I'm obviously missing something crucial about either consulting, or the companies that hire consultants and was hoping someone could enlighten me.
Why would a company need to hire a consultant in the first place? why don't they possess enough knowledge about the industry they operate in that they need to ask a consulting firm for advice and if they constantly need consulting on one area of their business or another why not get someone internal who knows what they're doing?
i know dude.
in a related question, why are there so many stars in the sky? why are they even necessary in the first place?
word.
they hire you for 100k and whore you out for 300k. mad bs, yo.
When people have no idea what to do, paying someone to tell you what to do and blaming them if it goes wrong is an option.
Every time I see someone asking these sorts of questions I'm shocked at how people can't actually reason the answers. Do they not teach critical thinking any more, or is it just plain intellectual laziness? If you can't be bothered to think, how about just googling it? Shocker: this is not a eureka moment of a never-before thought of question.
I'll give you some blatant ones - try it yourself if it looks like fun. There are quite a few other reasons why people would hire consultants.
Why not get someone internal? Why do I shell out $$$ to a plumber or electrician when I need one? It's not because it's voodoo, and I'm sure if I set my mind to it I could do a decent job of it. Why does anyone ever employ a specialist? Because despite the high cost, it's actually cheaper than doing it yourself, if you factor in related costs (e.g. the cost of gaining the expertise).
Why don't they possess enough knowledge about the industry they operate in? This question has a lot of false presuppositions. You say it as if it's a single, atomic thing. You either know the automotive industry, or you don't. How about if you know about auto production, but need help with sales, or strategy? Can you really not see how that could happen? Do you really not know of any firms that are good at one thing but not another? For that matter, who says you couldn't benefit from knowledge from other industries?
Optimistic answer: The world/economy is so complex that it makes sense to pay a premium for outsourced talent in certain specialized fields. Rather than pay a team of people to constantly do competitive positioning studies whether you need them or not, for example, hire that same team for a higher rate when you actually need them.
Cynical answer: As Barings said, it's now possible for management/board members/sponsors to outsource almost every process of their strategic decision making to "experts" who will put together a fancy slide deck to use as an ass-cover when things go wrong.
consultants can be extra high-powered analytical capacity for senior executives when those senior executives want to know the answer to a specific, complex problem.
Consultants bring an objective perspective, without all the political baggage associated with actually being part of the organization (eg, consultants can say that the senior VP's pet project is a bad idea, whereas this is tougher for internal stakeholders).
Consultants can bring deep functional expertise and apply that expertise to a specific industry (eg, applying "Lean" to a manufacturing process).
Consultants are better at structuring complex problems than internal teams. So a senior executive can get value simply from the way consultants frame the problem.
Consultants can tap into a global network of experts, basically allowing senior executives to pick the brain of the world's leading experts on an industry.
Simply hiring consultants can signal a senior executive's intent to implement significant changes in the organization.
Those are just a few reasons off the top of my head. Reasons 1 and 2 were the most common reasons for my engagements when I was in consulting.
However, I would also say that many large corporations have developed very strong internal consulting teams staffed by ex-MBB consultants. These groups can definitely bring some of the analytical horsepower consultants can provide. Although, it is unclear that these groups actually steal share from consulting firms (as they focus on implementation and long term projects).
Management normally hire consulting firms to layoff people.
Because half the time the problems you're asked to solve are the result of office politics.
Firms donot have to cover health insurances etc for consultants.
That's true if I hire you directly as an individual consultant, and that's why a lot of companies hire people on a contract basis as "consultants," but it's not really relevant to professional consulting firms. If I hire Accenture, the consultants receive health insurance from their employer (ie Accenture) and the cost of that is baked into Accenture's billing rates.
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