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Charles Burleigh, a fellow Sales Performance Compensation consultant, data integration expert and blogger, wrote an interesting post about consulting rates.
In his post, Burleigh asks an interesting question: should a senior consultant drop his rate in order to remain engaged on a project? He notes that recent Callidus TrueComp positions being advertised only fetch around $40-$50; less than half the “acceptable” rate. He attributes this drop to less experienced consultants willing to take on these roles at lower rates, and to clients that may have unrealistic expectations.
I think there are several forces at play creating this situation:
Consulting rates are influenced by supply and demand. Right now, there is a lot of supply (many consultants looking for a job) and not much demand (projects are delayed or even canceled).
Sales Performance Management Vendors also try to compete more aggressively and seem more willing to negotiate their professional services rates.
SPM Vendors are also more focused on the benefits of recurring revenues from their ‘on-demand’ offerings than on the comparatively low impact on-time professional services fees.
With the recession, companies are on a tight budget. They probably realize that there is a risk that trying to find an inexpensive consultant might result in finding an inexperienced consultant, but sometimes there are just no other options.
Companies might also realize that there are many very experienced resources looking for a contract, and that they might be able to find such a consultant with a low-ball offer.
I don’t have data to confirm this, but I think that this is a trend for the entire IT professional services industry
Should senior consultants accept lower paying contracts? There may not be other options. Keeping your skill set up to date and getting more relevant experience during the market downturn (even at lower rates) could make a difference in getting a more lucrative contract once the market recovers.
This being said, companies should be very careful to choose consultants or consulting companies with the the right experience, and not settle with a junior consultant only to save a few bucks. After all, you often get what you pay for. But keeping this in mind, for the reasons I have outlined above, now might be a good time to kick off an SPM project and obtain ‘better-than-usual’ rates.
In the meantime, an industry-wide consulting rate drop might be just what is required to generate more demand, to help the sales performance management industry to prosper, and in turn cause the consulting rates to climb back.
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Today I came across a web forum called “Ask Jon!” by OpenSymmetry. It’s a great knowledge exchange platform where anyone can submit questions and answers.
Most posts are currently related to Callidus TrueComp, but there are new categories to discuss solutions by many other SPM vendors such as nGenera, Oracle, Practique & Merced, Sungard, Varicent, Xactly, etc.
Such forums are only as good as the content being posted, so I encourage everyone to visit and contribute in making this forum a one-stop shop for Sales Performance related information.
Of course my blog is still THE number one source of SPM information, but I may not [always] be able to answer all your questions, about every product on the market.
Don’t wait, go have a look and sign-up.
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