6 Reasons Why Companies Spend $2 Million To Hire Business Consultants

Consultants can bad a negative reputation – charging $2 million-plus for 10 weeks work that results in a lot of fancy PowerPoint presentations, all of which are archived away soon after BCG or Monitor leaves the client.

Below, Ill paint a more optimistic (and personally held) view on the key reasons why companies need business consultants. Youll have a better understanding of management consulting as a future career.

1) Staff augmentation – the least value-added role that consultants offer. Companies often have short-term staffing needs (in the case of government work, this can extend for several years) due to a variety of factors (eg, company downsizings, unplanned growth). While expensive, it can be commonplace for operational consulting firms (eg, Deloitte) and, to a lesser extent, public sector consulting firms (eg, Booz)

2) External change force aka political cover. It can be hard for companies to do whats needed (eg, sacred cows) – particularly when it comes to employee layoffs, salary reductions, major operational changes. Hiring business consultants can help accomplish needed goals with sufficient political cover in case select parties protest (eg, displeased Board or disgruntled employees) or things go wrong (Despite the significant cost increase, we implemented BCGs recommendations ” theres little that what we could have done better)

3) Best practices across sectors and functions (eg, organization, supply chain) – consultants have the privilege of:

a) Serving a multitude of clients in the same industry (eg, Transportation, Energy) b) Serving a multitude of clients facing similar problems across different industries (eg, Middle East expansion, Northeast Asia outsourcing)

This allows them a sort of pattern recognition for effective solutions, applying lessons learned in applicable situations.

4) Analytical manpower

Similar to staff augmentation, companies often need help executing strategies where their capabilities and knowledge are lacking. Consultants can be of great value given their training and resources – another reason why consulting jobs are so hard to come by.

5) New perspectives

Companies often need an outside viewpoint – youd be amazed at the amount of value business consultants can add based on the most commonplace observations. Critics contend that this is evidence of consultants selling common sense, but for front-line workers up to senior executives, it can be easy to fall into daily routines without casting a sharp eye towards self-criticism and improvement.

6) Skillset augmentation and training

Id argue that every consulting project – particularly ones with close client interaction – incorporates employee training as a primary ingredient. Big recommendations are worthless if clients dont implement and maintain suggested changes after Bain leaves. Thus, a central part of what business consultants do is to train client employees on necessary knowledge, capabilities, and mindsets.

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