From ‘Hourly Billing’ to ‘Value Creation’: The Future of Consultancy

In a world where knowledge is king and flexibility is the key to success, consulting firms are navigating a sea of change to maintain their relevance and value to Clients. Traditionally, many of these firms have relied on a secondment model, known as ‘hourly billing’, where consultants are hired on a long-term assignment basis.

However, in an era where the market is becoming increasingly saturated, companies like Covalens are looking for innovative ways to differentiate themselves. Developing programs in co-creation with Clients and working in an outcome-based manner are strategies that promise to deliver more value. Both models have advantages and disadvantages. Let us briefly list some of them.

The Secondment Model: ‘Hourly Billing’

Pro’s

Flexibility for the Client: Secondment offers Clients the flexibility to hire expertise at short notice for specific projects without the long-term commitments of a permanent position.

Scalability: It is easy to scale up or down the number of consultants according to the needs of the project, ensuring efficient deployment of resources.

Expertise on Demand: Clients have access to a wide range of specialist knowledge and experience exactly when needed.

Con’s

Less Involvement: Consultants can sometimes feel less involved in the Client’s long-term goals, as their focus is often on the short-term results of the project.

Higher Long-Term Costs: Although flexible, the cost of hiring consultants on an hourly basis can add up significantly, especially for long-term projects.

Knowledge Loss: When a secondment ends, the consultant leaves with valuable knowledge and insights that could otherwise have been retained within the organization.

 

The Program or Service Model: ‘Outcome-Based’

Pro’s

Deeper Partnership: Developing programs or services with Clients in ‘co-creation’ implies a deeper connection and understanding of company culture and goals, leading to more tailored and effective solutions.

Focused on Results: This model rewards the achievement of specific goals and results, as opposed to simply completing hours, ensuring a stronger focus on what really matters to the Customer.

Long-Term Value Creation: By focusing on outcome-based results, the consulting partner becomes an integral part of the Client’s success, leading to long-term value creation and retention.

Con’s

Complex Pricing: Pricing based on outcomes can be complex, as clearly defining measurable results can be challenging.

Risk to (the company of) the Consultant: Bearing more responsibility for outcomes also means taking on a greater share of risk, which is not always desirable for all consulting companies.

Investment in Relationship: Building a successful co-creation environment requires an initial investment in time and resources to develop a deeper relationship and understanding of the Client.

Conclusion

Both Service models have advantages and disadvantages, and creative blends are undoubtedly possible. In the future, Clients will have to choose the most optimal sourcing strategy more thoughtfully, in line with their operational objectives and budgetary possibilities. Ideally, this is done in close consultation with the relevant service partners with whom they have already built up a good basis of trust.

Covalens

In the transition from secondment services to developing program in cooperation with Customers, Covalens is positioning itself as a progressive player in the consultancy market. We try to play a (pro-)active, ‘challenger’ role to properly align the Client’s sourcing strategy with its long-term goals. By placing more emphasis on long-term value and outcome-based results, Covalens is not only responding to the growing demand for customization and depth, but also building lasting relationships beyond the traditional models.

The challenges of this shift cannot be underestimated, but we also believe that the potential benefits for both clients and consulting firms are significant and imply a promising future for the industry.

If you want to know more about the role that Covalens could play to help you make the transition to an outcome based approach, please do not hesitate to get in touch with Steve Dierckens: steve.dierckens@cronos.be, +32-478/38.12.71.