| Consulting is hot, hot, hot these days. It's a way out of corporate positions that offer limited opportunity for professional growth, lower average salaries, and decreasing power within the enterprise, as business drivers take on greater importance in directing technology decisions. Consultants tend to have an immediate hike in respect, even if it's only because they aren't regular employees of the company that retains them (familiarity breeds contempt, etc.)
The main reason for consulting's growth is the exploding need for technology expertise. Even in the largest firms, it's hard to keep up with the state of the art. Using consultants lets firms identify and retain cutting edge skills and strategic advice without incurring the costs of permanent employment. A consultant's hourly rate may be far higher than the prorated cost of a full-time employee, but firms can save on the overhead costs of regular employees. They save on the cost of training to keep capabilities up to speed too. Finally, companies can duck any negative feedback associated with downsizing/rightsizing by using consultants for fluctuating needs.
So is consulting for you? It probably depends on what you think consulting is. Do you think it's working for a well-known consulting company and flying across the country (or the world) to work with Fortune 100 clients? Or is it a contract job with a local company that you charge $60 an hour? Consulting is both of these and more...
Option 1: The Status Consulting firm
Consulting, especially Big 6- (or is that 4 now?) type consulting is touted as a real glamour occupation. Travel, cutting-edge technology implementations, fancy dinners with clients, and six-figure salaries are all truly part of the consulting lifestyle. But so are grueling 12-hour days, canned "best practice" solutions, and seeing your family for 36 hours over the weekend. Big firm cultures can be rigidly controlled hierarchies, often with proscribed dress codes, and young associates are expected to take on every assignment that is doled out without complaint.
The expected reward, if you are diligent and lucky, is the path to partner. Most don't make it. They achieve middle management status and elect to stay where they are. Others don't even stay upwards of five years. They find the life too grueling and move on to less stress-filled situations. Some find opportunities with the clients for whom they've consulted. Some others move on to...
Option 2: The Smaller Consulting firm
Smaller salaries, smaller project teams, smaller arenas of expertise, smaller client bases - these are typical of the smaller consulting firm. Relationships with client companies may be more time- or scope-limited than ongoing relationships enjoyed by larger consulting firms. Advantages of working for smaller consulting firms are the opportunity to stretch beyond your technology specialty, the ability to move up quickly into project lead or management positions and quicker assignment turnarounds. Disadvantages are the need to stretch beyond your technology specialty to meet immediate client needs, the requirement to move into a project lead or management position that you're not quite ready to assume and quicker assignment turnarounds that necessitate just-in-time learning. You get the picture here.
Smaller consulting firms need to be adaptable in their approach to clients, rapidly responsive to business opportunities and willing to take chances in order to increase their market share. Employees of these firms must demonstrate the same traits in order for these companies to be successful. Because cash flow isn't great, you may end up in situations that offer a different set of technology challenges than you were led to expect.
Smaller firms don't have the same luxury as larger, well-know firms to be picky about their work, despite the dynamic IT marketplace. In a smaller firm, it will be much clearer to you that you are an asset whose use must be maximized for profitability. Your willingness to jump in, stay one step (at least) ahead of the client and leverage other people's knowledge and experience will make you a good small firm employee.
Option 3: The Contract Consulting Firm
In options 1 and 2, you would generally be a regular, full-time employee of the consulting firm, which will market its services to client companies. In this option, the consultant affiliates with the contract consulting firm as an employee who is one of a pool of potential resources who can be referred to clients, to work on temporary project assignments under the client's direction. The contract consulting firm develops the temporary assignments, pre-screens/qualifies possible contractors for referral to the client and collects hourly fees and performs administrative processes such as billing, collecting fees, processing paychecks and taxes.
A second model exists with contract consulting firms where the consultant (that's you) affiliates as an independent contractor rather than an employee. You retain your identity as an independent while you perform work under the firm's auspices. The firm identifies the opportunity and acts as a matchmaker, putting you and the consulting job together. This makes you a "1099 employee", a title you may have heard before. A fee may be paid to the contract firm, but they bear no liability for the quality of your work and are not responsible for any output once the decision to hire you for the consulting position has been made by the client company. Of course, the contract consulting firm's reputation is on the line, but the bulk of the responsibility is on you. Essentially, this makes you...
Option 4: The Independent Consultant
Congratulations! It's the American Dream. The independent consultant is in business for him/herself. Like the joke goes, when you have your own business, you only have to work half time and the best part is that you get to pick which 12 hours a day you work. This kind of consulting is perfect for some people; pretty much total control over assignments, avoidance of office politics and a very nice cash flow. There are some terrific websites that offer referrals for work and advice on being an independent. See Contract Employment Weekly at www.ceweekly.com.
It's easy to fantasize about the life you could have if you could bill for $65 per hour. What you need to remember is what it will cost you to actually earn that amount. Try health insurance, liability insurance (both for yourself for disability and for professional liability with your clients), and the cost of your time to perform administrative tasks like billing and tax reporting, not to mention the increased tax burden of being an independent.
The IRS also requires that each assignment you work on with any client be qualified as an independent consulting relationship. There is a list of 20 questions about the relationship which serves as a test of independence. If the IRS does not judge the engagement to meet this test, both you and your client could be subject to payment of back taxes, fines and penalties. I'd suggest that you identify an accountant who can advise you on these points.
Some folks avoid this by incorporating themselves and paying themselves as employees of that corporation. This is a totally different set of requirements that I'm even less qualified about which to advise you; if you're interested, get professional advice from an attorney or small business development organization.
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So here are the commonly required set of skills to be successful in consulting:
- outstanding communication abilities (oral and written)
- ability to be self-managing and self-directing
- fluency in both technology and business.
There are a whole bunch of consulting firms soliciting your interest here on jobcircle.com Check them out if you're still thinking consulting might be right for you.
We're also still soliciting recruits for the Career Checkup later this spring. Send me your resume and job target(s) for consideration. Next month: "Career Checkup". I've gotten some interesting letters and will be profiling a few brave souls, anonymously of course. If anybody wants to sneak in under the wire, I've still got a little space left. Write to me at jamie@jobcircle.com".
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Jamie Fabian spent more than 15 years as a human resources executive before changing careers to become a senior project manager for a growing IT consulting company. Now in management consulting for a large Pharma company, Jamie would like to be seen as a hybrid of Tom Peters, Tom Jackson, and Tom Wolfe, but spends too much time working, driving carpool and watching mindless TV to write more than this column. You can contact Jamie with questions and comments at jamie@jobcircle.com.
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