I'm the CEO and I don't really like it when the annoying guy down the hall tells me what to do, so I'm gonna spend $50,000 and have a team come in and interview everybody and then they'll tell me the same thing the annoying guy said, for years, but because they're outside consultants, I'll listen to them when they say it.
A tale as old as time:
> Jesus left there and went to his hometown, accompanied by his disciples. [...] Jesus said to them, "A prophet is not without honor except in his own town, among his relatives and in his own home." He could not do any miracles there, except lay his hands on a few sick people and heal them. He was amazed at their lack of faith. (Mark 6:1-6)
Sounds like a job that AI easily replaces
You may also be surprised how many companies have 1 guy in house who pretends to be an expert and does his damned best to prevent people getting hired who might out them.
Good consultants come in, tell you how it should be done, with evidence. Better consultants then provide those services if needed on a project basis. Usually "Good Consultants" in the IT industry are absolute heavy weights. Like we carry a bunch of different skillsets where there are few other people in our country with the same experience, and no one can afford to carry that expertise on an ongoing basis, but lots of people are willing to pay for a couple hours a month.
That ofc, does not reflect the sales channel for most consultancies. Sales is focused on finding anyone they can schmooze into paying for services. Generally where large consultancy firms are involved, the decision maker is treated like royalty. Usually it involves helping them cheat on their spouse or get access to drugs. Weeklong out of town trips, usually vegas, paid for by the consultancy, with a hefty petty cash card. Smaller decision makers might only get local strippers and beer.
One time, I was involved where a company we were consulting to on X, was concerned they were being lied to by consultants on Y project, and we stepped in and sounded them out in a meeting in front of the client making it evident they were just being told to justify Dynamics CRM and Sharepoint at all costs.
Having consultants do anything in this situation is antithetical to the ideal of a company. The company should fail, OR, the consultants should advise that the company should either fail or gain the expertise to no longer require consultants.
Obviously this isn't going to happen, and here we are.
So there's some free market reasons for this to exist.
Should a homeowner know how to replace a roof before they can own a house? Repair HVAC appliances, upgrade a switch label?
If I don't know how to make a CPU should I not be allowed to buy a laptop?
Hiring help from outside is how the free market works. Goods and _services_
The main issue, of course, is that a truly efficient market is a theoretical construct that can only be approximated. And in practice the approximation is often quite poor: successful companies are usually only doing one or two things right to make their success, then doing most other things in a mediocre fashion, and usually one or two things just short of catastrophically badly.
The free market doesnt say anything, the invisible hand is also silent. Have seen:
1. Additional round of investor funding to rescue the business based on doing it right this time.
2. Dip into family money to reorganise and rescue business
3. Uses us to correct their practices and then runs it themselves
4. Farm mortgage.
I dont see how its antithetical, its a service. Businesses use other businesses services all the time.
This is a super myopic. Company's don't operate in idyllic terms ("ideal of a company"). Company's exist to create customers. How they reach that is up to them, consultants or otherwise...there are no "rules" you have to follow to achieve it (other than obvious regulatory ones)
And apparently so much so that they feel they can even use AI-created reports/materials...
Deloitte really falls into the "We wined and dined and whored the decision maker" tranche.
The customers are big companies with huge budgets, and a lot of red tape. The guarantees they want the most are legal. If things don't go well in a project, or if a project isn't implemented on time, they want to have someone to sue. Someone that will not simply go bankrupt and disappear. "Quality" is almost a nice to have, compared to the legal guarantees.
Enter the Consultancy companies. They have a huge amount of workers, a lot of them fresh out of university. The quality of the work they produce might not be great, but when problems arise, they can always throw more people at the problem (or to make them work longer unpaid hours). They are sometimes called "meatfarms", because of this. They will not go bankrupt easily.
The way these companies develop software is by third parties, often overseas, sometimes, frequently via several intermediate companies, each one adding their cut.
I must stress out that it work. Boring, soul-crushing at times. But it is not easy. Just dealing with the red tape is a job on itself. The kind of contract that needed to be written before a medium-sized project has to be very detailed. It details things like what will happen when the project derails, what will be the penalty and who will pay what. It's a small book.
Source: I was one of those "fresh out of college" people when I joined Accenture. I once was asked to estimate how much would it cost to change one (static) website's scrollbar color from default to yellow. The quote for that change alone, perhaps 10 LOC change implemented by someone in India, was 3000 euros. This was around 2010. I was glad when they offered me a severance package.
This is absolutely insane and, quite honestly, hard to believe.
You need sign offs, and translations - wait but isn't it just the scroll bar color? Yes but the color needs to fit in with the corporate colorscheme, so now we have to pull in the design team, and they're in Poland.
Take five people at $200 an hour and drag them into three meetings. There's 3000 bucks right there.
Or, take one consultant and buy them the last minute plane ticket, to write 10 lines of code, at a customer who insists that everything be done on-site.
There's a whole lot of ways that a bloated company can blow $3000 really quickly.
What if you built a company by recruiting such people and sold their expertise at a premium?
