Why hiring consultants is not a waste of money

Consulting firms are everywhere. From Fortune 500 companies to startups, organizations spend millions hiring external advisors to solve their biggest challenges. But what do consultants actually do – and more importantly, are they worth it? Having worked at Oliver Wyman and BCG, two renowned global consulting firms, I want to share some of the insights I've gained into how they operate and create value.

What Do Consulting Firms Do?

The most basic definition is this: consulting firms sell knowledge. Companies bring them in to handle specific projects where they lack expertise or resources. These projects can range from small-scale tasks, like conducting a market survey with 200 street participants, to high-stakes initiatives, such as developing a corporate strategy for a multinational company.

There are consulting firms for virtually everything, but the most prestigious niche is arguably strategy consulting. At its core, "strategy" refers to the concrete actions a company must take to achieve its goals. Strategy consulting firms are typically global players, advising middle and top management on a variety of topics related to strategy. The three most prestigious firms in this category are McKinsey, BCG, and Bain.

Are They Worth It?

Speaking with friends and family who have taken completely different career paths, I’ve noticed that the public perception of consulting firms – at least in Germany – tends to be rather critical. The media primarily highlights cases where consultancies make mistakes or engage in questionable practices (you may have heard of McKinsey’s role in the opioid crisis). These cases, however, are the exception rather than the rule and do not accurately reflect the overall value that consulting firms create. Based on my experience, I believe that the majority of the work consultants do indeed provides significant value to their clients.

Direct Value – Creating Tangible Impact

At Oliver Wyman, I worked on a project with a global German manufacturing company struggling with declining sales and market share. They were having a hard time understanding the reasons behind their losses and needed help to regain competitiveness. We helped them in two major ways:

1. We developed a program that broke down profitability at an extremely detailed level. Thanks to this, they could now determine exactly how profitable product X was when sold to customer Y in, say, Switzerland – insights they had never had before. Previously, their financial data was fragmented across geographies, with no one having a clear overview of the bigger picture.
2. We observed that the client was maintaining certain practices simply because “this is how we’ve always done it.” One key finding? They were producing 50 variations of essentially the same product – an inefficient practice that was draining resources. By providing an unbiased perspective and challenging these assumptions, we helped them streamline operations and improve profitability.

In summary, this is what I refer to as the direct value of consulting firms – bringing in expertise, fresh perspectives, and analytical power to make measurable improvements.

Indirect Value – Preventing Costly Mistakes

At BCG, I worked on a project with another German manufacturing company that had just acquired a US subsidiary of a competitor. Our job was to support the integration of the acquisition into the German parent company.

Compared to my previous project, this was fundamentally different. We weren’t creating groundbreaking insights or producing new content. Instead, we were managing teams, structuring workflows, and ensuring alignment throughout the integration process. Our tasks revolved around creating templates, running meetings, and guiding the overall integration process.

Until the very end, I questioned the value I was creating through my work. Was it rocket science? No. Did we deliver tangible, immediate results? Not directly. But as Day 1 (the moment when the two companies officially merged) approached, it became clear that the client could never have managed this process on their own. They had only been through a handful of integrations in their history – BCG does it all the time. We simply knew how to do it better. The money they spent on our project team was insignificant compared to the potential financial disaster they avoided.

This is what I refer to as the indirect value of consulting firms – preventing costly mistakes before they happen.

Final Thoughts

From what I’ve seen, consulting projects create real value for clients – far more than what they cost. Ultimately, the impact depends on the attitude and diligence of the consultants themselves. As my boss at BCG put it: "The best consultants are those who make themselves unnecessary."