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#472: Competing With Insourced Consulting Practices

Posted By Mark Haas CMC FIMC, Tuesday, January 4, 2011
Updated: Tuesday, January 4, 2011
This goes in cycles, but it seems that we are in a phase of companies shifting from external consultants to building their own consulting divisions internally. How can external consultants compete with that?

Competition with an internal consultant is no different than it would be with any other source of management advice. If your value to the client is greater than that of alternatives, then you will likely be invited to serve that client.

First, consider why companies are shifting to internal consultants. Most often it is perceived to be a savings in costs, specifically the hourly rate. Although on an activity based cost basis (including facilities, training, overhead, backup staffing, etc.) the costs may appear to be close, the client often does not see it that way.

Second, consider the environment in which insourcing companies find themselves. This is often both a cash preserving and cultural issue, meaning that managers prefer to not spend budget outside the company at the same time they may be laying off staff or cutting salaries. Better to retask current staff, even if they may not have all the expertise an external consultant might bring.

Tip: The solution is to do more research than normal about the client's consultant selection rubric. Is this insourcing a temporary issue driven by the CFO, a culture issue driven by the HR Director, or a strategic move by the CEO? Remember, when everyone is changing how they use consultants, this brings uncertainty and risk to all. Don't give up when the client says they have decided to insource consulting. Help your prospective client clarify the issues and true costs (including opportunity costs) of retasking a valued staff member to replace outside expertise.

© 2011 Institute of Management Consultants USA

Tags:  client relations  client service  prospect  sales  trends  your consulting practice 

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