A Rant, Part II

“A consultant is like a prostitute: paid by the hour, does what the client wants, when the client wants it, and the one who pockets the money is the pimp.”

Yes, I’m a consultant. If there’s one piece of advice I like to give, it’s this: keep two eyes looking forward and one looking back. As everyone who follows this blog probably knows, I spent 5 years at the same consulting firm. That’s too long — another thing to remember: don’t stay more than 3 years in the same place, especially if you’re under 30.

In 10 years I’ve changed companies about 5 times, and inside the consulting firm I jumped between various clients. That’s stressful, I’ll admit, but it’s worth it. If you stay open to learning, you’ll pick up a lot of valuable lessons for the future.

Consulting firms are particularly dangerous — especially small ones, and even more so if they’re anything like my former employer. One of the reasons (there were several) that drove me to leave were the delayed payments. Oh, not salary — payments. Remember that when you work as an incorporated entity, it’s no longer an employer-employee relationship, but a client-vendor one. You provide a service and invoice for it accordingly.

Anyway, back in 2004 we already went through a similar crisis. There’s no way to lose money in consulting. They hire you at R$ 50 per hour and sell you to the client for up to R$ 100. That’s a markup of up to 100%. I’ve seen rank-and-file consultants I know make no more than R$ 40 per hour being sold at R$ 250. That’s a lot.

For us consultants, it works like insurance: you outsource to the firm the responsibility of dealing with clients, hunting for projects, managing allocations, and so on. It’s like a health plan: you pay a monthly premium and in return they’re obligated to keep you stable — paying on time, placing you in good projects.

Do the math and you’ll see the consulting firm always has a healthy reserve — cash flow is not complicated. It’s a gold mine. Especially in a world like SAP, where consultants command artificially inflated rates, thanks to the limited supply and outrageously expensive certification process — and of very low quality, I might add. Today, clients pay through the nose for mediocre service and don’t complain. It’s the ideal racket.

When a consulting firm starts showing signs of financial trouble, that’s the red flag: get out as fast as you can. Don’t think twice. If the client throws a fit, if the client delays an invoice, if the client stalls — none of that is the consultant’s problem. That’s precisely what we pay that insurance to the firm for: so it positions itself between the client and you. The consultant, working correctly for the hours logged, has the right to get paid on the dates specified in the applicable contracts.

“A deal’s a deal.”

When that doesn’t happen, it’s a sign of administrative incompetence. It’s a sign of profound disrespect toward the consultant — who is the firm’s actual workforce. At its core, it’s sheer stupidity, because it means shooting yourself in the foot. The consulting firm is nothing more than a bureaucratic apparatus whose sole obligation is to manage itself.

The excuse of “we’re investing heavily in the company’s future” doesn’t fly. Sacrificing payroll isn’t investment — it’s stupid spending. You don’t compromise the basics. Would you skip paying your electricity bill to buy a computer? I’d hope not, because the power will get cut, and then what do you need the computer for?

The curious thing — and I see a lot of people fall for this — is believing. Especially when we’re young, sometimes we think we’ve found the next Steve Jobs: the visionary guy who operates outside all the norms and is going to change everything. BE CAREFUL. It’s a con: there was only one Steve Jobs in the past 30 years. The probability is that the higher chance is you’ve found just a dazzled narcissist. And you’ll end up working for free for him, grinding yourself to the bone, sacrificing your personal life. All for nothing.

I’ll repeat the warning: from politicians to cheap con men, everyone has excellent speeches. Captivating talk, the kind that almost convinces you to drop your pants, to work for free, to sacrifice yourself pointlessly. Remember the “client-vendor relationship” I mentioned? That means no matter how “valued” you think you are, as a consultant you’re nothing more than a resource — a contractor, and by definition, replaceable.

There’s nothing wrong with that, as long as you place yourself in that position: you are NOT a partner in the company. The consulting firm’s fate is not in your hands, however much we’d like to believe otherwise. And when the noose tightens, you’ll be the one left exposed. I’m not saying to slack off — don’t confuse things! Give it your maximum, but do it for yourself. See those late nights as an investment in your own learning that, as a side effect, also happens to help the company.

I’ve told this to a few people before, but I’ll say it again. I wanted to put a down payment on an apartment last year. Not trusting the consulting firm’s integrity, I didn’t. I also traded in my car last year — I could have paid cash. After an hour of calculations (learn to use the HP-12C!) I decided to finance instead. All of that paid off: I kept my liquidity. That was essential to support the decision I made last month: abandoning the sinking ship.

By luck, Surgeworks crossed my path at exactly the right moment. But I wasn’t counting on that. You always have to plan for the worst: being unemployed for several months. You need reserves — in the form of liquid investments — for those moments.

Obviously we need to minimize that worst-case scenario, which is why my earlier articles about being self-taught, continuously investing in your learning and your network all make sense: I assumed I might be unemployed, but I still received several good offers on the same day, and consulting firms still call asking about me. You need to keep your options open: both in terms of knowledge, to have alternatives, and financially, so you don’t need to accept scraps from others. Do that and you’ll rarely have problems.

This is an important warning. I’ve seen ugly scenarios, and they made me very cautious. Never bite off more than you can chew, never depend on anyone. Never let anyone “take care of” you: own and understand your own finances, budgets, taxes.

Even if you’re not a consultant, but an employee at a company that starts showing some of the symptoms above, start planning your exit. Stop being dazzled, don’t take on large debts unnecessarily. And above all: don’t get swept away by speeches. When things are going well, you’re “highly valued” — they treat you well, sometimes even give you a small raise or a perk.

Even so, you’ll be working for less than you deserve. And when things get ugly, you’ll be called in to “help,” even without pay, even sacrificing your personal life again. And if you choose to leave, all that “consideration” goes down the drain: you’ll become the traitor, the one who bailed when they were needed most, blah blah blah. Don’t be intimidated. If the company is going under, it’s not your fault. Quite the opposite: it’s the company that broke the trust first.

In my case, in 5 years I never burdened the company by taking vacation, for example. Last year I worked hard — consecutive Saturdays, not even taking holidays. But the day I announced my departure, what was the first thing I heard? “You know there’s a termination penalty.” Great — so much for “consideration,” gone in an instant. That pompous speech from before vanishes and the naked truth appears. That’s when the masks come off. It didn’t surprise me or frustrate me because I practice what I preach: I plan for the worst-case scenarios. And they happen! No big revelation — just another page turned.

I left with over a month and a half of back pay owed. I send collection emails and you know what I hear? “I’ll pay you R$ 1,000 per month, starting at the end of July.” Remarkable how far a company can sink. I feel like I’m almost begging for change. What can you do? Almost nothing is better than nothing. I just want what’s mine — and that’s another thing to remember: what belongs to you, you have the right to demand.

After 5 years, delivering every project successfully, leaving every client satisfied, pulling all-nighters, working through holidays, not visiting family on weekends, not taking my wife on a trip for the last 4 years, not even attending my grandfather’s funeral. In the end, that’s how a “resource” gets treated: like just another resource.

Use consulting firms the same way they use you. They’re still “entry points” into various clients — especially the big-name ones that are normally backwards, nepotistic, and highly inefficient. But names like that count on your résumé, and everyone needs to suffer through inefficient companies to learn “how not to do things.”

Do good work. Grow. Learn. But be very careful! Shady dealing is a constant in this market.