YOU AND THE BUSINESS OF CONSULTING




Copyright 1993,1995, 1997 by
Paramount Systems, Incorporated




















YOU AND THE BUSINESS OF CONSULTING


        Consulting can provide both security and monetary rewards.  For
those individuals who wish to remain technical and are task oriented,
consulting offers an opportunity to work and be evaluated purely on results.
It also provides relief from the political and hierarchical pressures that
exist in most traditional employment situations.  By knowing the business
aspects of consulting and how to conduct yourself as a Consultant, the
transition from traditional employment to consulting can be a comfortable one.

        The easiest part of being a Consultant is working.  The challenging
part is getting there.  The following information is offered by Paramount
Systems, Incorporated to help you understand the business of consulting and
how to conduct yourself to effectively work with consulting firms.

        The consultants you are acquainted with are a good source of
information and guidance.  Share this information with them and listen to
them, carefully.



        The majority of "consulting" firms provide various personnel services
on a temporary staff supplementation basis.  The marketing cycle consists of
identifying opportunities within client organizations by maintaining close
contact with client managers.  When an opportunity is identified, the
consulting firm will search its records to identify appropriate resources
(that's you).  The next step should be to contact you and discuss the
opportunity.  Then, with your permission, submit your resume to the manager
under the consulting firm's letter head.  If the firm can spark some
interest, this is usually followed by an interview with the client's project
personnel.  If all goes well, you will be selected and employment with the
consulting firm would commence with the first day of work at the client
site.


Sound simple?  It is!  But, don't stop reading now!


        There are three ways to work with a "consulting firm", i.e.
subcontracting, salaried employment and hourly employment.  Prior to January
1st, 1987, many consultants were independent subcontractors.  Firms would
market/broker their services to clients and perform the billing and
disbursement functions.  Consultants were paid for hours billed and in many
cases not paid until the client paid the consulting firm.  Compensation was
good and in addition, as business entities, consultants deducted business
expenses, such as transportation, from their Federal Income Tax liability.

        In January of 1987, a new IRS regulation became effective.  It
requires consultants that are party to a three party agreement (you, the
consulting firm and the client) and are engineers, designers, drafters,
computer programmers, systems analysts, of other similarly skilled workers
engaged in a similar line of work, be someone's employee.  Rumor has it that
this regulation was put in place to put smaller consulting firms out of the
business.  It obviously didn't work.  Instead many schemes were tried to
circumvent this restriction.  To date however, it is the IRS and Labor
Departments that remain the independent consultants chief ally.  They have
been very slow to enforce this regulation.  Many clients however, fearing
payroll tax liability, have included verbiage in their contracts with
consulting firms requiring compliance to the regulation.  This has reduced
the use of independent consultants, but not by any means eliminated it.

        You will still find many firms offering work on what they refer to
as "on a 1099".  If you accept work on this basis, I would suggest that you
establish a tax ID with the State and execute a Resale Agreement to avoid
any sales tax liability.  I would further suggest that you work closely with
an accounting professional.

        The second way to work with a consulting firm is as a salaried
employee.  Firms touting salaried employment will pitch such benefits as
CAREER PATH, SECURITY and WINNING TEAM/SPECIALIZATIONS, specializing in
state-of-the-art methodologies or software products that are currently in
demand.  Let's look at each of these advantages.

        CAREER PATH:  Clients looking to supplement existing staffs with
temporary help invariably look for "doers", such as proficient programmers,
analysts, application developers, etc.  It is vary rare that firms are
called upon to furnish project leadership or management consulting.  A
career path does exist with some of the large-scale system integration firms,
but don't look for one with firms that are primarily involved in staff
supplementation.

        SECURITY:  When accepting a salaried position, you do so with the
hope that the firm will continue to pay you while you are between assignments,
"on the bench" so to speak.  Many do.  The question is:  "For how long?"
You will find that most companies will provide an adequate period of time,
if your skills are in heavy demand.  This is a way of controlling resources.

        Remember that margins are best on salaried employees, but to keep
that money a company must "kick" you off the bench rather quickly.  There
are some people out there who have been terminated upon completing their
very first assignment!  You should know that some companies establish what
is referred to as a SALARIED REVOLVING DOOR, offering people work on a
salaried basis and if upon completing an assignment the consulting firm
cannot market them right away, they quickly throw them away.

        It does not necessarily have anything to do with your performance.
The financial condition of the company and market demands dictate the
company's actions.  However, sooner or later, you will lose your place on
the bench.

