January 6, 2022

Getting at the Big Questions with the “Big 4” - Addressing, Not Accepting, 2022 Rate Card Sticker Shock

Chris White
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The Problem: RunawayFY22 Rate Cards from the Largest Consultancies

Regardless of whether it is the Big 4 or any of the large consulting firms, it’s a painfully Big Bite when it comes to 2022 rate increases across the board for the largest consulting services providers. Is it supply/demand-driven? Yes. Is it inflationary? Somewhat. Is it sustainable? Absolutely not! The early, yet undisputable, Big 4 rate card trend data yields critical warning signs for enterprise buyers who might have given the top consultants a hall pass a year ago but are now not prepared for what’s coming real-time with rate jumps of 30%, 50%, even 60%. Double-digit consulting services rate increases are coming as fast as the calendar turns to 2022, and the Big 4 suppliers have options for whom they work with, just as buyers do. How to craft a win/win strategy that does not leave buyers holding their noses and an empty wallet?

The Business Impact: FOMO on Speed and Quality Places a Steep Premium on Brand

This topic is admittedly a challenging one to solve, but not an impossible one. No one wants to succumb to the implied threat of the B or C quality resource downgrade to save some money, but the conversation can and should be had about value. And that requires the empirical, not the emotional. Too often, there is no conversation, and there is no data. It is a one-sided ask for a new rate sheet and a mechanical update to a buyer’s procurement system from which the rate card dance continues, unabatedly, into full bloom for the following year. Adding to the perceived impact of resource quality downshifting or getting pushed to the back of the virtual buy-side waiting line for IT talent, rate cards are nearly always a once-a-year exercise at best. This is usually about the time the holiday invites and food plans are being worked on, such that the process can and does quickly fly under the leadership radar. Those with big appetites for rate card increases will be pleased with what’s on the menu if nothing else is done to reset the table between now and early 2022.

This is not a CHRO problem, nor a CPO problem, or even a CIO problem. This is a business-impacting problem needing C-Suite sponsorship and alignment. Fast!
Continue to accept 30%+ yearly supplier increases with a smile and a signature, or take common-sense actions to address with “Big 4+” to link their rates to your outcomes

The Solution: Sustainable Approach to Real-Time Global Rate Card Management

The largest enterprise suppliers have inflationary pressures, just as you do. However, they also have sophisticated value-based selling engines and deep insights into your enterprise buying patterns. Can you say the same about your organization’s readiness with insights and alignment in order to compete with the suppliers? While pervasive rate impacts are slated to affect essentially all job and service categories, the impact to highly skilled positions is where the rubber meets the road and need not be left out of a negotiated outcome.  However, informed enterprise buying requires skillful planning, Leadership awareness of the impact, and a sustainable approach to getting the correct data and insights at the right time.  This is not a one-year nor even once-a-year phenomenon; getting in front of Enterprise Extended Workforce rates once and for all’s time has come. Purposeful automation becomes the digital transportation to Digital Transformation.

Key Actions for Rapid Impact: Key Steps to Addressing Runaway Rate Cards

1. Internal Alignment: Pull Stakeholder team together to discuss current process

2. Organize  the Data: From XLS to PDF and even WTFs, build a view of total wallet size

3. Build a Spend Forecast: Best remedy for one-off suboptimal SOWs is overall economy of scale

4. Fixed  Fee, Not Detail Free: 78% of IT SOWs bought with little/no resource unit cost visibility

5. Big 4 have choices, too: Cultivate top partnerships and be strategic, not a chest-pounder

6. 80/20  Rule as a Guide: Declare victory at 80/20 quickly, congratulate team, then move on  

7. Sustainable SOW Buying: Rationalize process/technology for improved cost/risk outcomes

Contact us to learn more about how we've helped customers significantly change the equation with their consulting partners to save money and reduce risk.

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