Posted , in Business model
Staff augmentation: Not a commodity
“Staff augmentation” has long been a dirty phrase in consulting, redolent of stacking your consultants high and selling them cheap. Clients, unable to resource their day-to-day business let alone important new projects, turn to consulting firms to provide people—bodies—to fill the gaps. And because there are many gaps and because consulting firms are seen to be almost bottomless wells of smart people, such requests tend to be generic.
Two years ago, in the initial excitement around robotic process automation (RPA), consulting firms told us they were being asked to provide “armies” (their word) of robotics consultants to work on unspecified projects. As it very quickly became apparent that it was relatively easy to do this type of work, such requests weren’t a sign that we had a new blockbuster consulting service on our hands but rather a commodity in which a lack of differentiation (expertise) meant there were low barriers to entry and multiple suppliers, bringing fee rates tumbling down. That didn’t, though, mean consulting said no to requests for help: Precisely because it was easy to train people, RPA became a good way to hoover up unused capacity. No work in strategy? No problem: Just get your strategy consultants to do RPA work for a while. Far stranger things have happened in the constant struggle to maintain utilisation rates.
Experiences such as this give staff augmentation a very bad name. It’s cheap consulting in every sense, a lazy way to offload surplus people without having to think about it too much. A low margin is better than no margin. But the real problem is that this attitude encourages both clients and consulting firms to undervalue one of the core reasons why consultants are useful.
There are many reasons why organisations hire consultants, but they boil down to three: independence, expertise, and flexibility. Consultants can play a hugely valuable role providing objective, disinterested advice on complex, contentious issues—areas where internal wrangling threatens to hold progress back or on the occasions where executive teams simply don’t know what’s the right thing to do. They’re the people clients turn to when they lack critical capabilities. And they provide a much-needed resource buffer: When clients don’t want, or can’t afford, to recruit full-time employees, consultants are a short-term solution. The problem is that these last two reasons have increasingly been seen as mutually exclusive. Because staff augmentation has been focused around generic skillsets, perhaps too because this type of work tends to be longer-term, even open-ended, and often without predefined deliverables, it’s not seen as being “proper” consulting. Yes, there are firms that specialise in dropping individual experts in to do specific jobs for a period of time, so the underlying issue is one of scale. Staff augmentation is not about one “body”, but many, and the fact that there are many means that none of them can be experts.
What if we were to challenge that assumption? The disdain with which staff augmentation is regarded blinds firms to clients’ need for organisational flexibility. What if a consulting firm were to promote the idea of expert augmentation, the ability to supply teams of people who are highly expert in a particular field, not just those left over when every other project has been staffed? The analogy would not be with a standing army—cannon fodder for whatever battle a client is engaged in—but SWAT teams, capable of parachuting in and getting a lot done in a short space of time. I can hear cries of pain from the operational and finance people in consulting firms that such a strategy would drive margins down. Really? All our research about pricing highlights the importance of expertise in pushing fee rates up. Rethinking and repositioning your approach to augmentation could take it out of the commodity space altogether.