Posted , in Differentiation
Body-shopping after the recession
As part of the research for our forthcoming report on the European consulting market, we’re in the process of interviewing literally hundreds of consulting firms across the region, from the biggest strategy firms to local specialists. And one thing that has struck me so far is the relentless rise of body-shopping, where clients define their requirements in terms of the skills they need rather than projects, and buy individuals rather than teams.
To be honest, I’ve been surprised. In the early days of the financial crisis (and this is now being repeated in the public sector as the latter cuts back its use of consultants) it looked as though “body-shopping” consultants were suffering most, as procurement departments, wise to their canny ability to slip into a line role and stay there for months or years, made it harder for middle managers to hire them. Yet here we are, a few months into the private sector recovery, and the demand for such consultants seems higher than ever before.
What’s driving this? One important, but short-term, reason is a lack of internal resources. Back in the autumn our research about the already-booming financial services sector found that many companies had made too many people redundant during the recession and were struggling to keep up in the recovery. But there are long-term causes. More sophisticated clients, many of whom are ex-consultants, are quite capable of managing their own teams, made up from a combination of internal staff and freelance consultants. Body-shopping consultants are usually cheaper (if not always in terms of their daily rate, then certainly in terms of the “baggage” they bring with them). Unless facing change on an extraordinary scale (post-merger integration, for example), most clients are still reluctant to commission lengthy consulting projects, the type that require a substantial team of people.
As a result, many countries have seen a significant rise in the amount of freelance consulting: bizarrely the Belgium consulting industry seems to have been particularly badly hit. So does all this herald the end of consulting as we know it?
Answering that question is complicated by the lack of information about the size of body-shopping consulting market. It’s also not clear whether it’s cannibalising conventional consulting or a growing market in its own right, i.e. whether clients are choosing to hire such consultants in place of projects or to outsource more line management work than they would have done in the past. My suspicion is that it’s a mixture of the two. And I don’t think we’re so much witnessing the end of the consulting firm so much as the clear bifurcation of two types of consulting, process consulting and content consulting. Body-shopping consultants may be experienced in a particular field, but it’s hard for them to maintain the depth and international range of expertise clients are increasingly demanding. Consulting firms, on the other hand, have become too complicated and expensive for process work (although I’d again exclude post-merger integration work from this).
And that’s all fine, as long as everyone knows where they sit. The problems come – and this is where cannibalisation is occurring – when they aren’t sure, or aren’t clear.