Consulting used to pay big bucks and attract the best. now, IB pays big bucks and consulting seems to pay well - but not if you consider the hours and pressure. Even the work isn't what it used to be. Very few of us seem to get near the boardroom level and most Strat houses seem to be doing a fair bit of operational work now. Is this fair?

I'd be interested to know peoples thoughts on this too.Alot of effort goes into getting a job in MC, but when I talk to friends in IB (often weakers candidates), I begin to think how stupid it is to take a job in MC. Work is work, IB just happens to pay 10x more.

Can of worms....Consulting is still a reputable profession and one of the top choices for young graduates in terms of pay and prestige (whether ACN, Big 4 or MBB). You can still pick up a great skillset here that will help in future for bus. school, running your own firm or just getting a new job.

It's becoming a lot less attractive to 'real' consultants, that's for sure. By which I mean the ones who have been in this game for some time and know what's what, rather than some self-professed "expert" that has entered the game after being tempted by a couple of articles in the Sunday Times about how lucrative it all is.I for one earn less than most of my clients and have only stayed in this game because my hours aren't too bad. The moment I'm expected to go back to 60 hour weeks or the like is the moment I'll be looking for a role in industry. I don't mind working 60 hours weeks, providing there's a real premium in what you earn for this kind of sacrifice. Sadly however many employers these days think they can pay industry salaries yet get very highly qualified professionals working exceptionally long hours for no additional remuneration. Something just doesn't stack up - a lot of us simply aren't getting paid an amount that justifies our commitment, stress levels, and skills relative to other, admittedly lower-paying but arguably 'better value' (from our point of view) jobs.

the bullseye of it all.

How can consulting dumb down? The starting points is bottom feeding

How can consulting dumb down? The starting points is bottom feeding

Again, I think that there should be a distinction between MBB and other firms.. It is true that consultant in smaller firms are usually paid industry level salary but for longer hours.. In MBB work is generally more interesting, however they're still underpaid, especially if you compare it with IB.However, the average week is made of 60 hours. In IB, u reach 60 hours by Thursday night..

Why draw a distinction with MBB, if anything they're the ones who have "extended their value chain" (or dumbed down, depending how you look at it) in to operations and IT more than anyone else. Their hourly rate is probably less than other firms and the skillset is not as vastly different as they'd have you believe. Admittedly, their brands do still open doors, but one does wonder in 5 years if they'll have diluted much of what their grey, wrinkled and early grave forefathers built.

Exactly, their skillset is not different. But the name opens you many doors. It's like in IB; if you work for GS or a very little firm, you still do the same thing over and over.. You prepare pitchbooks, run DCF, look for comparables. But GS is something highly regarded.So, I agree with you. A guy working in McKinsey does pretty much the same stuff that it's done in some smaller firm. But you know that it is NOT the same job.

A quick look at the figures confirms all your suspicions...In 2000 the MCA reported the average revenues being generated per consultant were £180,000 in the UK market. If fee rates had just kept pace with inflation they&apos;d now be more than £220,000 per consultant. Instead the latest MCA figures show fee generation of £178,000 per consultant.So the fees being charged by consultancies have declined significantly in real terms since the dot-com boom days.What might be the explanations:-- Average profile of consultants employed is more junior?? <b>Absolutely not</b> - clients are demanding project teams comprising fewer juniors and more industry experts, so this shift should have produced a rise in real fee rates - the actual decline we&apos;ve witnessed is therefore even more stark.-- Average utilisation rates have dropped thus reducing fees generated per consultant?? <b>Again absolutely not</b> - utilisation was so high last year the firms couldn&apos;t take on any more work without bringing in new hires. So again the utilisation argument should mean fees generated per consultant are higher in real terms than in 2000, making the actual fall even more surprising.-- Commoditisation of the market and lower value work?? In reality this is what I believe has happened. Firstly the firms have extended their range of services further and further and in the process have increased the contribution of revenue lines that are less profitable. More importantly, though, clients have aggressively introduced procurement procedures into the purchasing of consulting services. Clients have been played off against one another far more professionally than in the past and are increasingly winning work on the basis of how low they can bid for the assignment.In a labour intensive knowledge industry like consulting (where staff costs make up 2/3 of the entire cost base) then clearly the remuneration enjoyed within the industry is going to be directly correlated with the fees earnt per employee. And less attractive remuneration inevitably means the industry struggles to attract talent in the same way it could in the late 1990s.The solution - we have to start pricing projects according to value created rather than on a time & materials basis. Until we do that our services are just commodities and we in turn are just commodities too.Tony RestellTop-Consultant.com

That is an excellant post Tony. One thing I would like to add is that this is market capatalism at its finest. One could argue that in the early 1990s and before when there was not the proliferation in small &apos;boutique&apos; firms asthere is now, that the big players operated a de-facto cartel. With the influx of smaller players (many who spent time at the larger firms) who have lower operating costs and effectively operate a predatory pricing regime. On the issue of value-add..well if it is not tangible (unlike finance) it is always going to be subjective. One example, ETRM is booming right now and ETRM SI are in big demand, however what tangible value does an ETRM system have on an energy business...its debatable in my view. This is what the smaller players play on and hence opt to price according to a cost-based pricing model rather than on economic value. The last example may be slightly recondite, but it holds trueZB

Really interesting post!!I agree with what Tony says - prices should be associated to some economic value. I know that Bain, for example, sometimes charges a little more for its services but agrees to take an x% of profits generated in the future.This could be a starting point, where compensation is associated with some economic value. You charge the client some price in order to cover your costs plus a little more, and then you share profits generated in the future. Nonetheless, there are some problems in doing so. For example, clients may be skeptical because it is very hard to prove that a project has a direct impact on profits.

