Thursday, November 18, 2004
The Economics of Consulting
Thanks to Tom Rodenhauser at Consulting.com for the following insights..
The economics of consulting have changed over the last decade, which has fundamentally altered the business’ talent pool. IT service companies have increasingly decreased the premium on consulting, thus creating a downward spiral that pits costs against prices (forget about strategy firms for a second). The math is simple: expensive experience can’t compete when others are essentially giving away "near-experience" for free.
Consultancies like PwC, Bearingpoint, Accenture and Deloitte have replaced hundreds of experienced professionals with lower-cost alternatives in their quest to re-invent consulting. The early retirement packages and not-so-gentle exits have created a teeming mass of partner-level consultants without partnerships, vibrant ghosts too young to retire who rattle around the industry in search of a home.
Ten years ago, the orderly world of consulting held a couple of career options: join a partnership and work towards the brass ownership ring; or parachute to a soft landing with one of multiple loving clients.
Today’s consulting career track is much more convoluted. Many IT service companies still use the term "partner" to describe their consulting ranks, but like Vice Presidents at family-run banks, the term loses its luster when everyone holds the title. The only real partners are the ones at partnerships.
Having just returned from my annual pilgrimages to various b-schools, I can tell you that today’s students see consulting more as a CV enhancer than career destination. Long term, that view will further alter the industry’s ability to attract and retain professional talent.
http://www.consultinginfo.com
The economics of consulting have changed over the last decade, which has fundamentally altered the business’ talent pool. IT service companies have increasingly decreased the premium on consulting, thus creating a downward spiral that pits costs against prices (forget about strategy firms for a second). The math is simple: expensive experience can’t compete when others are essentially giving away "near-experience" for free.
Consultancies like PwC, Bearingpoint, Accenture and Deloitte have replaced hundreds of experienced professionals with lower-cost alternatives in their quest to re-invent consulting. The early retirement packages and not-so-gentle exits have created a teeming mass of partner-level consultants without partnerships, vibrant ghosts too young to retire who rattle around the industry in search of a home.
Ten years ago, the orderly world of consulting held a couple of career options: join a partnership and work towards the brass ownership ring; or parachute to a soft landing with one of multiple loving clients.
Today’s consulting career track is much more convoluted. Many IT service companies still use the term "partner" to describe their consulting ranks, but like Vice Presidents at family-run banks, the term loses its luster when everyone holds the title. The only real partners are the ones at partnerships.
Having just returned from my annual pilgrimages to various b-schools, I can tell you that today’s students see consulting more as a CV enhancer than career destination. Long term, that view will further alter the industry’s ability to attract and retain professional talent.
http://www.consultinginfo.com
# posted by Econ Dev UK @ 3:23 AM 
