All entries for Friday 30 September 2005

September 30, 2005

Cautionary tale

Writing about web page http://www.kuro5hin.org/story/2005/9/27/95759/4240

Just read a scary story about the power of big consultancy firms to make huge amounts of money from rich and ignorant companies/managers.


At this point, IBM Global Services consultants flooded our conference rooms. Overnight, we ended up with twenty consultants. When I asked how much these consultants were costing us, I was told $250/hr. This information proved to be incorrect – they were actually charging us $325/hr.

What were we getting for $325/hr? People hired off of Monster and Careerbuilder. Seriously.

Management was under the assumption that we would be getting real implementation experts from IBM. In fact, we were getting employees from a subcontractor. We paid IBM $325/hr, and they paid their subcontractor about $165/hr. The subcontractor then paid its people salaries of $90,000 to $110,000/yr, the market average, which equates to about $75/hr when benefits are included. We were paying a markup of about 333%.

It's a depressing tale…but not if you were one of the consultants.


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