The Real Difference Between Consultants and Contractors

I get asked a lot whether somebody can (or should) call themselves a consultant.

It would be easy to brush off labels, but sometimes they do matter.

In business circles, consultants are thought of as seasoned professionals at the top of their field, and contractors often as temp help. That may not be fair, but that’s what it is.

The benefits of marketing yourself as a consultant are pretty significant. Experts can justify a higher fee, are in complete control of defining their solutions and can gain widespread recognition for their work.

I’m guessing that sounds pretty good to you, so let’s start at the beginning.

Technically Speaking…

By simply pulling out our handy the dictionary, we can see:

  • A consultant is somebody who is paid to provide expert advice
  • A contractor is somebody who is paid a specified rate to deliver goods or, a service

So…a consultant who is paid to advise by the hour is technically a contractor. But, a contractor isn’t necessarily a consultant.

Make sense? Still, it doesn’t really help us draw a line in the sand, and it feels like we’re comparing apples and oranges.

That’s because, we are (to a degree).

Where Things Get Messy

The rub as I see it, is trying to categorize these professionals based on how they are paid, rather than the work that they do.

This opens a can of worms when you start drilling into the details. For example:

Where’s the line drawn between being “paid to advise” and being “paid to do”?

Often, companies hire consultants because they don’t know the best way to solve a problem nor, how to implement it’s solution. Let’s say a Fortune 500 company hires Deloitte to come up with a strategy for improving profitability. Deloitte delivers, the client is thrilled and then, asks them to lead the staff reduction component (i.e. layoffs).

Does that make the staff working on the layoffs “merely” contractors?

What about the software architect contracted to help develop a new logistics system? If this person brings in best practices from previous engagements and, works with the client to define and develop said system to best align with their business, are they a consultant?

If a consultant is paid hourly, do they immediately “downgrade” to contractor?

Hourly contracts have their downsides:

  • An unscrupulous consultant could simply focus on billing every hour of their contract rather than completing the client’s solution as quickly as possible.
  • A micro-managing buyer may try to direct the consultant incessantly, worrying about where every hour of productivity goes.
  • A good consultant may have undersold themselves by not selling their true value to the client for a larger fee.

Still, for many large companies, hiring in an hourly staffing model is the path of least resistance. The consultant may not be maximizing their earning potential, but what does that have to do with their accomplishments?

Why should consultants be starving artists?

If it’s OK for an aspiring consultant to take pro bono or, low rate work to build their portfolio, then shouldn’t it be OK for them to take an hourly contract if the project is a good fit for their portfolio?

But, Here’s the Main Point…

There are plenty of consultants who are paid to do more than simply advise and, even more “consultants” who simply get paid to do.

At the end of the day, my definition of a consultant is fairly simple:

Someone hired to help a client solve a problem, on their terms, using the insight they’ve acquired from past experience.

That is, you define the solution and conduct the work in a manner that you believe best helps the client. If that’s you, go ahead and feel free to call yourself a consultant.

Leave a Reply