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June 17, 2009

Reverse Auctions for Management Consultants

Recently in the UK there was a series of articles about how British telecom had dramatically reduced its consultant workforce by conducting an aggressive reverse auction.

My experience with BT is that they are compelled to do things way over the top. A typical british process for the sake of process approach, so they probably needed to do something dramatic.

But in general the whole idea of auctions and reverse auctions is something that I ould recommend steering well clear of at all times.

The whole idea is that a service package or similar is placed online, and then everyone starts to bid for who can do it in the most cost effective manner. The winner is the lowest price, and if you can't get that low then you're outta there.

Taking part in this sort of foolishness only hastens the drive towards commoditization, and reduces the likelihood that you will get a fair price for the work that you do.

No check of value, track record, and absolutely no appreciation of the fact hat driving people out of business is no way to get to a great result. Particularly if they are your service providers...

But the point is not to attack these processes as such, that is predictable.

The point is to implore you and any other consultants out there not to participate in them at any time!
Auctions like this are springing up all over the place. From contracting, which is somewhat justified, and particularly in freelancing.

We see sites like and others springing up where the end game is almost totally detemrined by price. The problem with this? The world is not flat, and there is always someone from low wage economies who will do it for the price of bread.

And that is no good either for us, or for them...

Stay out of them, do not allow them to get further footholds into the freelance or consulting game.

The problem with competing on price is that you might win!

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