What do you look for in a consulting partner?

Offshore Work, Onshore Rates

Over the past 15 years, the big consultancies have shifted much of their operations to cheaper, offshore locations, typically India, the Philippines, and Eastern Europe. For prescribed work like accounting, this has worked well for larger firms, getting the bulk of the work done offshore, then reviewed by senior staff onshore.

IT, however, is a little different. The DevOps push to more frequent releases has meant that these firms have struggled, as their model simply does not work, and they struggle as the middlemen between offshore teams and clients.

The impact of Covid-19

A recent approach to offset their QA issues has been temporarily sending Australian project resources to run the offshore teams or bringing cheaper offshore resources into Australia. Whilst this approach has worked, the Australian government’s hard border lockdown due to COVID-19 has blown this approach out of the water, leaving Tier 1 firms back where they started.

A recent AFR article (Travel ban keeps Accenture consultants out of Australia) draws attention to this issue. Without the ability to bring in their offshore “bench” of consultants, the big firms are now resorting to massive increases in wage costs to attract onshore talent. These costs are ultimately passed on to you.

Why not run remotely?

Many IT firms have developed an offshore working model, so why are the big players struggling with it? Simply put, they find it far more engaging and profitable to be embedded in the client site, and historically they have always preferred this approach. Unfortunately, the pandemic has hit this model also, since most companies have most staff working remotely. Simply put, more prominent firms have been caught out since their approach has always been an onsite one to ensure project effort and financials are unquestioned. I’d argue that a better approach these days is to shift your organisation’s spending to organisations with demonstratable examples of work performed offshore and with personnel on the ground in offshore markets.

Buying Innovation

For the past 15 years, the larger consultancies have been driving their financials, not investing in innovation. Their new approach is to buy market share and capabilities through swallowing up innovative technology and digital businesses. In the past 12 months, Accenture has bought over 40 organisations, Deloitte over 20, and Capgemini has shelled out over $250 million just purchasing market share in Australia with their purchases of RXP, Empired and Acclimation.

There is certainly nothing wrong with acquiring capabilities when it is faster to buy than building. However, the price of these purchases is ultimately paid by you as the consumer of services. Additionally, it is questionable whether the real value in these firms (the consultants themselves) stick around for the long haul.

Premium Prices, Questionable Value

The days of knowing what you get for your money are long gone. By their admission, the big consultancies are lowering their standards for hiring, and recruiting those who did not go to university or staff from other markets. While a diversity of thought and career changes should be applauded, these firms’ rates are still very high. You’re paying top dollar; the talent should match. Compared to offshore, it just doesn’t make sense. Offshore resources are usually university-trained, industry certified and ready to add value for a fraction of the cost.

Conclusion

For the reasons outlined above and many more, there’s little surprise that many organisations are now turning to trusted digital partners to shift their workload offshore. The pandemic has proven that you can manage a project over zoom, so why pay Australian rates when the processes of your project are no different onshore or off? To understand how offshore models add value, contact us today.