Consulting and the gig economy

Richard Longstreet, 3Search

Posted

The way that people want to work is changing. The cohort currently entering the workforce have very different expectations for their careers than their parents did: They expect to jump around from employer to employer and even sector to sector as they develop portfolio careers. And many of them will use platforms that did not exist just a few years ago to find freelance opportunities and will spend more of their career self-employed. Consulting firms will need to be prepared to help their clients rethink their approach to managing their labour force in response to this changing talent landscape. However, firms themselves will also need to adapt the way that they manage talent and their own balance between full-time and interim resources. 

One person who knows better than most the changing pressures firms are facing is Richard Longstreet. As Strategy, Transformation & Change Manager for London-based recruitment agency 3Search, he works on a daily basis with leaders and HR managers at some of the UK’s largest consulting firms, and has a frontline view of the talent challenges they are currently facing. We sat down with him to learn more about what the future of resourcing looks like.  
 

You provide recruiting support for quite a wide range of different firms. Are you seeing any specific skills that are particularly in-demand right now?

The bottleneck in the industry right now is around specific grades rather than specific skills. A lot of firms are really struggling to find talent at the manager and senior manager level—I don't know of a single consulting firm who wouldn't hire a very good senior manager at the moment. That's the point where a lot of people leave consulting for industry: There's a desperate need right now for senior managers who can lead on accounts.

Sector experience is becoming increasingly important right now. Firms are trying to avoid looking like they subscribe to a one-size fits all model; they recognise that most of their clients are looking for sector-specific advice, and are trying to cater to that.

Do you anticipate the sorts of skills firms are looking for to change as more and more of them embrace automation—particularly for tasks that would previously have been done by junior resources?

It's certainly possible that technology will start to remove the bottom layer of the resource pyramid. And of course, it's something to worry about: If you don't have enough people coming in at the lower end of the industry, then it starts to wither and die. But people have been writing think pieces about the death of the consulting industry for decades, so I think it's likely that consultants will find a way to adapt to a more technology-driven business model.

The more that consultancies automate aspects of their work, the more their consultants will be free to do more people-facing work. That will have an impact on the sort of skills that firms look for in new hires: They'll be even more interested in facilitation skills and other soft skills. If firms do start to rely on technology to do more heavy lifting when it comes to analysis, reporting and so on, then I could definitely see the skill profile for a junior consultant looking very different in a few years. That's not a bad thing, just something the industry would have to adapt to.

In recruiting, there's been a big increase over the last few years in the number of technology solutions on the market that purport to solve the recruitment problem. While I might be biased in saying this, I don't think anything has come along yet that can replicate the human to human relationships that are so foundational to the industry. I suspect we'll see something similar happen in consulting: There will always be a role for interpersonal skills, no matter how advanced the technology becomes.

So what do you see right now as the most important driver of changes in the way that firms resource their projects?

The Big Four are good examples of firms that have exceptionally strong graduate schemes: They hire very talented people and equip them with robust consulting toolkits. But they all have serious attrition problems—they lose a lot of people around the three to five year mark. And as more and more of the new generation of consultants embrace the gig economy, that attrition problem is only going to get worse.

A lot of large firms have adapted to the gig economy faster than I'd expected them to. The Big Four are getting a lot better at maintaining relationships with alumni. A lot of big firms now have talent exchanges—networks of ex-consultants that they can tap to resource projects. And there's a lot of advantages to staffing projects that way: It means they don't have to keep those resources on their books, so they're not paying permanent salaries. It means they can cut back on overheads quite significantly—so I'd expect them to rely even more on that resourcing model in the future.

Smaller firms stand to benefit the most from embracing the gig economy—but they lack the resources necessary to manage a pool of external resources, and they don't have the same alumni networks to draw on that the larger firms do. That's where there's a role for organisations like ours—and you see people like Eden McCallum and the Barton Partnership doing this as well—to step in. We can provide those small- to mid-sized firms with access to a "virtual bench" of freelancers so that if they sell a project and need to staff it quickly, they can do that without having to maintain a large bench of under-utilised resources. We can vet all of those freelancers, provide references, and match them to the right projects based on their skills.

If companies like yours are now able to tap into those sorts of networks of freelancers, then why not cut out the middleman entirely? Why provide firms with resources when you could staff those resources directly onto client projects?

The logical next step from providing a virtual bench for other consulting firms is to start going straight to industry clients and connecting them directly with our networks of freelancers. That's something we've started to do—and there are other companies for whom it's their primary business model. Effectively, it's creating a new type of business that's halfway between a recruiter and a consultancy. And of course none of those companies have the overheads of a McKinsey or a Deloitte. I think if there's a real existential threat to the industry, it's that. Big firms are at serious risk of being consistently undercut on price by these types of freelancer networks.

For us as recruiters, we've found that playing in this freelance network space necessitates a new approach to dealing with clients. When we go out to a Head of Strategy, the question has to change from "Where are you looking to add resources to your team?" to "What challenges are you facing at the moment? How can we connect you with people who have the skills to address those challenges?"

Do you see any examples out there of companies going even further? Where’s the Uber of the consulting industry?

There are some businesses out there now that are purely platform-based: I'm thinking here of companies like COMATCH and Movemeon. All they do is provide a platform to connect independent consultants with their clients, the same way that Uber connects drivers and passengers. The issue I have with companies like that is that they've removed all of the human element from the process: There's no-one acting as a filter between the client saying: "I need someone to deliver this piece of work" and the hundreds of thousands of people who think they're qualified to do it. Yes, you can bring in technology to help sift through all those people, but I don't think that technology will ever get you all the benefits of having a human act as the filter.

How do you think the big established consulting firms are going to be able to compete in this new world?

I think we'll likely end up in a world where both sides—traditional consultancies and gig economy-style freelance networks—can survive alongside each other. There will always be clients who want the comfort and the security of working with a big name like a McKinsey or a Big Four firm.

As big consulting firms try to differentiate themselves from the new breed of freelance networks, they're going to have to rely more heavily on their technology solutions and their asset bases. The big firms are always going to have an advantage in terms of the money they can put behind technology development and the type of partnerships they can build. Look at Deloitte, for example—they've made some incredibly innovative products through their partnership with McClaren, such as their "digital duplicate" for supply chains. No firm built on a gig economy model is ever going to be able to compete with that.

Bigger firms naturally benefit from the accumulation of people with different skillsets. McKinsey, for example, obviously employs a lot of very intelligent people—but the reason that those people can bill more per hour than they would be able to on their own or at another firm is that they all benefit from the assets and the methodologies that McKinsey has been able to develop by virtue of the fact that they can bring so many smart people from different bits of the firm together to work on them. Institutional knowledge is going to be fundamentally important if firms want to protect their price points when they find themselves competing for work against freelance networks.

Do you have any final thoughts on how firms can respond to the rise of the gig economy?

I think the rise of the gig economy creates a lot of opportunities for consulting firms—provided that they design their organisational structure to take advantage of it. The big challenge is going to be finding the balance between being able to tap into a flexible network of resources to find sector expertise and specific skillsets, while also maintaining enough in-house consultants to act as a central hub of intelligent thinking, developing propositions, and intellectual property. If they get that right, then they'll be in a good position to compete with the pure gig economy players.

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