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Ok, I’ve been asked, and as of next week I will have worked as a consultant in all three different types of arrangements.  I thought it might be a good idea to explain the pros and cons of different consulting positions.

To sum it up, there are three different types of consultants.   The W2 (Or Salaried), The 1099 Direct, or the 1099 Corp-to-Corp.

 In this post, I’ll discuss the first type.

The W2 or “Salaried” Consultant

The W2 consultant (or “Slave”) is one who works for a firm and who gets the full benefits package.  While this can be a good thing, the drawbacks can and usually are many.

Pros

Salary – Having a salary is great during low periods or lulls in work.  Maybe you can get the company to spring for a refresher course or two to keep you marketable, etc. during this time, but it’s nice to know that no matter what your paycheck is coming in. 

Benefits – healthcare being what it is, a family can always depend on the Consulting firm to provide health benefits.  They may be more expensive than a “joe-job” but it’s good to have around.

Cons

Salary – Yes, this is a pro as well as a con.  Salaried employee gets paid a fixed amount per week / two weeks / pay period.  This means that any overtime he works is on him.  Since the firm is usually billing hourly for the consultant’s services, there is a lot of motivation to push consultants into overtime.  Of course, the consultant can say no, but that doesn’t keep you employed for long. 

Non-Compete – The most painful part of any Employer/Employee agreement is the “Non Compete Agreement”  Now in most states it’s largely unenforcable.  An employer can’t keep an employee from working in their field of expertise.  However, most consulting firms will require that you sign one and it will be horribly restrictive. 

I’ve been in the situation with a my first consulting firm, CTS, Inc. (who I have no problem naming as they don’t exist under this name any longer) where I had to move across the country in part because the non-compete I signed specifically said that the agreement was (to paraphrase) “restricted to the metropolitian area where services have been performed”  Well I was a consultant in California, and during that time had worked in Los Angeles, San Diego, Burbank, Phoenix, AZ, and Denver, CO.  I moved to Washington DC.

I still got sued by CTS for breaching the non-compete agreement, and it cost me over $8,000 in legal fees (as I had to defend myself in a Georgia Court) before they blushed and effectively said “Oops, sorry, my bad.” and withdrew their complaint.  They knew they had no case but wanted to make leaving painful, probably as an example to others who might leave.

The same thing has happened with the most recent one I worked for, though in this case, since I went to work for my previous employer (not as a consultant.)

The non-compete is used to bully employees from making positive career moves (which are definately not going to happen as long as a consultant is billable, see my point below.)

Career Path – A Salaried consultant who is consistently billable has no career path.  I say it again – NO CAREER PATH.  There is no motivation to keep the consultant moving forward, because moving a billable resource into a management position makes them increasingly less billable.  Therefore, it’s the people who don’t/can’t cut it as consultants who end up managing the ones who can.  As long as you’re bringing in the cash, you’re career is dead in the water, and of course, as to the above point, it’s not like you can quit and go to another consulting firm for the promotion can you.

Anyway – In my next installment I’ll profile the 1099-Direct, and why this can be one of the best ways to consult.

So tell me something, how much sense does it make to pay anywhere from between $150 and $250 an hour for a consultant to come in and then tie their hands to the ankles by telling them they can’t actually do any of the work.

That’s the situation I find myself in.  The customer, a fairly large company that provides consulting servers, managed hosting, etc, brings me in to help them figure out some SRDF migration issues.

They give me a cube, a phone, and a connection out to the internet so I can get email. 

What I don’t get however is access to ControlCenter, any of the hosts, or any of the Storage arrays.

Today I spent 8 hours on the customer site and because I spent most of my time waiting for everyone else to gather information for me, got about 45 minutes of real work done in that time.

As Forrest Gump says, “stupid is as stupid does.”

Having been an EMC Partner a number of times, I’ve noticed a few things.

EMC obviously doesn’t consider the literal meaning of “Partner” when they bring on Professional Service partners.  They refuse to give them the access to the tools they need to complete their jobs. 

All you have to do is to log into powerlink as a partner after having had employee access to the site to see, there is a *LOT* of material that isn’t there for “externals”

It’s frustrating.  Having spent the last year as a customer I was able to see the difference.

An emc employee comes in with everything they need, if they don’t have it they can get it quickly and easily.

A partner comes in, and when a something comes up, say a peice of software didn’t get shipped with the original order (happens more often than I’d like to admit), what does the partner get to do?

Call the badged emc employee and have them download it for him, because he doesn’t have access to the software he’s supposed to be there installing.

Pity – lot of time wasted time, billable time, waiting for things they should have had in the first place.

You know, corporations (like EMC) must think we’re stupid.

I read in eWeek ( Link ) that EMC is going to kick 1,250 people out on their asses right before the holidays because they failed to make it last quarter.

I guess people are just so much chattle, to be sold off whenever profits need a boost.  What most people (investors) don’t know, is that kicking 1250 people to the curb does absolutly NOTHING to bolster their bottom line.

They won’t lay off sales people, they are the “bread and butter” of the organization, right?  And obviously it won’t be the engineers, they are busy busy designing the new product.

That leaves the lowly professional services people.

I’ve been working with and for EMC (directly and indirectly) for close to seven years now.  I can tell you one thing.  When they lay-off PS people, they will, with a 100% certainty, have to turn to consultants and partners to get the promised work done.  Partner companies cost about 3-5 times as much as internal employees  (probably a bit less when you take benefiits into consideration). 

Eventually, and I can now count 4 times this has happened, they will realize how much money they are spending on partners and consultants and declare a moratorium on partner utilization.  This requires them to hire the people they laid off, usually at higher salaries (because these same people went to work for the partners when they got laid off) and  usually only get the lower quality employees back.

(Sorry EMC, but the partners pay better than you do, by a good sized margin.)

They try to entice people to hire in, and in my case specifically, by telling me what a stable place EMC was and how I would be insulated from the ups and downs of the market.

Apparently not – 1,250 people are going to find out how insulated they really are.

Right before Christmas….

Oh – and by the way.  Some of your customers (me included) take note of how you treat people.  I know I’m shopping around quotes right now that I might have otherwise gone straight to EMC for.

 

“An elephant is a mouse built to government specifications.”  -R.A.Heinlein

As some who spent a lot of time consulting in the federal space, i can say that this was an absolute truism.

If you don’t believe me, look up NMCI.