The problem is that even excellent consultancy advice may result in failure if the implementation is handled badly. And, if the implementation isn&apos;t our responsibility, how do we make sure that the client&apos;s failure to implement our advice successfully doesn&apos;t result in us going home with empty pockets?

Tony,In response to your fee analysis, I do think much of it is right. In 2000, there were also lots of "products" for consultancies to sell - tail end of ERP boom, Y2K, M&A overload, e-this and e-that - whereas today there is actually very little to differentiate consultancies in offerings despite the badgering on here.Moreover, 8 years ago, companies were feeling left behind and had to buy consultancy to keep up, the buying decision is different now. Clients generally want us for well-defined projects or interim roles to keep headcount down, the urgency is not there and, as consultancy offerings increasingly align, it is inevitable it will move towards price-led buying.Until the next big thing anyway...

Glad that this has opened up the "can of worms" as was stated earlier.Some really great insights here and obviously I was asking this on the base of having working in a growing consultancy that stated it would "only do high value work, blah blah" which in reality meant "see a hole, fill a hole".I think the focus is now well and truly on the Service part of "professional services" and industry are demanding more for less. It iwll be very interesting to see how this pans out. Tony, your response and information is spot on but I&apos;m not sure about the solution given the economic climate. Would this generate too much risk as per ACN and the NHS contract? I suspect that the way consultancies pitch for work and the whole tender process would need to be reworked as we often over promise based on uninformed views of potential client needs. More sophisticated, scientific diagnostics (something that has all but disappeared from most of consulting recently) would have to make a come back.

K - your points are very valid. The person who&apos;s able to crack how consulting firms can consistently agree and secure risk-reward contracts will become a very rich individual indeed!I do know some smaller consulting firms who&apos;ve been quite successful in adopting this approach though, so I wouldn&apos;t let the NHS situation kill the idea off altogether.The NpfIT contracts presented a very difficult strategic decision for the firms - Richard Granger was extremely aggressive in his negotiations but the likes of Accenture will have felt compelled to remain in the running for the contracts as this would have had such major brand implications for who would be perceived as the consultants likely to secure the lion&apos;s share of future public sector assignments. Hence there were all sorts of dynamics at play here that wouldn&apos;t be a factor if a firm were dealing with a private sector client on a clearly defined piece of work.In principle this approach should really appeal in a recession - clients only pay big bills if the claimed returns are achieved; compare that with the current situation where they may face a big bill without any certainty of a significant ROI. I know which contract I&apos;d rather be signing in a time of economic uncertainty...Tony RestellTop-Consultant.com

And back to the original post - it should get a mention that you&apos;re far more likely to still be in a job a year from now if you&apos;ve taken the consulting career path rather than the IB route! Some pretty anxious looks on the faces of those working in the City right now.

I dunno about that... consultants are usually the first to get the chop when budgets start getting cut back....

Read this:http://www.verasage.com/index.php/Community/comments/if_you_dont_discuss_value_expect_to_discuss_hoursAnd if you like it and can see some of the answers to Tony&apos;s challenge to the consulting firm who can "crack" it, then get these:Read these:http://www.amazon.co.uk/Professionals-Guide-Value-Pricing-CD/dp/0735548064/ref=sr_1_2?ie=UTF8&s=books&qid=1216240177&sr=1-2http://www.amazon.co.uk/Pricing-Purpose-Creating-Capturing-Value/dp/0471729809/ref=sr_1_1?ie=UTF8&s=books&qid=1216240138&sr=1-1http://www.amazon.co.uk/Value-based-Fees-Charge-Ultimate-Consultant/dp/0787955116/ref=cm_lmf_tit_4_rdssss0http://www.amazon.co.uk/Firm-Future-Accountants-Professional-Services/dp/0471264245/ref=pd_sim_b?ie=UTF8&qid=1216240138&sr=1-1

Possible explanations:-------------------------- too many consultancies- government work dried/drying up in post Tony Blair days- no more SOX growth- more negotiation savvy clients- large IB bonus culture has led to more grads choosing IB over MC, hence quality of staff at MC has declined, hence harder to convince clients of higher charge out rates- experienced consultants decide consulting is a mugs game and move to industry for better career progression/pay/work-life. They bring with them knowledge of how consultancies operateMy guess as to possible trends:-------------------------------------- clients hire in McKinseys/Bain for important consultancy/strategic decision making stuff, and hire in cheaper outfits to implement (already happening I think)- larger consultancies buy up smaller boutiques that are seen to be experts in their fieldConsultants become seen as a commodity to help speed things up and bring in knoweldge about competitors. Consultancies have some really experienced guys who bring in the work and have managed the politics of getting promoted, and many younger staff waiting for enough experience to move into "my main career path" (this is all probably a reality)- UK growth in MC business becomes/is stagnant whilst developing countries flourishAnd now for more wacky predictions: (complete fantasy and not based on any insider knowedge)- Capgemini sell off consulting arm to an Indian company like TATA who then introduce IT and remote working in order to deliver a successful budget consultancy model in the UK- Audit arms of BIG 4 decide consulting arms is lowering their brand image and so the two separate again- PA merge with one of the other big consultancies