When budget is short, and schedules are shorter, managers have to be resourceful to get their tasks done within schedule and budget. They have to deal with hiring freezes, layoffs resulting in overworked staff, and many other problems. They look at their departmental budget and often notice that there's an underutilized column, namely consulting. IF they can get their tasks accomplished using consultants, or using outside contractors through an agency, they will do that simply because they don't have to ask for the permission they would require if they tried to hire someone.

The consequence for the consultant is that they are faced with often hostile and uncooperative attitude from the staff. It costs the company quite a bit to hire someone, yet they can bring in an outside contractor or a consultant with much less overhead ... no benefit package, no vacation, often no limit on number of hours ...

They're not always the first to be discharged, simply because layoffs are handled by HR, while consultants, in many cases, are not.

Pay for contract help, i.e. through an agency, is usually quite high from the client's standpoint, but the contract employee seldom sees all of that. What the contract employee sees is a block of work that can be terminated at any time, wherein the employer pays the contract agency a significant amount, yet the employee sees a mere $50-$60 with no benefits unless he's been continuously employed by the contract agency for a considerable period. If he's sick, he earns nothing. If he wants a vacation, that's on him, and he'd best be caught up on his work ...

It's a two-edged sword, I guess you'd say.

For the independent consultant or consulting firm, it looks a bit different. Clients come to you with their requirements and you have to exhort them to create a testable Request for Proposal. Some of them will know that in advance, and will simple send you an RFP. You then write a proposal. That takes time ... time that's not billable. You sit in negotiating sessions for hours, trying to pin down exactly what you'll have to do in order to get your money. Eventually there's contract, and now you have to do what's in the contract. If you've allowed things to remain murky, well, there'll be lots more non-billable hours spent. If you've failed to create a test specification that the client will sign, and verify as an acceptance criterion, well, you'll pay ... in terms of time and materials, to get your money. Ultimately, you'll have spent about 12,500 hours on a 5000-billable-hour job. You'd best know that going in.

RE