The Rise of the Independent Consultancy : David vs Goliath

A recent study from Source Global Research suggests that there is an interesting shift happening in the consultancy market place.

The professional services sector in the UK alone is worth around ￡215bn a year, and a growing proportion of it is made up of independent professionals. Nowhere is the ‘professional gig economy’ having more of an impact than in the rapidly evolving management consulting industry.

In the UK we estimate that, of the ￡9.75bn of work delivered by consultants in 2016, almost one-fifth, valued at around ￡2bn, was attributable to independent consultants.

Although it’s still significantly smaller than the proportion delivered by traditional consulting firms (￡7.3bn), it’s a segment that is continuing to grow.

It is tempting to think that the growth in organisations’ use of independent consultants must be driven by one thing: price. It’s a well-known fact that independent consultants lack the overheads of a traditional management consulting firm, and so can offer their services at lower rates.

Price, Flexibility and Quality

However, the research shows that whilst price is important, it is not the principal reason why organisations are increasingly likely to turn to the independent consultant market.

When asked why organisations would select an independent consultant over a big firm, flexibility is nearly always more important than anything else. Overall, 48% of organisations selected this, while 38% selected price.

As well as flexibility and price, 23% of organisations also say that higher quality is a top reason to go with an independent consultant rather than a traditional firm. When we asked them to compare the quality of work delivered by both parties in specific consulting services, the results were conclusive: independent consultants deliver higher-quality work in four of the eight areas we asked about, and were equal in a further two.

Given organisations’ positive perceptions of the quality of independent consultants’ work and their increasing need for organisational flexibility, many plan to make more use of them in the future.

The need for capacity, capability, and credibility – the top reasons organisations turn to external support – should play into the hands of the more traditional, big firms that dominate the consulting market. They boast prestigious reputations, large numbers of bright people, and the breadth of skills many organisations are looking for. And indeed, this is still where companies are most likely to turn. But 40% of organisations, the largest group, told us they now use a fairly even split of traditional management consulting firms and independent consultants.

Respondents were asked what they expect they will be using more independent consultants for. The answer is, well, just about everything. In all the consulting services, organisations expected to see an increase in the number of independent consultants used.

In a world in which project timelines are shrinking, fresh approaches are required, and transformation is often sold in smaller chunks rather than multi-million-pound deals, independent consultants allow companies to turn the tap on and off whenever they need to.

Are we therefore witnessing the beginning of corporations moving away from expensive, inflexible Global Consultancy businesses and aligning with more specialised boutique partners?

To read the source article, please click here.

David Stack is founder of Brightfrog, a niche IT consultancy business with a twist. David has over 20 years experience in the Finance, Pharmaceutical and FMCG industries and uses common sense, great dedication, enthusiasm and a pinch of social psychology to deliver great results. (www.bright-frog.com)

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