If you've never worked for a big consulting shop it's hard to explain what it can be like. I BILLED 2,800 hours my first (and only) full year, and spent most weeks out of town. They love to take you out for dinner with your consulting coworkers while on engagement, but you quickly realize this is to (a) keep you onsight until 7 or 8pm, (b) prevent you from developing a life outside of the company, and (c) hey, maybe we should head back to the office after dinner for a little bit... It's fun for a while when you're young, single and stupid.
I know that some consulting shops are sweat shops like you describe, but not all are. I worked for one of the major consulting Big4s and my experience couldn't be more different (except for spending most weeks out of town).
I was there for 5 years, and with the exception of one single project that lasted 1.5 months, all of my teams would leave the office no later than 6pm, and not once did I or anyone I ever worked with ever go back to the office later in the night. Once we gathered at the hotel bar after dinner with our laptops to practice a presentation we were giving the next day, but that's it.
It also wasn't difficult at all to develop a life outside of the company, even with the weekly travel. I spent a lot of time with coworkers, yes, but on most of my teams I genuinely enjoyed that time (and even long after leaving I am still close friends with many of them). We had hobbies together (would go to the gym together sometimes, explored different neighborhoods in town, played video games together, watched sports together, etc). If you're the type of person that thinks "work is only for work and therefor I can never be 'friends' with a coworker", then consulting isn't for you, but not everyone is like that.
The work-life balance and the general fun that I had were my favorite parts of consulting. I left because I found that every project I was on was inherently a "this company is full of incompetent morons and so they're hiring a bunch of mediocre consultants to come in and hold everyone's hand", and after several years it just got exhausting to always be the adult in the room.
When I was at a consulting firm in London that I wont name, I was charging them 700GBP a day, and they were charging the end client 1500GBP a day (I saw this on an internal presentation slide I was not supposed to see)
The difference between employee salary and effective hourly rate, and billable rate, is not usually particularly secret, and usually doesn't make any sense first time, or even 20th time one sees it. The billable rate is some outer space number with no meaningful connection to real world. If you stick long enough you'll realize that billable rate is not what consulting company charges for you. It's what they charge for you and the non billable boss, senior partner, salesperson, delivery excellence review people, Admin and hr support, half a dozen people who did the bids and proposal, legal, the first phase of the project company did as loss leader, and then for all those things multiplied by contracts not won. this too is not a particular secret either internally or to the client.
If you go as a independent contractor, you can bill close to that rate yourself, but may find that you can't bill quite that rate as the mandatory middle vendors will take their obligatory cut, you need health insurance and your own expenses and any moment you're not working whether between contracts or vacation is lost money. Still makes sense for some people, less for others. Depends on your expertise, preferences, sales and networking skills, and how good is your accountant. Always better to build reputation and then become small consulting company yourself, billing billable rates and paying salary rates to others.
(This is in the world of consulting. Math may be different in world of independent freelance technical developers)
Your firm was charging just over 2x, but in the US it's not uncommon to see the client billed 3x what the consultant makes. This is especially true if there are subcontractors.
I don't doubt it, for one of the Big Names. I know 3x is common even in smaller shops. I don't doubt that places like Wipro, Infosys and the other big names that work the US H-1B market have much larger markups.
There is also rack rate and discount rate. The rack rate can be insanely high. The discount will take into account several things.
1. How much does the consulting company wants to work with a client? If it is seen as a high profile client or has long term potential then the discount rate will be better.
2. How long will the assignment be? The longer the assignment, the more billable hours for a person and the lesser the company is still paying a full time person when they are not billable.
3. How much is the sales person trying to make a sale? It's the delivery teams' issue to deal with not enough margin to deliver under budget =or just change order the heck out of the client after the sale.
When I was doing consulting in the UK, there were often layers of white label.
Client hires company A, who bill 2.5kGBP.
Company A outsources to Company B at ~1.5kGBP.
Company B outsources to Company C for 700GBP.
Consultant at Company C makes buggery fuck all, and has to unravel the mess of Chinese whispers/obfuscation to work out what the job actually is and who they are meant to be pretending to be that day, whose report template was being used, etc.
it’s not that they want to fail delivery; it’s that any new small agile firm of like 10 people who manages to qualify and deliver in some small project will instantly have so much demand that they will scale from 10 to 100 people in short order until they cannot effectively manage and turn into the the thing they hate. and contracting is low margin after bizdev costs, the economics really aren’t there so you make money by squeezing labor salaries. you can’t raise rates because moral hazard - you’d have immediate incentive to pocket the margin. behold the stable state.
This is not really true at least everywhere. In Europe and especially North Europe smaller (less than 1000 ppl) consultancies are usually the most lax and best paid jobs with best benefits out there and the best ones definitely do raise their rates.
It's just about what kind of clients you want to work with. If you pick any client that comes to your door and never say no then you'll end up in the race to the bottom with these large outsourcing corps.
Picking a consultant is like picking a tradesperson -- the competent ones already have more business than they can service, so they'd be doing you a favor by taking you on, which usually means an introduction from an existing client is needed.
Oh, and also, if you suck as a client, they're going to drop you and never answer your calls again.
raise rates to what? from $260 per hour (USA) to $300? there’s only so much a client can optically tolerate, the proposals are already fine tuned to the same maximum as everyone else. same problem in legal industry, you can’t get the partner bill rate up to $5k/hr (how rude) but you can bill 10 associates to “research” at $500
I don't know where the parent worked, but I expect the rates are 120€-180€ (company billing, not your salary). It's just that most other companies pay smaller salaries as there traditionally was very few tech companies with competitive pay. It's been slowly improving though.
They are not happy to pay for shit, but they are tricked into thinking that they can get same quality from India outsourcing as from actual professional devs/companies. Later they get angry and then they'll go to court. The order is following: 1) Sales people 2) Developer 3) Lawyers
I've seen it repeatedly, how they think you'll get the same quality product outsourced to the cheapest consultancy in India is beyond me.
The business never learn and if it wasn't for experienced DevOps managers intervening they'd still use sweatshop devs that barely speak English on their first gig.
