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Charge out rates decrease?

 
#1 Charge out rates decrease?
04/06/2008 07:02

Link

I get the feeling that over the next few years we'll see a general trend of lower charge out rates (or less than general inflation increase) at least at the lower grades.

I think this is due to an increased acceptance of requiring external consultants on a regular basis but at the same time seeing them as a commodity. There line between different types of consultancies has now also blurred and IT, strategy, and finance consultancies are all going after similar types of work.

What do people think?

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#2 RE: Charge out rates decrease?
04/06/2008 08:14

Chaucer, the author and poet to Link (#1)

Indeed, t'is a great possibility.

Methinks we shalt see many a consulting firm from many a background scramble and chase for all that they might get. Many a self-proclaimed expert shalt rise from the woodwork and offer their wares of all sorts and varieties for a mere bag o coal or a single shiney penny.

Here endeth the lesson.

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#3 RE: Charge out rates decrease?
04/06/2008 21:01

Raef to Chaucer, the author and poet (#2)

There's no such thing as a commodity - especially in a business where people deliver to people. Are you a commodity? Are you Lidl's own brand coffee or Starbucks? Oh, coffee is a commodity isn't it?

Consultancies which are little better than temping agencies may struggle - but there is even a premium for having temp staff rather than employing someone during a recession.

No, you won't see lower charge rates. You might get paid less yourself, and you and some of your colleagues will be sacked. But rates will remain high.

Of course, consultancies stuck in an hourly rate business model may struggle - they fail to understand, communicate, deliver or price for value-add. That's why the rates will stay high (although in some cases lower than they should be) because of this blindness.

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#4 RE: Charge out rates decrease?
04/06/2008 22:35

Q to Raef (#3)

Surely an hourly rate is better than a day rate as the latter means you dont get paid for the overtime?

And ok commodity is a bit of an exaggeration and I didn't mean salaries will become on par with permanent staff but across consultants it will surely not increase as rapidly. Hence the lower salaries and job cuts.

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#5 RE: Charge out rates decrease?
05/06/2008 20:02

rb to Q (#4)

An hourly rate is better than a day rates. Of course, getting kicked in the head once is better than getting kicked in the head twice. What exactly are you saying?

Consultants heal thyself. Take a look at your own business - can't you see this billable hour stuff is ridiculous and has nothing to with delivery to clients or your skills?

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