Consultants can usually run a rate of anywhere in the range\nof one hundred to two hundred dollars an hour. Some larger firms in the \u201cBig\nFour\u201d can charge up to six hundred dollars an hour for senior resources. Multiply\nthat by the average of forty hours a week and fifty or so weeks a year, and it\nis easy to see how that adds up to more than you will see in your paycheck.\nSorry to break it to you. What a consultant bills is never what they pocket in\nsalary for reasons we will soon discuss.<\/p>\n\n\n\n
When I first started consulting and reviewing my own\nbillable rate, I could not even process how and why companies would pay that\nkind of money for someone like me. For that kind of money, companies could pay\nthe salary of three or four versions of myself for the same period. It just did\nnot add up.<\/p>\n\n\n\n
There are a few major reasons most companies will hire\nconsultants instead of hiring their own employees:<\/p>\n\n\n\n
The first major reason it makes sense for a company to hire\na consultant is that the needed work must be completed in finite time with\nlimited scope. Although the cost of the project can be high, a client will save\nthousands of dollars by not having to hire long-term, full-time resources. They\ncan pay highly skilled, subject matter experts to come in and knock out the job.\nAfter completion, they can send the consultants on their way and transitioning\nthe ongoing support to existing employees as a portion of their day job. The\ninitial cost of the project is considered an investment with a long-term\npayback.<\/p>\n\n\n\n
Similar to project-style work, sometimes a company is simply\nshort staffed. Maybe it is the year-end, maybe Mary is on maternity leave, and\nmaybe they just need an extra hand hitting a deadline. In these cases, this\nwork is usually called \u201cStaff Aug,\u201d short for Staff Augmentation. Staff\naugmentation is where the current staff is supplemented by consultants for a limited\ntime. The cost in this scenario is temporary because the role is temporary. <\/p>\n\n\n\n
The cost of a company\u2019s full-time employee exceeds his or\nher salary. Companies pay for the employee\u2019s desk, computer, parking pass,\ncoffee, perks and\u2014most importantly, the second most expensive item next to\nsalary\u2014benefits. With most reputable companies now offering retirement matches\nand health care benefits, the usual cost of an employee is over 20% beyond that\nperson\u2019s salary. This is where the cost of hiring a consultant can begin to\nmake a lot more sense.<\/p>\n\n\n\n
Many times, a company will bring in a consultant because\nthey just cannot do the work themselves. The work may be too complicated, or the\norganization may not have enough time or resources to complete the work on time\nor at all. Finding an expert to assist in complicated tasks is usually very\nhard to find and even more expensive to hire for the long-term. This is where\nspecialty firms and their resources can flourish. Deep expertise in a business\ndomain, an industry, or a technology drives most of the work for consulting\nfirms.<\/p>\n\n\n\n
Mandatory or regulatory work is where Big Four firms make much\nof their money. Audit season, Tax season, Merger and Acquisition reviews can be\nthe reason you see an empty conference room get invaded by forty new folks\ndressed in the basic business casual starter kit and travel laptop. It is not\nrare to see these consultants working 80 hours a week, ordering take-out,\nhunching over documents and filling out spreadsheets. This type of work is\nnecessary either by law\/regulations or is required because of due diligence\nwork. This is frequently where consultants get started. <\/p>\n\n\n\n