Consultant or Contractor?

The growing trend in the employment world is toward consulting.  This is driven by a number of factors.  The two most notable trends are first, as hiring organizations see slow tepid growth, they have begun to see a need for additional staff, but are hesitant to hire full-time employees.  The pain and cost of massive layoffs a few years ago still has a bad taste in the mouths of hiring managers.  They’re once bitten and twice shy about making that commitment to more full-time employees.  They would rather work with temporary consultants where they can bring them on board with specific skills for a project.  Then, when the project is done, they can bring in another set of consultants with another set of skills for the next project.

Is everyone a consultant?

The second reason consulting is as popular as it is today is due to the unemployment rate.  As of this writing it stands at 7.7%.  There are many individuals out there that have been out of work for months and years.

A gaping valley of unemployment on one’s resume never looks good.  One way people get around that is to state that they were an “Independent Consultant”.  They may not have had any clients, but they did have business cards.

But let’s assume that when they went independent they had a few gigs with paying clients.  Does that make them a consultant or simply a vendor, a contractor that performs tasks for a client?

So are you a consultant or contractor?

A consultant answers questions for a client and helps them resolve the issues that those questions bring up.  A contractor fills in gaps by performing tasks under the client’s direction.

A consultant strives to become a trusted advisor to the client, someone the client consistently goes to when they need help with difficult decisions.  A contractor must sell his services to the client after every contract has been finished.

A consultant differentiates himself with the client.  The client looks to the consultant as a premium brand, worthy of paying a premium rate.  A contractor is a commodity and competes with similar contractors based on price.

See my related post: Is that an Employee or a Consultant?

Consultants often start out as contractors.  It’s a chance for them to get a foot in the door and establish a reputation for quality and trustworthiness.  Gradually, they begin developing a relationship with the decision makers at the client.  They talk to the client as an equal, pushing back on decisions and making the client think about whether they are making the right decisions.

Most importantly, a consultant doesn’t make recommendations based on how it will affect their own billable hours.  A consultant’s advice has the client’s best interests in mind at all times.  It may not result in additional business in the short run.  But if a consultant gets to the point where the client trusts their advice and relies on the consultant, billable hours won’t be a problem in the long run.

Are you a consultant or contractor?

If you would like to learn more about working in consulting, get Lew’s book Consulting 101: 101 Tips for Success in Consulting at Amazon.com

As always, I welcome your comments and criticisms.