Re-inventing public sector consulting

The fall in public sector expenditure on consultants in the UK since June’s election has been steeper and sharper than anyone expected. And it’s not stopping there: two thirds of senior public sector managers expect it to continue falling over the next year, our research has found.

But what should really be giving consulting firms pause for thought is the extent to which civil servants want to work differently with the private sector in the future. Only a quarter expect consultants to play a significant role, compared to three-quarters who think outsourcing will. Half want to see more joint ventures between the public, private and third sectors.

So what will a public sector consulting firm look like in the future? Certainly, it won’t look much like a traditional advisory firm, but nor will it resemble a conventional outsourcing firm. Extrapolating from the research summarised in our report, we think it will take responsibility for delivering work that has traditionally been done in the public sector.

A firm’s business case for participating in such deals will be based on its ability and willingness to offer better training to, and increase the innovation and improve productivity of, those currently doing the work, rather than cutting jobs. It will be prepared to invest in the local communities where it works, building skills there rather than sending work overseas.

Rather than delivering the work as a conventional service, it will create joint ventures and other structures in which the distinction between buyer and supplier becomes meaningless. It will already have experience of work done in conjunction with not-for-profit and voluntary organisations – and will be willing to incorporate the skills and resources of the third sector in new ventures in the future. In commercial terms, these initiatives will be structured to ensure that everyone, irrespective of whether they came from the public, private or third sectors, is incentivised to ensure delivery, and shares equally in the risks and rewards of success. They will be managed on simple commercial principles, not pulled in a multitude of different directions as a purely public sector organisation would be, nor built around utilisation and time-and-materials as a conventional consulting firm would be. Participants will be paid based on the performance of the venture, perhaps even from the surplus it generates. Much as people starting a business would be, they will be paid when the venture can afford to pay them.

“If I was a consulting firm I'd be modelling my proposition on this way of working,” said a public sector manager we interviewed. “Consulting firms need to reinvent themselves.” There is a huge opportunity here for the industry: “Attention is not so much on what is to be done as how it is to be done,” said another. “That's what's needed now. And if this isn't the wake-up call that the consulting industry needs then I don't know what is.”