I think it is important to distinguish between Consulting, Staff Augmentation, and Managed Services. Many of the large integrators/consultancies do all of these options, but the objectives, contract sizes, and durations of the contracts are all expected to be different.
Consulting - best though of projects, governance, and on-demand expertise. There are definitely junior resources in play, but the objective is to build on the IP of the consulting firm and to create a external channel for problem solving or delivery that is not dependent on or hampered by internal inertia.
Staff Augmentation - a lot of time this is just billed hourly, and you really are looking at paying a premium for a non-committed spend - if FTEs are "reserved instances" then staff aug contracts are the opposite. You pay a premium for the lack of long-term commitment and to make this look like variable OpEx. my opinion is that this model is over used in most businesses.
Managed Services - longer term commitments to deliver services. Generally the good advice is to contract on "what you want done" rather than the detailed "how you want it done", though that is more philosophical than practical. The expectation is that the service delivery will improve, and that those process improvements, automations, training, and provider IP/Tools will deliver decreasing unit prices for "resource units" over time.
Thinking of consultancies as pure brokers is certainly a mental model you can use, but is not the most nuanced model. I think it tends to be better to acknowledge that there are structural reasons why all of these models are present in organizations and rather to think about how they should be governed.
(disclaimer, my employer is an advisor on how to contract for these kinds of services. My work is not related to contracting, but research about this market)
I disagree - no one is calling large scale gov contractors such as Northrop Grumman, GDIT, CGI, CACI, many more etc. consultants - yet a lot of the IT work they do overlaps with the consultancies.
“Contractors” has become the more common term over time.
That’s definitely not true. I’ve worked for companies on the consulting side for five years.
We have two types of Statements of Work (SOWs) we get signed by the client. The first type and the only type I would ever get involved with are project based. The client has a business need but not the technical expertise. I come in right after sales and work with the business to tease out their requirements, get their sign off. We do the work and leave the project once the requirements are met.
With this type of SOW, we (I) lead the project technically, the project management etc and once the work is handed off, we move on. It’s outcome based.
The second type of contract is where the client has the technically expertise. But not the manpower. They then sign a contract with us to get $X number of people for $y hours with the expertise they need. The client controls what gets done and when. They handle the project management. This is your typical staff augmentation.
I would say that "Consulting" model as defined above is employed moreso (but not entirely) by Deloitte, but Accenture and Booz Allen have a higher percentage of on-site folks not at all engaged with internal IP building, sales, etc that amount to staff augmentation. As Booz Allen and Deloitte went after service contracts typically held by folks like Lockheed, GD, CSC, etc it was a race to the bottom for fees to grab as much land as possible, so there wasn't really any head room for people that could do both in the rate they pass through to the customer.
Furthermore, in the cleared space you're pretty much silo'd to places that grant clearances - so while you might build up some IP you can never actually leave that market because your credentials are too valuable.
Consulting - best though of projects, governance, and on-demand expertise. There are definitely junior resources in play, but the objective is to build on the IP of the consulting firm and to create a external channel for problem solving or delivery that is not dependent on or hampered by internal inertia.
Staff Augmentation - a lot of time this is just billed hourly, and you really are looking at paying a premium for a non-committed spend - if FTEs are "reserved instances" then staff aug contracts are the opposite. You pay a premium for the lack of long-term commitment and to make this look like variable OpEx. my opinion is that this model is over used in most businesses.
Managed Services - longer term commitments to deliver services. Generally the good advice is to contract on "what you want done" rather than the detailed "how you want it done", though that is more philosophical than practical. The expectation is that the service delivery will improve, and that those process improvements, automations, training, and provider IP/Tools will deliver decreasing unit prices for "resource units" over time.
Thinking of consultancies as pure brokers is certainly a mental model you can use, but is not the most nuanced model. I think it tends to be better to acknowledge that there are structural reasons why all of these models are present in organizations and rather to think about how they should be governed.
(disclaimer, my employer is an advisor on how to contract for these kinds of services. My work is not related to contracting, but research about this market)