I also think assuming there's no real skill at any consulting company is probably a mistake. Or if anything, they're not just all "management consultants" and many of these places have tech consultancies as well. There are also tech companies that are basically specialized consultancies---compsec is probably a very visible area where it's a more common model and at least some firms get some respect for competence.
There's plenty of criticism for consulting firms and it can be very valid. You can probably even dig up stories of bad consulting experiences in the comments on HN.
But I've known people who worked at places where they didn't really have the talent to solve some unique problem, or their own people had caused the problems.
Good consultants will try to pick the brains of employees for insight that's been missed, ignored, or simply wasn't communicated well. They have have problem solving skills that overlap with a good software engineer, such as requirements gathering, communicating with managers, etc.
- They helped our company to negotiate the minefield of government R&D tax credits, by interviewing all the developers and assessing how much was R&D compared to the guidelines (which are complicated). I think this was a good use of consultants: You get someone with specialized knowledge, and unless you're an enormous company, you couldn't afford to have someone with this knowledge on staff all the time.
- They ran a survey of our software development practices, which they also ran with many other software companies, and then compared our performance to the other companies. I think if you're a completely useless manager with no idea about software, then this could be good, as it might highlight obvious ways that you could improve your processes. For us, it was a waste of time and money.
1. Since tax prep is siloed away from development, you don’t know what you don’t know about your company’s tax and regulatory posture. You as a product owner don’t know how it compares with the industry. You don’t know the space of ways it can change.
2. But then, when they find that your development floor looks like everyone else, it’s less than profound. This analysis is most valuable to the outliers; maybe a company that’s merged and bought smaller ones and as a result needs to be told that they’re out of shape.
Big corporations and governments aren’t startups in which everyone is encouraged to do as they please in service of the mission. Corporations and governments hire people for very specific roles with very specific responsibilities. Stepping outside of your responsibilities is discouraged. Employees inside big organizations have to think, “how fucked am I if I make this decision and it goes wrong?”. A startup can write off big losses without a second thought, a big corporate or government has to investigate.
If you need to make a big decision, you don’t let an intern take a shot at it, even if they are convinced they have the perfect idea, because if it goes wrong, it’s on your head — which idiot let an intern fuck it up?
You bring in consultants who are (ostensibly) experts so that your responsibility ends at having done the right thing and if anything goes wrong, it’s not on your head.
> The trope you’ll often hear in circles like ours is that big 4 consultants exist to provide cover for unpopular decisions. That’s sometimes true. However…
And then in the rest of your comment you outline exactly that "consultants exist to provide cover for unpopular decisions".
The reality is that people within a large bureaucratic organization often need a decision to be made that has impacts which extend beyond their narrowly defined responsibilities. Consultants are brought in to make the decision instead, to put space between the employees and the decision. The decision might be unpopular or popular, that’s besides the point.
If you’re an employee with a role doing x, putting your head above the parapet and volunteering to do y, it’s a huge risk, for little reward. Best case, the big corporate you work for gives you a pat on the back and a gift card. Worst case, you’re the sacrificial lamb at the altar of accountability. Much easier to offload everything onto consultants to dodge any risk of being held accountable for a bad outcome.
So, yes, consultants protect employees, but not in the cynical way the trope suggests.
You just gave an explanation why it happens not that it is not immoral to do so.
I was an IT consultant. A big energy company wanted to go to the AWS cloud. Their folks were too busy and had no experience. We (my consultancy company) already had the knowledge.
Consultants don't only give advice. In many cases, they also do the work. But advice is also a "product". If your in-house team does not have the knowledge or time, you hire a consultancy firm.
That means even when an in-house team has the same expertise, they have to adhere by in-house processes and hierarchy.
If a CEO signs off a consultant contract, they dont play in the same arena, and can often side-step the hurdles an internal team would face, without anyone internally getting too upset (compared to an internal team side-stepping processes).
https://www.youtube.com/watch?v=3M7SzS_5PlQ
pretty much covers it in under two minutes.
But there's more to it than that. Your investors don't trust you if you're not the sort to trust Deloitte. (Your investors probably also invest in Deloitte, by the way.)
Suddenly you face change, maybe the markets are changing, or tech has come a long way - but in any case, it is in something which is either outside your area of expertise, or you don't have the resources to do it yourself.
So instead of hiring N people to do that one thing, you pay external people to do it for you. This is especially attractive in agencies where you have budgets to consider, can't just hire workers on a whim, and where firing workers can be equally difficult.
That's where consulting firms come in. Most big consulting firms tend to be huge, and have expert networks all over the world - so there's a decent likelihood they'll have someone that have knowledge in the problem you're looking to get solved. And they hire smart enough people that will toil away.
In a good scenario the consultants will have interviewed you, taken a deep dive look into your organization, analyzed the data, and either answered out your problem, or laid out exactly what you need to solve that problem. Usually on the strategy side.
For the implementation itself, you can either go to step 1 and hire people to do it, or hire some other consulting agency to actually do the implementation work.
That's at least the ideal situation. Sometimes consultants are just hired to rubber stamp controversial leadership decisions, and to back up things that leadership can't get internal backing for.
Of course, when the project is inevitably a late, half functioning, buggy mess you get to blame the consultants.
