How to reduce consulting spend?

Case Interview consulting spend Cost reduction cost saving
New answer on Mar 15, 2021
5 Answers
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Anonymous A asked on Mar 11, 2021

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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Adi
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replied on Mar 11, 2021
Accenture, Deloitte | Precision Case Prep | Experienced Interviewer & Career Coach | 15 years professional experience

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
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replied on Mar 11, 2021
Top rated McKinsey Case & PEI coach/Multiple real offers/McKinsey EM in New York /6 years McKinsey 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

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Antonello
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replied on Mar 11, 2021
McKinsey | MBA professor for consulting interviews

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

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Ian
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replied on Mar 11, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep
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Gaurav
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replied on Mar 15, 2021
Ex-Mckinsey|Certified Career Coach |Placed 500+ candidates at MBB & other consultancies

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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Adi gave the best answer

Adi

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Accenture, Deloitte | Precision Case Prep | Experienced Interviewer & Career Coach | 15 years professional experience
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