Consultants should rebrand themselves

[RainyDay]

That's exactly it.

Another trend I've noticed recently is that a lot of the technical staff in large companies are moving into more Project Management / Architecture roles and the technical roles are outsourced. It probably makes sense as it would be slow and expensive to keep staff up-to on IT advances and staff would be the subject matter experts anyway so it's a better use of their skill. Good times for contractors though!

I know of contractors who seem to have any number of 'layers' above them, all taking a cut but who seem to be adding little or no value. One contractor, working ultimately for IBM, told me of two other layers of contracting companies (not including his own independent company), all taking a cut of the day rate.

Why?

 

[Leo]

That can be true. However software such as that provided by say Oracle and Microsoft would have support costs.

Exactly, that's all bundled into the annual cost, so shouldn't be lumped in with an initial setup cost.

 

[Firefly]

I know of contractors who seem to have any number of 'layers' above them, all taking a cut but who seem to be adding little or no value. One contractor, working ultimately for IBM, told me of two other layers of contracting companies (not including his own independent company), all taking a cut of the day rate.

Why?

It can look that way, but in my opinion this is incorrect....there's no way the contractor would earn that kind of money on their own (if they did they would be working independently). By employing, say IBM, the hiring company gets other, non technical benefits included in that rate:

HR - a complex project might call for lots of different skills at different times in the project for varying lengths. It would be a nightmare for the HR department to source these skills and would take up valuable time even interviewing the candidates.

Brand - referred to earier - hire IBM as they are well-known and your behind is covered

Cover & contingency - if the contractor gets hit by a bus the likes of IBM will more than likely have contingecies in place (even pulling staff from other projects/companies)

There are probably more.

For what it's worth I've spent a number of years contracting over my career and in that time I have worked independently and via consultancies and the rates have been the same.

 

[RainyDay]

Just to be clear, I've no difficulty with the single level of contracting, e.g. Bank X outsourcing a service to IBM, who engage Contractor A as one of several contractors providing the service.

What I've seen is where Bank X outsource to IBM, who subcontract a chunk to HP, who engage CPL to provide resources, who then engage Contractor A - so HP & CPL are all getting a slice of the rate ultimately paid by IBM for Contractor A, and IBM get another slice before billing Bank A.

 

[Firefly]

Just to be clear, I've no difficulty with the single level of contracting, e.g. Bank X outsourcing a service to IBM, who engage Contractor A as one of several contractors providing the service.

What I've seen is where Bank X outsource to IBM, who subcontract a chunk to HP, who engage CPL to provide resources, who then engage Contractor A - so HP & CPL are all getting a slice of the rate ultimately paid by IBM for Contractor A, and IBM get another slice before billing Bank A.

It can probably happen in large, complex projects. Much like the HR problem the hiring company would face, IBM could themselves face a similar problem. In this instance they might contact recruiters / agencies to get people in. I haven't heard of consultancies hiring people from competing firms very often (such as IBM hiring HP staff, but I'm sure it happens). In any case the end result tends to be a higher charge for the company paying for the project. The contractor will get the normal rate or will work elsewhere.

 

[amtc]

A bit of topic - but a couple of years ago we got involved in work as to collective nouns - for example a quiz question is often a 'puddle of ducks'...imagine our fun when we found out it was a 'fleece of consultants'!