The Hidden Cost of Utilisation Rates – Why are you paying more for people less qualified?

For decades, organisations requiring transformation services employed large consultancies. They offer a recognisable brand, a global reach and an established way of doing things. However, over recent years, many businesses have been rethinking the scale of their partnerships and turning away from the largest firms, in favour of high-quality, established, boutique consultancies. This choice isn’t a compromise or a cost-cutting effort; it’s a way to secure more experienced people, fairer pricing and better outcomes. 

In the second in this series, we look at why large consultancies’ utilisation rates shouldn’t be your problem.

The impact of hidden utilisation rates

Central to this rethink is the way that large consultancies are structured. Most of them operate strict utilisation targets, meaning their consultants are expected to be billable for up to 90% of their time. While this creates internal efficiencies, it also has consequences for clients. Project leaders are under pressure to place the next available consultant on a job, whether they’re the best person for it or not.

This can result in:

Junior consultants with limited experience being assigned to complex projects

Those same consultants are learning on the job, but being billed at senior rates

Projects which are staffed to meet the consultancy’s internal revenue targets, rather than their complexity or outcome.

This results in the client having to pay for the cost of a consultancy’s staffing structure and its inefficient utilisation practices. It isn’t done deliberately, but it can become very expensive for the client, and it can lead them to question why they are paying more for people who are less qualified.

When projects are complex and involve matters such as regulatory change, system implementation and organisational redesign, experience really does affect risk. The cost of reworking parts of the process due to errors, delaying vital components because of a lack of expertise or losing stakeholder confidence because trust is diminished can quickly affect the perceived advantage of using a big firm. 

The Brighter advantage

We operate differently. Like other boutique consultancies, we have a leaner staffing model and no large ‘bench’ of consultants that we’re eager to deploy just for the sake of it. We select associates because they have delivered similar projects previously, in similar organisations, and have faced the same operational, digital or regulatory challenges. 

This results in:

• Faster mobilisation time, with less focus on ‘orientation’

   

• Fewer avoidable errors

   

• Less need for intensive supervision

   

• More stakeholder credibility

   

• Faster progress

   

• Better outcomes.

So, instead of paying for someone to learn on your time, you pay for proven capability and experience and, and while that does not eliminate risk entirely, it reduces the risk of errors occurring and speeds up delivery time. This matters particularly in transformation projects, where tight timelines and reputational risk mean that a smaller team of highly experienced consultants can deliver the results a client needs better than a larger team of less experienced practitioners.

Finding the right size consultancy

UK firms are becoming increasingly aware of the advantages of a boutique consultancy that sits between global operators and small-scale firms. Larger-scale organisations may offer advantages of scale but can be held back by inflexibility. Smaller firms can offer highly niche expertise but sometime lack the required breadth of experience. Boutique consultancies, such as Brighter, however, sit in the ‘sweet spot’ between the two extremes to effect quality transformation. They are small enough to remain closely involved and accountable while being large enough to handle programmes that combine complexity with consequence. 

In our case, this means that our clients benefit from:

• Direct access to senior leaders throughout the engagement

• Clearer accountability over who’s responsible for outcomes

• Greater continuity between what’s being proposed, what gets designed and what’s eventually delivered

• Faster decision-making processes

• Consistent delivery teams throughout the project.

Importantly, this structure, in which the people who create the proposal are the ones actually doing the work, reduces risk and greatly improves outcomes. 

Offsite/offshore vs onshore delivery

Another concern we hear from our clients is the exact delivery location. In these days of maximising cost-consciousness, many large firms offer offshore and offsite delivery models which, in the case of standardised processes or technical fixes, can reduce costs but, in more complex scenarios such as culture change or regulatory adherence, may actually  hinder progress. 
Working in a different time zone, for example, as well as missed cultural nuances and impeded communication can increase delays and lead to a lack of integration and less responsiveness which will, unsurprisingly, impact on outcomes. Here at Brighter, we’re always transparent about where and how the work will be delivered. We don’t default to offshore delivery methods in order simply to protect our margins, rather we decide on the location of the work based on its requirements. We believe that for many transformation initiatives, being embedded alongside out client’s teams improves collaboration, creates faster and more incisive progress and, most importantly, enables us to build trust with our clients, creating better outcomes. Delivery location should depend on the needs of the project, not simply to benefit our margins.

Outcome-led without being overpriced

One of our clients’ main considerations is to achieve overall value for their money, rather than focus on how much day rates cost them. Large consultancies naturally have large overheads in the form of global offices, convoluted management structures and significant expectations from shareholders, all of which are inevitably incorporated into their fee structures.

At Brighter, we operate with a leaner corporate structure which allows our pricing to reflect the work that’s involved, the expertise we deploy and the result that we deliver.

This enables us to focus on outcomes such as achieving operational efficiencies, successfully implementing systems, achieving regulatory milestones and upskilling and embedding teams. It also means that our clients are paying for the experience of our people not extraneous layers of management, that there’s a clear link between the fees we charge and the outcomes we deliver and that there is better value-for-money over the lifetime of a programme.

The value of your current consultancy model

This gradual move away from larger consultancies is not merely about rejecting them wholesale. Many continue to deliver the high-quality work on which their reputations were founded. However, increasing numbers of clients are asking more incisive questions about the value of their current consultancy models, especially such issues as utilisation rates, who will be doing the work, what experience they have and whether the price they pay accurately reflects value-for-money.

At Brighter, we ensure that all our clients deal with senior and experienced practitioners who provide flexible and transparent delivery, and that our pricing structure is aligned to the outcomes we generate rather than our overheads. 

If you’re reviewing you consultancy model and are questioning its current value, let’s have a conversation.