The freelance consulting revolution is in full swing, spearheaded by online platforms that are disrupting the traditional advisory model.
Digital marketplaces for consultancy work such as HourlyNerd and Skillbridge have emerged over the past several years alongside huge numbers of independent consultants who are challenging established firms.
Rob Biederman, co-founder and chief executive of HourlyNerd, and a Harvard MBA, says these ventures are ushering in a new era of how consultancy work gets done.
“People are no longer constrained to hiring individuals who are in their immediate vicinity,” he says. Freelance consultants hone their skills while earning fees, often on the side of study. Businesses benefit from projects being completed without dedicating the resources such as time and money that a big firm might incur.
“Consulting firms have a lot of overhead fees and consultants make significantly less than what the price of the project is at traditional firms,” Rob says.
The freelance consulting market leaders — MBA & Co, Skillbridge and HourlyNerd — have amassed tens of thousands of consultants, according to BusinessBecause estimates. The vast majority have MBA degrees. “The consultancy route provides MBA graduates a degree of autonomy and a great deal of variety,” says Sotirios Paroutis, assistant dean at Warwick Business School. “Very quickly they can develop links with blue-chip companies that look impressive on their CV.”
The matchmaking of talent with opportunity online captures but a fraction of the global workforce. Yet McKinsey & Company, the consultancy firm, estimates that online talent platforms could boost global GDP by $2.7 trillion, or 2%, by 2025, by improving productivity and spurring employment. 200 million inactive or part time workers could gain additional hours through freelance platforms.
“As demand for talent picks up, the balance of power in business is rapidly shifting from the employer to the employee,” says Josh Bersin, principal and founder of Bersin by Deloitte, the professional services firm.
Nearly half of respondents to a recent Deloitte human resources survey said their need for contingent workers will keep growing over the next three to five years.
The connecting theme is technology. “We made the difficult and expensive choice to invest in technology,” says HourlyNerd’s Rob. The market is increasingly competitive but he believes this sets HourlyNerd apart. “We feel strongly that our technology is superior to current options on the market,” he says. The platform has 11,000 consultants, 95% of whom are MBAs. The business is backed by GE Ventures and Greylock Partners, the Silicon Valley venture capital group.
Marc Wells, principal learning technologist at Imperial College Business School, says that remote working will continue to increase, however he can’t yet envisage it replacing office based work entirely.
Nonetheless, working virtually or remotely offers a number of advantages. “Organizations benefit from reduced travel costs, and working remotely can be a cheaper alternative to investing in office space,” Marc says.
Companies can use online talent platforms not only to identify and recruit candidates, but also to improve their productivity once they start work. McKinsey calculates that the adoption of these platforms could increase the output of businesses by 9%, and reduce human resources costs by 7%.
Countries with persistently high unemployment rates such as Greece, Spain and South Africa could benefit most.
Bhive is an online marketplace that connects family owned firms in developing markets such as Latin America with MBA consultants. “They face unique problems,” says Alexander Afanasyev, bhive CFO and co-founder. Bhive has so far signed up 70 consultants from top business schools including Stanford, Columbia, INSEAD and IESE.
Alexander, who has an MBA from IE Business School, says businesses in the LATAM region say they are “sick of being treated like leftovers” by big firms. “We stripped consulting of all its expensive accessories and focused on solving the clients’ problems, as cheaply and quickly as possible,” he says.
Advanced economies like the US will realize significant gains too because of the fluidity of its job market. McKinsey estimates that 230 million people could find new jobs more quickly with online platforms. US census data revealed the market for individual business consultants was worth $40 billion in 2013.
“The self-employment route can provide students a way into a new sector, and a valuable opportunity to develop new knowledge, skills and experience,” says Karen Siegfried, MBA executive director at Cambridge Judge Business School. Approximately 30% of Judge students completed freelance consulting work, including for BT, Google, Paypal, Twitter and Vodafone. “It can be a ‘win-win’ situation for both parties,” Karen says.
At Warwick, MBA students have delivered freelance consulting work to Virgin Media, IBM and PepsiCo, according to Sotirios.
Freelance consulting platforms are geared for growth — MBA & Company, for example, has raised $3 million in funding from investors including MMC Ventures — but the untapped opportunity may be big data.
Raj Jeyakumar, Skillbridge chief executive, and Wharton MBA, says the company is focused on building a data-centric marketplace to match users with businesses more effectively. This represents a divergence from the rating systems that Skillbridge’s competitors use.
There is an enormous opportunity to harness data in online platforms to produce insights into demand for specific skills — and the career outcomes associated with educational institutes, McKinsey says. Sites like LinkedIn and Monster.com are already muscling in.
“HR and people analytics has the potential to transform the way we hire, develop, and manage our people,” says Jason Geller, managing director for Deloitte’s US human capital practice. “Leading organizations are already using talent analytics to understand what motivates employees and what makes them stay or leave.”