Warning: this post contains a number of opinionated hot takes formed over the last 20 years of running companies in various countries and contracting or consulting in these countries. If this is not the sort of post you are looking for, then look away now..
Language is Important
Nothing gets my goat up more than someone confusing or conflating the term consultant with that of a contractor. Not true, there are a couple of other phrases; the use of “best practice” is amongst them.
The consultant bible (here at Mechanical Rock at least), Flawless Consulting by Peter Block, defines a consultant as a person in a position to have some influence over an individual, a group, or an organisation but has no direct power to make changes or implement programs. The recipient of this advice is called the client.
A contractor, as defined by the Cambridge Dictionary, is a person or company that arranges to supply materials or workers for building or for moving goods and/or services.
So the difference is pretty clear - one advises, one does.
In reality, however, the lines are often blurred between advising and doing. We, for instance, call ourselves consultants but often do a mix of engagements which are advising, or advising AND doing.
It is also common for the client to come to us and expect to be provided with a solution, but it is the consultants job to make this into a 50/50 proposition. A consultant needs to keep the client engaged and ensure they have skin in the game.
When companies only do the doing and call themselves consultants, that is just deception. Even worse, when companies call themselves consultants, but then hire contractors to deliver the work, that is worse than deception, it is downright duplicitous.
A Different Perspective
I lived for many years in the UK and was a professional contractor for a time. IT Contracting is (well, maybe no longer) a way of life for many there. It is a way to earn a great income, with low tax, and also have the flexibility to move around. But it is independant, highly mercenary and is focused around delivering a service, not providing a consulting service. Running a business in the UK, as result, can be a challenge. In a land so permeated by independant contractors, creating an identity and a culture when the lure of the contractor Pound is so prevalent is hard. Contractors, by nature, are not aligned to a “consulting” companies values & goals and also more often than not the promise of the processes which influenced the client to choose them in the first place.
In the UK, the right to substitute a worker is one of the key status tests that HMRC would look for during an IR35 investigation. In my opinion it is not only the right to substitute but the ability to do it. If you have built a real company (sorry contractors, but running a one man band is very different to building a business), then this is easy, as a core set of skills prevail amongst your employees. This is also true in Australia, but the tax legislation is different in the sense that the economic benefit is not as high, but the risk is just as large.
Where To From Here
I work hard to differentiate my businesses from the commonly held view of contractors, so it is a trigger for me when people do not understand the difference, albeit subtle at times.
Companies who operate as glorified recruitment firms continue to be successful, so the market must know more than me! Or perhaps the market doesn’t know more than me and the people that make these decisions don’t care or are motivated in ways which I am not familiar with.
“It is a mistake to assume that clients make decisions to begin projects and use consultants based on purely rational reasons. More often than not, the client’s primary question is: “Is this consultant someone I can trust?” - Peter Block, Flawless Consulting
Either way, best practice dictates that if you ever see me in the street, please ensure you do not use the words consultant and contractor interchangeably.