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.


- 2 comments by 1 or more people Not publicly viewable

  1. Not really – seems from me that they were cheated too. It's really the middlemen who were profiting, for doing pretty much nothing.

    30 Sep 2005, 15:23

  2. You're right of course…the whole system is pretty messed up, but really the problem is with the companies that are willing to throw this kind of money away and so let these crooks get away with charging that kind of money.

    30 Sep 2005, 16:50


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