The ‘UBER’ fever has caught North America. There has been an emergence of the “gig” economy, which is essentially an economy characterized by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs. UBER and Air-BNB are the companies who have perfected this model and have radically democratized the taxi and hotel industries, tapping into un-utilized excess capacities and ultimately making the economic system more efficient.
Certain changes in lifestyles and social attitudes have facilitated this kind of model; let us take a closer look at three of them.
1. Changing attitude towards work
The attitude towards work is changing. Going to the office on a daily basis is no longer the definition of work. More and more people are opting to work from home. In this digital age, the workforce is increasingly mobile and work can often be done from anywhere. As a result, freelancers can select from jobs and projects around the world. If you are competent and have a track record of satisfying demanding clients, you can make a decent living as a freelancer while remotely working from a beach in Miami! People want a better work-life balance and more flexibility in terms of when and where they get things done. This changing attitude towards work is re-shaping work environments.
2. Improved means of communication
Internet-based communication services have improved in sound and video quality drastically over the years and are available for next to nothing. This has promoted the use of virtual meeting spaces which are quickly eliminating the need for big fancy meeting rooms and the high costs associated with business travel.
3. Success of crowdsourcing as a business model
The success of crowdsourcing has been proved in a number of business cases from incumbents like McDonalds and Samsung to startups like Waze and Pebble. Globalization and increased connectivity have enabled easy access to talented professionals around the world. Access to diverse perspectives makes it more likely that a firm will get the best possible solution to a complex problem. More and more companies are looking for ways to leverage diversity both within and outside the organization.
Is this model relevant to consulting?
To answer this question, let us look at a typical consulting business model.
In a consulting firm, partners are responsible for bringing in new business. They then assemble a team which, depending on the size and scope of the project, is likely to include engagement managers, subject matter experts, associates and analysts. Most of the work is done by the team and the partners play more of an advisory role as well as taking P&L responsibility for the project.
In the most established consulting firms, the clients are charged not only for the human capital involved in the project but also for the fixed costs of maintaining large flagship office spaces. They also typically have no say on the individual consultants who will be staffed on the project. Most of the work is done by juniors and there is less involvement from the senior consultants.
The alternative is an Uber based model for consultants. Experienced consultants who want the flexibility and freedom to work on their own sign-up to an online platform. Prospective clients also register and are able to search for consultants who have exactly the right skill set and experience for the project. The client can select different individual consultants and combine them to build a project team. The platform facilities virtual meetings and any financial transactions between the parties. A few startups like Catalant Consulting are already working on this kind of model, which allows clients to put the challenge out there and crowdsource ideas from consultants around the world.
The benefit of this kind of model for clients is that an army of entry-level business analysts is replaced with senior consultants who enjoy the challenge of solving client problems and the freedom to work on a variety of projects but who don’t have the ability or interest in playing the role of partner/salesperson. These individuals create their own brand and attract new work via referrals and repeat business based on their previous project track record. This model also has the potential to democratize the consulting industry so that the economic benefits which have traditionally been captured by a few large consulting firms could now be shared by a larger number of talented individuals.
This model could have far-reaching implications for an industry that has historically focused on recruiting the best and brightest, then developing that talent for the long haul. In the coming years, “consulting services may be seen as a more commoditized, transactional type of interaction rather than as a professional long-term service partnership” predicts Dan Reardon, CEO of North Highland.
Having said this, there are four key challenges that may prevent this new model from disrupting the industry.
1. Scalability Issues: Large projects involving multiple consultants, like enterprise level technology implementation, will be difficult to effectively execute through this model.
2. Influence and resources of incumbents: Large consulting firms have knowledge banks and a large pool of talented people to tap into. Some of these top consulting firms also have strong alumni networks in industry, finance, law and government. This gives them an edge especially when it comes to implementing major projects.
3. Partnerships: Companies often form long term partnerships with a consulting firm so that the consultants are aware of the past history of the firm. It makes sense that an enterprise-level software upgrade is best carried out by the firm that owns the software or the firm that implemented it in the first place. As a result, clients will tend to prefer their partners rather than engaging a new batch of freelance consultants for each new project.
4. Credibility: It is unlikely that the CEO of a Fortune 500 company would be willing to hire freelance consultants for important projects because his job would be on the line if they fail to deliver. The trust component is hard to achieve through the online model, and would likely be a deal-breaker when the stakes are high.
To conclude, the consulting industry is unlikely to be completely ‘Uberized’ in the immediate future since the online model has limitations that are hard to overcome. However, the opportunities for freelance consultants are bound to grow, especially in the market for small to medium-sized projects.
Mudassar Shaikh is an engineer at heart, management consultant by profession, entrepreneur by spirit, and student by essence. He is passionate about enabling organizations to develop new technologies and make them accessible to the masses, positively impacting the life of many and pushing the human race forward.
Image: Pexels
🔴 Interested in consulting?