The Mandarin asked me to provide a summary answer to this question:
What is the appropriate level of the use of consultants in the public service? Has it gone too far? Are consultants doing too much core/routine work or are they providing a vital service?
It’s a fair enough question, but rather too decontextualised for me to make much sense of it really – but I didn’t think the Mandarin wanted my musings on that, so I offered them what’s below the fold. My main point is really on contracting out in the first two paragraphs rather than consulting per se.
One can distinguish between using consultants to inform one’s strategic thinking and outsourcing routine work. Outsourcing the latter can make sense. But I recall a moment of epiphany when the Productivity Commission was being asked to report on what human services could be made more competitive. They proceeded to go about their business as someone trained in economics would, by exploring the characteristics of different sectors, such as how competitive a sector could be made and the extent to which consumers might be well informed and capable of choosing the best services for them.
These were sensible questions to ask. But since the government was funding these services, they were not normal markets. So, it seemed to me that a more fundamental question was the extent to which those responsible for running these services understood what they were doing. Did they have arrangements in place so that, as they changed arrangements, they (and ideally the wider world) would know whether things were improving or getting worse as a result? The thing is, if the agency can’t answer those questions, it doesn’t answer the question of whether it should insource or outsource the work. It answers a different and prior question. Which is whether the agency knows what it’s doing.
As for outsourcing higher level ‘strategic’ thinking to consultants, I’m a sceptic. They’re less invested in their clients’ success than insiders. They have little corporate memory (though this is offset, or even outweighed, by their ability to generalise from experience in other organisations). But the biggest problem is the way in which their output is ‘productised’ and sold. The way consultants make money is by developing some new system which seems appealing and then selling variants of it to one organisation after another. So they sell fads. And because they’re in sales mode, they’re not alive to the downsides of those fads.
An exception would be where the strategic thinking is supposed to be being provided by independent outsiders. My experience of being such an outsider is that one often needs some high quality analytical and critical skills working alongside the agency’s team to get the best result.