As of January, 2013 the U.S. unemployment rate stood at 7.8% (Bureau of Labor Statistics). That’s certainly lower than its peak of 10% in October of 2009, but there is still a lot of room for improvement.

But the consulting industry is in the intense pursuit of qualified individuals.  One has to be careful, however, in reading statistics by occupation.  “Consultant” is the title many use to fill unemployment gaps in their resume.  Calling one’s self a consultant doesn’t necessarily make them one.

But the demand for legitimate consultants is high. 

Why is consulting hot? For a number of reasons.  The most prominent ones being:

Memories of layoffs.  Beginning around 2008, many businesses saw their revenue numbers take a nosedive.  In response, they started slashing their staffs.   Many of them didn’t cut enough the first time and had a second, third, or more rounds of layoffs.  Within many organizations, each wave was preceded by rumors resulting in morale-destroying jitters throughout the company.  After each wave, there were company meetings in which management assured the survivors that no further layoffs were planned.  Those vows were rarely believed.
As a result, companies are hesitant to hire full-time employees.  Why should a company make the long-term commitment to hiring full-time employees in a still uncertain economy and risk damaging morale further if they have to turn around and start laying people off again?

Flexibility. The cost of hiring (paying recruiters, time spent interviewing and training, not to mention the overhead of benefits) is higher than ever.   The cost of laying people off is also high.  If a company needs a skill – say a marketing expert – they can contract with a consultant for a set period of time.  The consultant comes in, provides her service and leaves when the work is done.  No severance. No morale issues associated with the layoff.  The consultant’s hourly billing rate may be higher than they would have paid a full-time employee, but the cost is lower in the long run. 

Temporary buildup of staff. If the company faces a new law for which they need to be in compliance,  a programming consultant can be contracted to supplement their staff until the work is done, without interrupting their existing staff members’ work log.  Should they have an entire project to perform, they can hire a consulting firm to provide the planning, requirements gathering, development, project management, testing and deployment of the project.  Consulting staff can be ramped up gradually as the project gets into full swing, ramp them down as the project goes live, and they can swap out individual consultants based on the need for a certain expertise.

Immediate recovery is not certain. While there have been signs of recovery over the past few years (The Dow Jones Industrial Average has increased over 106% since March of 2009 and home values in many areas have been slowly inching up), recovery has been slow and unemployment remains high.

Many companies continue to put off business decisions to expand until they are more certain that happy days are here again.  Even as they decide to expand, one thing they’ve learned from the past five years is that, while they need a core team of employees for critical knowledge based work.  They can supplement that core team with consultants that have specialized knowledge and skills, giving them the flexibility to swap out those skills when needed.

As always, I welcome your comments and criticisms. 

About the author: Lew Sauder is the author of Consulting 101: 101 Tips For Success in Consulting.  He has been a consultant with top-tier and boutique consulting firms for seventeen years.  He is currently a Senior Project Manager at Geneca.  Lew can be reached at Lew@Consulting101Book.com.