One on One with MBO Partners’ Gene Zaino

In recent years, the so-called “gig economy” has permeated massive industries from transportation to travel to finance. Now it’s reached the consulting profession in a big way as firms are looking beyond their roster of full-time employees and tapping into pools of contract or project-based talent. This new breed of independent consultants report greater health and happiness, more overall job satisfaction, and increased flexibility, according to MBO Partners CEO Gene Zaino. We caught up with Zaino to discuss the rise of the independent consultant and the effect it’s having on the profession.

Consulting: What’s the biggest factor that has given rise to the so-called gig economy?

Zaino: The biggest one is probably technology, which has made it easier for people to work when they want, where they want, and also has made it easier for marketplaces to be assembled that enable projects to find people and people to find projects. Another is the fact that our economy has become much more volatile and agile. That’s driven by economic changes, most recently the big recession. But with global competition and startups, and people looking over their shoulders to what’s happening next, things changing so fast makes it much more desirable for companies to buy talent on a more just-in-time basis. When things are moving so fast it’s much more convenient if you can find and acquire the service and result you want on a more project basis. Employment is a long-term decision, using contract workers is an easier, quicker decision and you’re not making that long-term commitment, you can just buy what you want when you want it. 

Consulting: What is the impact on the consulting industry?

Zaino: A lot of technologies when they hit an industry people think it’s going to destroy or change the industry. It certainly changes it, but I think what the consulting industry is finding is that things are becoming more competitive, more efficient, and that pricing is more transparent. Any kind of gatekeeper is being challenged, whether you’re in the travel industry, the financial industry, and of course now even in the human capital consulting and staffing industry. What we’re seeing is consulting firms are building their own communities of contract talent, independent consultants, freelancers that they can maintain without having to keep them on the bench but they can keep them in communities with specializations and tap into them when they need them. That’s making their utilization higher because they don’t have to pay for the downtime. It’s become a tool. For the individuals it’s actually a benefit because they feel they can work on the kinds of projects they want to work on across multiple consulting firms. We’re seeing the whole consulting industry rely very much on a wider segment of their workforce being contingent. There will always be their core, full-time people, but with things changing, just like traditional companies need to hire contractors, consulting firms need to tap into a more fluid workforce. The smart consulting firms are building those contract-based workforces, curating them in different areas of expertise and then dipping into them when they need to. It’s very much a strategic initiative for these firms.

Consulting: Does this hold true for boutiques and multi-hundred-thousand employee firms?

Zaino: Yes. We see consulting firms that have a handful of full-time employees and 50 independent contractors. Then we see the biggest of the big building online branded marketplaces to attract tens of thousands of these independent consultants and contractors to become part of their community so they can tap into them across the firm and across the world.

Consulting: What advantages or disadvantages do independent consultants have over full-time ones?

Zaino: The disadvantage obviously is they don’t have that full-time permanent type of work. But nowadays, quite honestly, nothing is permanent, nothing is guaranteed, that’s one of the stress points. But the benefit is that once they know how to do this, they are totally self-sufficient, they’re also self-driven to do the types of things they want to do because they’re comfortable with marketing themselves, they’re comfortable with having a diverse income stream. We’re seeing most of these consultants generally have about a dozen clients to work with, whether they’re consulting firms or actual companies. They’ll build relationships with those dozen or so clients that if any one of them has an economic problem where the client cant do the work with them anymore they lose one small fraction of their income stream that they can replace. They’re actually feeling more secure than full time workers that are in an industry where there’s lots of change, whether it’s an industry going through disintermediation or disruption or going through acquisitions where there are sudden changes or layoffs.

Consulting: Are there challenges establishing credibility for young independent consultants?

Zaino: What we find is the most successful independent consultants have been doing consulting work for nine years or more. It kind of makes sense to me because you need to establish enough credibility; you generally establish a network of people you’ve done business with who you’ll go to first. If you’re doing real consulting work where your projects are north of $10,000 an engagement, you’re probably going to do that with someone that knows you already, someone who has worked with you or is a strong referral. If you’re going to do traditional consulting work, and we’re seeing average engagements of about $30,000, those are engagements for which you have to have established some kind of reputation and relationship.