        WINNING TEAM/SPECIALIZATIONS:  Take a hard look at the advertisements
in the Sunday newspapers.  Consulting firms appear to specialize in whatever
the clients want.  The consulting firms may have been initially formed
around a core of highly skilled, technical gurus, but they evolve into
highly effective marketing/recruiting organizations that are capable of
finding whatever a client is looking for, if the client is patient.

        Salaried employment usually begins with an offer letter issued to
you by the consulting firm.  It welcomes you to their family at whatever
salary has been negotiated and usually states that it is the firm's policy
to coordinate employment with the first day of work at the client site.

        This is a contingency offer, and it does not mean that you have a
job.  It can be interpreted to read:  If they are successful in finding you
work, this is what they are willing to pay you!

        The first rule of the Consultant is to work.  There is no reason why
you should not accept a contingency offer that meets your salary requirement.
If you do:  You should always accept the offer in writing and add a
paragraph to your letter that states that you require the firm to always
obtain your permission prior to submitting your resume to any opportunity.
For you, this is one of the most important rules of conduct in this business-
Always control the distribution of your resume.

        The reason for this emphasis is to ensure that you do not have to
pass on opportunities because you either think that your resume is already
submitted or because you don't know where your resume is and it might already
be there.

        It is relatively well known that if two "fee paid employment
agencies" submit your resume to the same client, the client is very likely
to set it aside-the client does not want to devote time to settling disputes.
The same is true when pursuing consulting opportunities.  If more than one
consulting firm submits your resume to the same opportunity, the client will
often put your resume aside, because they know that consulting firms can be
tenacious about not wanting to give up an opportunity.  In addition,
remember that most clients don't realize how this business works, they often
think that the Consultant is trying to pull a fast one of some kind to get
more money.  Under any circumstance, a lack of control is always to your
detriment.

        Therefore, you must keep a very detailed record of where your resume
is:  Who has it and what have they done with it.  It is not enough to know
the name of the Company when a firm asks if they can submit your resume.
Remember that each manager needing temporary assistance is communicating
directly with the consulting firms.  A firm may know of one opportunity
while a manager across the hall, who needs twenty people with your skill set,
is trying to fill his needs through other firms.  This happens and it happens
frequently.  To ensure that you can compete for every opportunity, make sure
that you know and keep track of the company, department or group, manager
and something about project for each submission of your resume.  It is
of vital importance for you to be able to distinguish one opportunity from
another.  It can mean the difference between sitting at home or working.
That's important.

        When you ask a firm where the opportunity is, they will often try to
not tell you.  Excuses include:  We don't want to give away our business; I
can't tell you that; We have an exclusive on this and I have to keep it
quiet; Data processing here is such a small organization; or Just plain
forget it.

        Guess what?  If a sales representative has an opportunity to make a
buck, he or she will tell you exactly where they want to put your resume.
People have had sales representatives call back after feigning anger and
hanging-up on them.

        For some reason, firms will try anything to keep you in the dark.
Whatever their reasons, it is never in your best interest not to know where
your resume is-exactly where your resume is.

        How should you respond to these blatant attempts to limit your
opportunities-Politely tell them that if they can't work with you, you can't
work with them.  There are too many consulting firms out here for you to
waste your time on some smart guy playing games with your paycheck!

        In the process of pitching salaried employment, firms will also on
occasion offer other incentives, e.g. become a part owner of the firm after
some number of years or share in the profits, etc.  Don't forget to ask the
hard question:  "How many consultants, not principals, are currently
benefiting from the program?"

        Another tack frequently taken is to convince a person that, "with
your skills we will be able to get you working in no time at all.  I'm going
to put everyone on this and we will market you very hard.  To ensure that we
do not encounter any conflicts in submitting your resume, we would like
exclusive rights to market your services and we would like to know where
your resume is now, so that we do not create any conflicts."

        Let's look at this more closely.  If a person wants to buy a house
and asks the owner to take it off the market, the potential purchaser must
put some money down and if the house is not bought, the owner keeps the
money as compensation for lost opportunities.  The same should apply here.
Don't assign anyone any rights unless you are compensated with something
other than promises ($).

        The question, "Where is your resume now?", brings us to another very
important rule of conduct-Never tell one firm what you are doing with another
and never pass information about opportunities with one firm on to another!
Think about it.  If you tell someone where your resume is, you are giving
them a list of where your skills might be in demand.  If there is anything
on that list that they don't know about, they will send a sales
representative to see if they can get a piece of the action.  The bottom line
is that it will increase your competition and that is something you don't
need.  Worst case, and I have seen this more than once, a firm knowingly
created a conflict to cause an interview to be canceled.

