In central government there appears to be a drift away from the use of consultancies, in part due to the scrutiny placed upon departments in the early 2000’s from the “excessive” use of some of the larger, more recognised consulting houses.

The pressure on public services to identify and deliver value for money means they quite rightly need to scrutinise everything that they do, not just on a day-to-day business level but also when they need to reshape to meet the latest policy or legislative guidance - for example Varney’s report on transformational joined-up government.

Many public organisations have now recognised that fundamental change cannot be delivered within a business-as-usual setting and that programmes of change need to be established to deliver transformation. This means additional capacity and/or capability is often required in part due to the lean nature of most government organisations after the Gershon initiative. This support must also be secured in the “most economically advantageous manner”, according to all the best practice procurement guidelines.

The route to accessing this external support in the main is through established competitively tendered frameworks such as Catalist or CIPHER. Traditionally these consultancy based frameworks would be populated with genuine management consultancies, but there is an increasing agency/placement presence.

In central government there appears to be a drift away from the use of consultancies, in part due to the scrutiny placed upon departments in the early 2000’s from the “excessive” use of some of the larger, more recognised consulting houses. The National Audit Office report at the end of 2006 highlighted the size of this market at circa £1.8billion. This has meant that departments have been forced to find alternative sources of external support. New support has come in the form of contractors through agencies. The benefits are that this route does not have the same level of scrutiny and the price is, in most instances lower e.g. perceived better value for money.

This approach has engendered the huge growth in agencies placing contractors, agencies masquerading as consultancies (competing for consulting assignments using a composite contractor team) and even consultancies attempting to operate at agency margins – which is not a sustainable business model.

So where does this leave traditional management consultancy – seen to be too expensive or just not delivering enough value? What’s more, are they loosing their best people to the contractor market because they can earn more? Whatever it is consultancies need to change in a proactive way to ensure they can be seen to add value beyond that of simply providing a resource.

So to grow and survive consultancies need to offer a service that “hollow” agency led businesses cannot – differentiators, added extras and “value adds” that have long been asked for by clients but never delivered such as knowledge share activities and a genuine partnership approach, to name a few. But is this enough?