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How to reduce consulting spend?

I was recently asked a case question surprisingly on reducing consulting spend.

Your client is a F500 company in financial services. The client has signed a Master Service Agreement (MSA) with BCG back in 2018. Various lines of business of this client have engaged BCG in last two years and they signed their scope of work with BCG under MSA. The client has come to you and asked how the client can reduce its spend on consulting services? What levers you will analyze and more importantly how? what data you will need to conclude each of the levers?

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Gelöschter Nutzer
am 11. März 2021

Hey, do you want to post your solution here for us to comment? Best way to learn..

If you need a nudge to get started, think about following aspects (and add more from your thinking): 

  • Move to partnership based model i.e have one or two consulting partners do strategy->operations->execution
  • Get procurement involved to build a preferred consultants list i.e 20% consultants cover 80% of the requirements
  • Bring back work in-house
  • Stronger SLA and performance management i.e tie payments to value delivered
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Udayan
Coach
am 11. März 2021
Top rated Case & PEI coach/Multiple real offers/McKinsey EM in New York /12 years recruiting experience

There are many ways they can do this

  • Reduce the scope and renegotiate based on the new scope
  • Reach out to competitors for alternative bids and prices and use that for re-negotiating rates
  • Hire consultants in-house to reduce spend on external vendors
  • Outsource the business units that require most consulting work (if that is a possibility, especially for non core work)
  • Make it difficult for individual teams within the company to hire consultants by creating a complicated approval process

There are many ways to reduce spend, any of the above or other relevant answers would suffice

Udayan

Ian
Coach
am 11. März 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

You could use the classic Project Management Triangle: Cost, Scope, Quality, Time.

Since they want to reduce cost, they'll have to ask for less, accept lower quality, or allow for things to take longer.

https://en.wikipedia.org/wiki/Project_management_triangle#:~:text=Project%20Constraint%20Model-,Overview,produce%20the%20project's%20end%20result.

am 11. März 2021
McKinsey | NASA | top 10 FT MBA professor for consulting interviews | 6+ years of coaching

Hi, 

you can improve your negotiation skills, insource some area covered by consultants, change firms or simply use less consulting services with a 80-20 approach to understand what really matters

Best,
Antonello

Gaurav
Coach
am 15. März 2021
#1 MBB Coach(Placed 750+ in MBBs & 1250+ in Tier2)| The Only 360° coach(Ex-McKinsey+Certified Coach+Active recruiter)

Hey A!

To add to what colleagues already mentioned, it would be great to:

  • Measure the performance of the consulting services
  • Try to use demand management 
  • Take the tail spend into consideration. 

Sounds good? If you have any questions - just reach out!

GB

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