Insights

Reshaping business. Rethinking consultancy.

Flipping the consulting pyramid: Why leaders are turning to Independents

Competition within the consulting market is fierce and the emergence of independent consultants has created a new dynamic within the sector.

We estimate that independents now account for a sizeable part of the market. In 2016, they delivered around £2bn of the £9.75bn of consulting services in the UK. That balance is clearly starting to shift, but there’s still some way to go before independents will fully upstage the dominant firms.

Part of this can be attributed to a reluctance of management teams to change the status quo. A third of corporate executives we surveyed in our recent research, undertaken by Source Global Research, admit they mostly use traditional consulting firms.

Encouragingly, however, around half (51%) now say they use both independents and consultancy firms with about the same frequency. Most of the respondents we surveyed said that the quality of work delivered by independents is higher than that delivered by traditional firms.

Evidently, there is room for both in the market and there is an appetite to look beyond the traditional large firms for the expertise, leadership and capabilities that corporates need.

But, for those that have not experimented with such a mix in external expertise, why should they consider independents?

To start with, the most well-known reason to work with independent consultants is cost-saving. Onboarding an independent can offer considerable savings on the fees that typically accompany appointing a retained firm and provide the budgeting flexibility to match.

Crucially, the quality of independent consultants – many of whom have experience at the major firms – means that the lower fee doesn’t necessarily impact on the quality of consultant you’ll work with. More than two thirds of the Odgers Connect consulting network have successful top tier consulting backgrounds from firms such as McKinsey, BCG, Bain and the ‘Big Four’.

Another benefit of working with an independent consultant is the personal approach. Doing business has always been a ‘face to face’ environment, particularly at the top table, and clients want to know who they’ll be working with.

The lack of personal, senior engagement and relationship is a common complaint of businesses we speak to when discussing the approach of traditional firms. Clients can find themselves dealing directly with senior individuals at the beginning of a project, only for this to tail off as the project progresses and replaced with more junior consultants.

By comparison, working with an independent consultant means one point of contact throughout, which is not just reassuring but also means you can more easily develop a stronger working relationship.

This works in favour of independent consultants who rely on strong contact networks, and for clients who have the luxury of handpicking the individual to lead a project. Increasingly, that flexibility allows management teams to create their own team of consultants – convening a group of individual consultants with the perfect blend of experience and expertise to meet their unique challenges.

Many of our clients recognise the economic arguments for looking beyond the major consultancies.

“Independent consultants are a cost-efficient way of accessing fantastic expertise that I wouldn’t be able to access from mainstream consulting firms at that price point” says Neil Gad, Group Director of Operations Improvement at SSP Group Plc.

He goes on to explain that using independents means that, “I don’t have to buy a whole consulting pyramid, but instead I can hire the specific expertise that is required to deliver a project. I can then plug that expertise seamlessly into my internal team, and also have a single, direct point of accountability for the work against the agreed set of outcomes."

The consulting pyramid he mentions is an interesting way of comparing each model. All too often partners are used to sell services and the junior staff delivers. In my experience, this is the biggest bug-bear of clients. Their business models dictate that they need to keep selling the next project, but, frustratingly it is their extensive expertise that is wanted.

Of course, independents can’t offer the same scalability and global reach that traditional firms can offer. Another main reason to turn to a larger consultancy is to access their content and intellectual property. Cynically, there is also political reasoning for some business leaders who are often entrenched in the culture of working with large firms and can point to their status to justify decision making or want the benefits of a long-term partnership with a major consultancy. So, this isn’t the end of those relationships.

However, as more than a quarter of businesses (27%) now expect to increase the use of independent consultants, this part of the market will only get more prominent – particularly for more granular work on responding to regulation and highly targeted growth projects.

For 2018, we’ll see the independent sector mature further as it attracts even more professionals to the market and businesses consider a more balanced mix of their external consultancy support.

Fundamentally, this is about accessing the skills and seniority that organisations really need to make a project successful. Independent consulting is disrupting the market and challenging former ways of working. The sector now has the breadth and depth to its talent pool to step up and fill the void that is being left by traditional firms and respond to the evolving needs of leadership teams. 

For more information, please contact Adam Gates.

You are currently offline. Some pages or assets may fail to load.