A consulting firm's model of business may be compared to
staffing, wherein the objective is to lower labour costs for
clients for an intended result, or relative to an intended result or output, in order to charge for a
profit margin for the consulting firm. Clients are looking to procure or purchase external help and assistance. Consulting firms sustain their revenues from a
labour economic point of view as a method for distributing labour, where certain positions, roles or fields of expertise within the
labour market find it more suitable for
contract work, as contrasted to in-house employment, for a few conceivable reasons: • Client needs being incontinuous, or continuous but otherwise volatile in that they may vary from time to time in nature and scope, • A potential scarcity of skilled labour available on the market, • The possibility of offering a higher
work level activity, • The necessity for
licensed labour or other qualified labour for tasks not making up the core task assembly of the client organization, • Looking to get a hold of or utilize of third party
intellectual property, intangible capital or other types of goodwill belonging to the consulting firm. Aside from the economic arguments stated above, consulting also acts as a
corporate services model: • Where internal consulting solutions (at which the client firm acts as a de-facto employer) may run into issues of scope once projects get too large, external consulting firms may be able to provide a better solution for the larger consulting deals on the market, • Risk and compliance audits may be suitable for a consulting contract as a means of safeguarding neutrality, • Consulting comprises the natural service model for large-scale
transformation projects in client enterprises, • Certain service models, such as
financial auditing and
economic consulting, are effectively required to offer their services in the form of consulting agreements due to a lack of industry position outside of the
tertiary sector, • Some clients may decide to hand over entire assemblies of tasks to consulting firms for a period of time - this is akin to outsourcing agreements, however with the exception of a predestined due date which is atypical in outsourcing, • Consulting is also used as a
third party service model as could be seen in for example contract formations of
b2b-deals,
legal consulting and
M&A activity, consequently acting as a source of profit for clients, consulting firms and society as proffered. The consulting business model can be seen as a result of the
knowledge economy, and as a subset of the
knowledge industry. Today it is not rare for consulting firms to offer what may be considered
turnkey solutions to clients.
Knowledge transfer is also a prevalent sales argument for consulting services.
Outsourcing It is common practice for consulting firms to be involved in the sale of
outsourcing services as well. Similarly, outsourcing firms may offer consulting services as a way to help
integrate their services with the client. Many consulting firms offer several service packages as part of their business
portfolio. While consulting services and outsourcing services are compatible, issues arise if the clients are not aware of the differences between the two. From an
ethical standpoint, it is important that clients are aware of what type or types of services they are
procuring, as consulting services are meant to be a complementary service to the client firm, whereas outsourcing effectively aims to
replace parts of the client firm that are imperative to their operational ability. == Types ==