Boutique consultancies – the real alternative to hiring staff or contractors

Does your business need to deliver IT change and programmes/projects?

Are you looking for a better alternative to employing your own staff or hiring day-rate contractors via agencies?

Are you frustrated with spending excessive time trying to find the perfect hire and the long lead in times?

Are the costs with your current provider spiralling out of control?

If so, you’re in luck. Read on. This article is for you and we hope it will help you understand why there is a better alternative; use a boutique consultancy.

Before we talk about what a boutique consultancy is and what it can do for you, let’s quickly address a couple of taboo topics that most large private businesses will be thinking about right now: IR35 and the current Coronavirus pandemic.

How does IR35 impact me?
We’re not going to go in to too much detail in this post about IR35 however we need to be clear before we move on what IR35 is and is not and who it impacts.

IR35 is essentially about ensuring that external temporary resources (off-payroll workers) who are doing the same role as an employee are taxed at similar rates to those employees.

IR35 relates to workers, those fulfilling roles. HMRC defines a ‘worker’ as “an individual personally providing their services”.

IR35 does not apply to true B2B engagements.

As an example, if a large business hires a Project Manager, Business Analyst, Architect and Developer, all as day-rate contractors via an agency, to deliver a project, then the business will have to make IR35 status determinations on those temporary workers. However, if you outsource your project delivery to a ‘Service Provider’, no matter how large or small that third party business is, then these engagements are outside of any forthcoming IR35 legislation.

There has been plenty of discussion recently about how businesses should best manage the forthcoming IR35 changes due to be implemented in April 2021. Needless to say, there are businesses out there (large consultancies, business advisors, agencies, etc) trying to keep the status-quo and whose business model is based upon businesses continuing to use contractors.

Don’t be fooled or misinformed, businesses can safely outsource their projects to ‘service providers’ without being caught up in the IR35 nightmare.

Conserving cash through the pandemic
The Coronavirus pandemic has brought home to businesses and individuals the need to be scrupulous with their spending and to preserve cashflow. With businesses suffering a fall in revenue, loss of sales, potentially more months of uncertainty, yet still saddled with large committed costs, we understand that something has to give.

We recognise that businesses are nervous about investing in any long-term change or spending any money unnecessarily, however you inevitably need to spend a little money to save a lot of money.

For example, making redundancies, outsourcing activity, moving to remote working or digitalisation all come with associated costs to make these changes happen. Get them right and you should be able to reap the long-term benefits.

To maximise cashflow or increase profits, you need a very clear strategy and plan. You need to execute efficiently and effectively maintaining strong controls on spend and deliverables.

We still see businesses spending considerable sums of money with large consultancies or wasting money on retaining expensive day-rate contractors unnecessarily; afraid to let go of a solid extra pair of hands.

We’ve recently helped a multi-national insurance broker save £m’s on their IT run costs through our diligent engagement. They literally got over £150 in savings for every £1 they spend with us.

A viable alternative
We see a growing demand for businesses of all sizes to turn to specialist businesses to help them deliver and this is where we see an increase in the use of ‘boutique’ consultancies.

By boutique consultancies, we specifically mean those smaller, more agile businesses that offer a real alternative to relying on the larger consultancy firms or agencies supplying temporary workers (contractors).

What are benefits of using a boutique consultancy?
We believe that there are plenty of reasons for choosing a consultancy over employees or contractors. Here are 6 top factors that spring to mind for us. Let us know if you have others.

1. No need to worry about IR35 assessments – outsourcing your project delivery to a boutique consultancy (service provider) transfers the risk and need for IR35 status determinations from the business to the consultancy. The consultancy takes on the responsibility for determining the employment status of its workers, not you as the end client. Your business can rest assured that it has met its legal obligations in engaging a consultancy (service provider) to deliver on a specific engagement

2. Bespoke ‘Statement of Works’ put in place to deliver every project – consultancies focus on value and return on your investment. Every engagement is the life blood for a smaller consultancy and they will deliver; rest assured of that. With fixed delivery costs, the consultancy takes care of everything that is required from scoping, planning, delivering and transitioning to in-house or external support functions post completion. The Statement of Works and Consultancy Agreements put in place ensure that a client understand how they are working with the Consultancy (acting as a Service Provider)

3. Rapid engagement timeframe – we all know that hiring the right employees or sourcing good contractors via agencies that can take months of lead in time. From advertising roles, sourcing, interviewing, making offers and waiting for workers’ notice periods, businesses can wait weeks if not months to get someone onboard. However, businesses can swiftly engage with consultancies and be up and running within days. When time is against you, a consultancy gives you a superior time to get a team working on your change

4. Expertise ready to hit the ground running – all consultancy workers are experienced, qualified and highly efficient. The consultancy matches the right skilled worker to the assignment from their talent pool. If you have experience of using Big-4 consultancies then you will be too aware that they typically put their strongest players on a project to win the business but then slowly swap them out for more junior staff. Boutique consultancies don’t do that; they maintain the specialists to see through the engagement

5. Bandwidth for any size project – whether you just need a hybrid PM/BA for a quick initiative or you need a large team to manage the delivery of a new solution, a consultancy is there for you. Boutique consultancies have access to the best small businesses and freelancers / contractors and can scale at pace

6. No large overheads – large consultancies, recruiters and agencies have large overheads that they need to recover. Ultimately, the businesses who engage with these firms pay the price with at least a 20% baked in to the price you pay just for the recruiter/agency overheads. These excessive costs can be avoided by using nimble boutique consultancies. By keeping core costs down and only putting in place necessary resource, boutique consultancies keep the costs down for you

There are advantages and disadvantages to using any type of business to provide services. Ultimately, businesses will need to assess their ways of working, budgets and risk appetite. There is no one size fits all approach and clients may well end up with a blended model that makes use of employees, contractors and service providers.

If you would like more information, we would be delighted to discuss further with you how boutique consultancies can help you deliver your changes.

Written by Alec Wright, Founder and Director of AJWright Consulting. Alec has over 15 years leading complex IT change and working with large businesses, recruiters and agencies, both as a client and provider.