The ideal goal of consultancies like Deloitte's is that they hire a small number of people with experience and combine them with a larger number of young bright people and have them come in to review and advise organizations. The people with experience (so who have worked in that field before) direct the engagement and the leg work is done by the juniors, producing a report for the customer.
As to why companies would choose to use consultancies, there's a variety of reasons, some good, some less than good.
- Outside perspective & experience. The consultancy has done engagements with other companies in your field and can provide that experience.
- Neutral point of view. The consultancy should be neutral to any internal politics within the organization.
- Appeal to authority. Many times organizations use consultancies to provide evidence to external stakeholders that the thing they want to do is the right thing.
Now that's not to say that it always (or even often) works out that way, but in theory at least, there are some not terrible reasons.
IME (Worked for E&Y some years back) about 80% of people who started as juniors would have left after 3-4 years with the other 20% staying to try and make partner.
So why do the young bright people do it to begin with? They get to work with experienced people, broad learning experiences in diverse industries, networking (= future job prospects), etc.
The only person I know who ended up at a high-ish position at McKinsey with proper industry experience had as their only job being the founder of a company they worked quite hard for 15 years to build, and sold it. Still, it's someone who only had a narrow experience in their industry which is now advising companies in very unrelated fields.
Let's say you're a supermarket chain. You have lots of problems that only a small number of other companies - your competitors! - also need to solve.
If you hire a big enough consulting company, they will have a large amount of internalized knowledge relevant to those problems that they gained through previous projects working with your competitors.
Of course, they're never going to deliberately reveal other company's internal secrets, or directly assign people to work with you who worked last week with your competition... but industry expertise and "best practices" still flow through these channels.
I love how you summarized 99.99% of influencers and lifestyle/business coaches.
There's also asking for good advice for narrow problems from experts with decades of experience.
Both of these play major roles and they're often very easy to tell apart.
Two reasons:
- Expertise
- Bandwidth
That's it. That's the reason you hire consultants. Your team either doesn't have the expertise or the bandwidth to do the work you require. Could you hire for expertise and bandwidth? Absolutely. Is it hard ($$) to do that? Yes, and in most cases it's arguably WAY harder, especially when the effort is episodic.
Whether they are actually an expert, or just someone with a deep, confident voice who tells you what you want to hear is another thing.
Same reason all workplace PCs are Windows.
While I've done more than enough Powerpoint presentations telling clients what they already knew but didn't want to say out loud, there are some circumstances where bringing in a consultancy is a very good option.
Some examples:
As a software/cloud/data/AI/cyber guy (I wore a few different hats over the years...), I regularly caught up with buddies working in legal, tax, audit, retail, space travel(!!) etc. for coffee chats. It's surprising how often those of us who specialise in one domain had breakthrough moments from offhand chats with specialists in other domains. Very few people get the opportunity to have these sorts of conversations, and it's amazing how often you learn something relevant for your own work situation over a quick coffee.
When I needed expertise in one of those domains into one of my projects, I could send a message and almost always get someone on a call within a few hours. Very few organisations could get e.g. a high-ranking ex-NASA official on a call quickly to pick their brains, but I could.
Lots of times organisations don't have the deep expertise and/or available people to deliver on their internal projects. When a major rail transport provider needs to work out how to going to deal with new government critical infrastructure regulations for their IT systems, it's consultancies who can pull all the right skills together to help them out.
When there's a critical shortage of available IT skills in the marketplace, companies use consultancies to top up their workforce. Here in Australia, there were nowhere near enough GCP experts to go around for the last 4-5 years, so companies could either try to hire the very few people around at exorbitant rates, or tap a consultancy for resources.
Big 4 consultancies in particular throw high-quality training at their technical staff like nowhere else I've seen. One reason: quality training = billable hours. I had people around me burn out from too much training, and I'm pretty sure regular companies don't have that problem. For all the pointless Powerpoint presentations we did, there's a sh1tload of technical expertise sitting in Big 4 consultancies, waiting to be tapped.
Companies are always struggling with how to use the latest IT shiny tools properly. Right now it's AI - how can I use it to save costs or increase productivity? What are the ethical and legal implications that come with AI, and how can we deal with them? How can we deploy AI solutions securely? Which of our business problems are the best fit for AI solutions? How do we train our ops staff to keep these AI solutions running? - the list goes on and on.
Now a lot of people here in HN know how to do these things, but how does a regular business tap into that expertise and filter out the bullshitters? The answer is they go to a consultancy that (they feel) they can hold accountable.
On that point, sometimes execs in a company simply need someone to shield them from blame for unpopular decisions like mass layoffs. It's pretty well know that consultancies do a lot of that type of work, and they (justifiably or otherwise) cop a lot of crap over it so some exec can say "I didn't do it".
I'm probably coming across as a huge fanboy of consultancies, but remember - I'm an ex Big 4 guy. I think their influence is too large, particularly in government policy making; I've encountered way more sociopaths in Big 4 leadership roles for it to be down to chance; by any measure staff turnover and burn out is very high, and I'm convinced that's by design.
However, they have their place.