        The second part of the rule, never pass information on from one firm
to another, is just plain common sense.  It doesn't take consulting firms
long to identify people who do that and they will just stop working with
you.  Again, that limits your opportunities and is therefore not in your
best interest.

        If you do obtain salaried employment, you should immediately talk to
other employees to determine how people are treated on the bench and how
long people with your particular skill set can expect to be supported on the
bench.  That way you will be prepared.

        The third way to work with a consulting firm is as an hourly employee.
Working with a firm in this manner allows the firm to meet the letter of the
law and at the same time allows the Consultant to retain his or her
independence.  As in working on a 1099 basis, the Consultant is paid for
hours billed, there are no paid vacations, holidays, sick time, etc.
Usually, hospitalization and medical insurance is available at a cost, but
most consultants are either deriving benefits from a working spouse or they
have their own plans.  Employment starts with the first day of work, usually
at the client's site, and the understanding is that employment will continue
for the duration of the engagement.  If at the end of the engagement there
is nothing to move directly into, the employee is terminated for lack of
work.  This sounds more frightening than it is.

        Let's look at what happens at the end of an assignment in more
detail, so that you can better understand how to make the transition from
one situation to another.  Once the release date is known, the firm will
start looking for opportunities for you, but they should treat you as an
applicant for marketing purposes.  That is to say that they should always
ask your permission prior to submitting your resume for any opportunity.

        It is assumed that once you know the release date, you are going to
call other consulting firms that you have identified as firms you want to
work with.  Tell them that you are going to be available on a certain date,
that you are forwarding them an update of your resume covering this last
assignment, and that they are to call you to discuss any opportunities that
you might be interested in.  You should always have the understanding that
they will not submit your resume anywhere without your permission. Cranking
up your marketing machine in this manner represents the best way to obtain
employment quickly.

        Many times a client will request help for a relatively short period
of time.  As the end of the engagement approaches you commit to another
engagement and subsequently you are told that the client would like you to
stay and help them further.  This is a common occurrence.  There is no
problem in telling another firm that you will be staying on where you are.
No problem at all

        Remember that the most important relationship for a Consultant is the
relationship between the Consultant and the client!  Clients have a "pecking
order" as to who they bring in.  Those who have been with the client before,
either as a regular employee or as a consultant, and have done an outstanding
job come back in first.  After known resources, it is a question of skill
set, applications experience and the chemistry of the interview.

        During the interview the Consultant must sell herself or himself
into the position and at the same time determine the expectations of the
client and feel comfortable that they can meet them.  Never allow a firm to
oversell you into a position that you will not be successful in!  The client
organizations that we work with are too big for you to accept the risk of
being "locked out" of them.  Believe me, it does happen.

        As a Consultant who knows the marketing cycle, you should realize
that nothing is real until you get a call with a valid start date.  Up to
that point, everything is in the realm of opportunities and you should
pursue them all.

        My advice as to what you should do if offered a start date is, "TAKE
IT!"  The most important thing is to work.  Take it no matter what it is.
It is not forever.  Become a firm believer in taking the bird in the hand.

        Never, never listen to anyone who tells you to pass up something for
something else that is surely going to happen in the next few days.  They
either don't know what they are doing or your interests are the furthest
thing from their mind.  Either way, follow that kind of advice and you might
just lose a few paychecks.

        Although reneging on a start date to take another consulting
engagement is a violation of ethics, remember that all work with consulting
firms should be looked upon as temporary employment and temporary employment
should never take precedence over career decisions.

        People employed on an full-time hourly or salaried basis are
bonafide employees.  Their employer should be paying half their FICA,
providing Workers' Compensation and liability coverage, and paying state and
federal unemployment taxes.  If you are terminated, unemployment benefits
are available.

        As an employee, if you find yourself in a dispute with your employer,
the Labor Department is your ally.  By the way, one of the things to watch
for is being terminated for anything other than lack of work after
successfully completing an engagement.  The Labor Department is always
interested in hearing about wrongful firings.

        As an independent subcontractor, either incorporated or on a 1099,
you should remember that businesses settle their differences in court.  That
means money and time.  If you are not an employee, the Labor Department does
not want to hear about it.

        One problem that affected me was "The Consultant that Couldn't Get
Away".  We had established a start date as to when he would join us as an
hourly employee.  He was finishing up an assignment on a 1099 with another
firm.  The other firm and the client had known about and had no problem with
the assignment coming to an end.  At the last moment the other firm found
some additional work in another area.  They told the Consultant that they
wanted him to stay and work with them.  When he said he would rather not,
the consulting firm reminded him that they owed him a sizable sum of
money.

