The city is paying some 230 "consultants" an average salary of $400,000 a year for a computer project that is seven years behind schedule and vastly over budget.
This is misleading. The figures in the article are based on the hourly rates charged by the contractor that employs these consultants, not their take home salaries.
This is noted only later in the article:
The actual amounts individual SAIC employees took home are most likely lower than their stated rates, since computer firms typically take a cut of each consultant's charges. Nonetheless, these are breathtaking numbers.
This too is misleading because it suggests that the hourly rate is comparable to the individuals' salaries except for a "cut". In reality, this "cut" is likely 50 percent or more. 60-70% would not be unusual.
This is typical of newspaper coverage of "scandalous" IT contractor pay. The project may indeed be a disaster, but those consultants are not making nearly the money that the article suggests.
As you ascend the ranks of consulting and get to the top 3 shops (McK, BCG, Bain) it drops down to 1/20th to 1/30th. That is once you take into account the disparity between number of hours billed and the number actually spent doing the work.
I don't know the figure now but ten years ago you were expected to bring in at least ten million in business annually to be considered for partner at Andersen Consulting.
And how is this justified, does the companies brand and support structure really outpace the value that consultant is creating by a factor of 20 or 30?
I'm not sure what he means here - the higher up you get, the better the ratio. For partners it gets inverted - they are making more than their billing rates because they're getting a cut of everyone below them's billing too.
When you buy consulting, you're buying a commodity. The premium is meant to insure you against natural variation, key people quitting, and so forth. Joe Accenture is meant to be interchangeable with any other Accenture consultant. A lot of the overhead is the extremely rigid, prescriptive methodologies that are supposed to make this possible. For multi-year projects, enough budget-holders believe that this is worthwhile for the entire Big Consulting industry to exist.
That type of strategy consulting is completely different from IT consulting. You don't "ascend" from doing IT work at Accenture or IBM into doing management consulting at MBB.
This is misleading. The figures in the article are based on the hourly rates charged by the contractor that employs these consultants, not their take home salaries.
This is noted only later in the article:
The actual amounts individual SAIC employees took home are most likely lower than their stated rates, since computer firms typically take a cut of each consultant's charges. Nonetheless, these are breathtaking numbers.
This too is misleading because it suggests that the hourly rate is comparable to the individuals' salaries except for a "cut". In reality, this "cut" is likely 50 percent or more. 60-70% would not be unusual.
This is typical of newspaper coverage of "scandalous" IT contractor pay. The project may indeed be a disaster, but those consultants are not making nearly the money that the article suggests.