can't just change your job title.)

Companies pay consultants much more than contractors. You don't see many independent consultants about (independent excludes Wipro Bob)

[northernladuk]

Wasn't sure where to place this but thought this would be the best place to start.

I've noticed that on the large project I'm currently working on that several contractors have grouped together to become equal shareholders in a new consultancy. This consultancy appears to have been simply set up to provide said contractors to current client.

Now my first thought was that this was maybe a way to cut the agent out of the loop but this kind of feels too simplistic. Does anyone know of another reason why they would do this? Are there other benefits to be had by doing this on a project where you could be there for several years?

I wouldn't think they can cut the agent out as they will be on handcuffs and won't be on the clients PSL unless they have pulled some deals out somewhere.

They may have started a company so they can try provide a consultancy service and charge a premium. My last client paid from 600 a day to small consultancies to 1400 or so for accenture types but only paid 350 or so through bum on seat channels.

It could be they are doing another piece of work somewhere else or trying to get a solution together then can sell to the client rather than bum on seats. They may even be doing both, they spotted client needed something and together, out of client hours, have created something and sold it back.

Could do with asking a few more questions....

[Murder1]

Thanks for the responses guys.

Given the recent cost focus here in the last year or so I wondered if the client had actually convinced contractors to form consultancy's so the client could cut out the agent (meaning no need to be on a PSL) but as you say this would cause a stink with the agent for not much gain.

It's not really my business so I won't be digging further I just wondered if this thing was common.

[jmo21]

I know of a couple of contractors that basically started a "real" consultancy firm on this basis.

They both worked at the NHS and a project came up for bid. They both had a lot of knowledge on a particular system it would interface with, so they put together a proposal, and won the bid.

[tractor]

Wasn't sure where to place this but thought this would be the best place to start.

I've noticed that on the large project I'm currently working on that several contractors have grouped together to become equal shareholders in a new consultancy. This consultancy appears to have been simply set up to provide said contractors to current client.

Now my first thought was that this was maybe a way to cut the agent out of the loop but this kind of feels too simplistic. Does anyone know of another reason why they would do this? Are there other benefits to be had by doing this on a project where you could be there for several years?

You could try asking them instead of a bunch of random strangers who couldn't hope to do anything more than guess hth