        When he asked my opinion as to how to handle the situation, I told
him that his best option was to stay where he was and work it out-I really
didn't want to do that, but the options are severely limited.

        Another example of what not to do is dramatically illustrated by a
young man on his first assignment who walked off the job.  He had been told
that he would receive 70% of the billing rate as compensation, gross
earnings.  When he found out what he was being billed at and calculated the
percentage that he was getting, he was so angry that he cleaned off his desk
and walked off the job.

        The client manager called in the sales representative and read him
the riot act.  He told him that he was looking for continuity on the project
and was very disappointed in the consulting firm for not controlling the
situation.

        The sales representative was a fast thinker.  He complained about an
unnamed firm that had tempted the consultant with a dollar more an hour and
told the manager that he was disgusted with both the ethics of the
consultant and the other firm.  He also said that the other firm was
competing with him to get people into the manager's area.  When the manager
asked for the name of the other firm, the sales representative said that he
couldn't tell him that.

        Guess who will never be asked back to work for that manager!  Guess
who got a jump on all new requirements in that manager's area!

        What should the Consultant have done?  He should have finished the
assignment.  He should have remembered that the most important thing for him
was to make the client happy.  After the engagement, he could have told the
firm:  "I have some personal business to take care of.  I'll call you when
I'm ready to come back on the market."

        There is one other piece of paper that the Consultant should be
familiar with, that is the non-compete agreement.  This agreement is a
condition of employment and is used throughout the industry.  Simply put,
once employed, you cannot go back to that client either as a regular
employee or as a consultant through another firm without the firm that
placed you there giving you their permission.  This is a way consulting
firms protect their marketing investment.  The spirit of the agreement
should be:  If we place you and the client likes you and wants you back
within a reasonable period of time, we would like to be part of that so that
we can make money too.

        There must always be a time frame associated with this type of
contract.  They are usually for six months to one year from the end of the
engagement; I have heard of one that specifies two years and another the
specifies three years.  That is a long time, but work is work and these
agreements are part of the business.

        I have frequently heard of these agreements being used to stop
people from working, both as regular employees of a client and as consultants
through another firm. The best advice here is to know the firms that you are
working with and know how they have treated people in the past.

        There is another practice that you should be aware of, commonly
referred to as "locking people out".  It is an attempt to reserve you as a
resource for when (and if) a client requests a firm to provide people with
your skills.  A consulting firm may be tempted to do this when they feel
that a call for consultants will probably be made in the future.  By
obtaining your permission early, the consulting firm is in effect blocking
you from allowing another firm to submit your resume for that opportunity,
if it becomes a reality.

        The risk to you is that the firm you approved to submit your resume
might not be among those called when the opportunity becomes real.  If this
happens, guess what?  You lose.  If you think a firm is trying to reserve
you, ask when the assignment is to start.  If it is not within a reasonable
period, two to three weeks, perhaps you should pass.  When the opportunity
becomes real, other firms will be calling you.  You can count on it.

        As a final topic, perhaps a brief discussion of resumes is appropriate.  Having
and using multiple resumes with different emphases is a good idea.  Resumes
used to pursue traditional employment should be of the "cookie cutter"
variety, chronological in format and very easy to read.  Always use a
specific objective (recruiters do not usually have the time to see where you
might fit) and provide enough information to show that you are qualified for
the position specified in the objective.

        Resumes used to obtain consulting positions differ from those used
when seeking traditional employment.  Your resume for consulting should
project a more detailed image of what you have done.  Every skill and
product knowledge that you wish to market should appear in the body of your
resume, with enough detail to make a prospective client feel that he or she
knows the extent of your capabilities.  A good format is to provide (in
descending, chronological order) a statement of the task, the role you
played and the tools you used, including the environment and platform.  Do
not avoid using the names of companies, applications, areas supported and
software products, and don't worry about the length of this resume.  All of
this information is of interest to the Project Manager/Leader looking for
help.

        You will also find that this expanded resume is of value when you
interview for tradition employment.  Presented at an interview, it will tend
to structure the interview, leading the conversation in the direction of
what you are most familiar with.


Welcome to the world of consulting.


        We hope that you find this information enlightening and above all
useful.  Your experiences and comments would be most welcome.  They can be
addressed to:






Allen P. Monoson
Director of Recruiting
Paramount Systems, Incorporated
290 Roberts Street, Suite 202
East Hartford, CT 06108
860-528-1166 Phone
860-282-7960 Fax
PSIEH@aol.com






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