Consultancies - we are in the wrong business

[BolshieBastard]

They have more money than sense \ business accumen. Plus it looks better to the shareholders when the CEO says they engaged so and so consultancy rather than Joe Bloggs Ltd!

[Boo]

He's happy enough with his rate but I'm a bit bemused. Why on earth do clients pay these consultancies huge amounts of money like this? What are the consultancies doing that we as contractors aren't?

They pay senior managers at the client firms kickbacks and incentives to take them on. Said managers own no shares in the companies they work for and their salary packages are completely divorced from any performance related elements so they have on incentives to do otherwise.

Boo

[SueEllen]

They pay senior managers at the client firms kickbacks and incentives to take them on. Said managers own no shares in the companies they work for and their salary packages are completely divorced from any performance related elements so they have on incentives to do otherwise.

Boo

You believe everyone is on the take.

There is an anti-bribery law in the UK so you can't pay managers kick backers.*

However there is nothing stopping you entertaining clients by taking them out for very expensive meals or sports events. Or getting them involved in your charity event. This is called "networking".

*BAE systems is exempt from this.

[Vandalay]

I do a lot of work through a consultancy, and their cut is 30%... and I don't mind because my cut is still about 25% higher as a consultant placed contractor as I would be through an agency. That, plus I can actually see the effort they put into sales and marketing - it's a proper b2b relationship, rather than some shark who's on a PSL taking a 20% cut for doing almost nothing. Nice to have transparency too.

[Vandalay]

Why on earth do clients pay these consultancies huge amounts of money like this?

One reason is that consultancy costs usually come out of a different pot of money to agency contractors, and usually don't form part of headcount numbers. £500 a day might be far too high for a line manager to sign off, but for a senior manager signing off the budgets for major projects it's peanuts.

[bobspud]

A mate of mine was working for a client for a few years and always though a Preferred Supplier agency who charged the client about 4% markup on his rate, all open and transparent like. So all is fine and dandy for a while but now he's found himself some work back at the same client but they have decided to engage him through a consultancy firm who have a few other people on site. Now get this, they are putting about 60% markup on his rate. Note that although the consultancy have people working on the project for the client, they had nothing to do with getting him the work, he was asked to come back based on his reputation from previous work done for the client.

He's happy enough with his rate but I'm a bit bemused. Why on earth do clients pay these consultancies huge amounts of money like this? What are the consultancies doing that we as contractors aren't?

Markups like that would have agencies wetting their pants with glee. How do we get a piece of that action?

I have worked in consultancy for years thats the going rate for markups. If you think thats bad imagine being a perm employee in the same firm. Many of them will be struggling to break £80k for 100 hour weeks

I have tried to get in at the ground level for years there are a number of issues. You need at least 5 of you to start with no more than 12 at the top of the game. You need a salesman with good contacts and then the most important part enough money in the bank to run all of you for 90 days + expenses... The sales guy is a pain because a good one will throw more options at you than you can manage and a bad one will leave too many of you on the bench at the same time...