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The public sector is a sideline for many management consulting firms oriented to the Fortune 500 and large multinationals.
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However, for those firms that focus on the government, particularly at the US federal level, the business offers a great deal of opportunity. For many years, it has grown steadily and far more consistently than commercial consulting, and for many firms, the profits are strong. This article provides an overview of the industry, the recruitment and hiring process, and identifies the hiring posture at some of the larger firms.
Government Services Industry Overview
The US government spends about $75 billion on professional and technical services contracts annually. The expertise bought covers the breadth of information technology, engineering, management consulting, law and accounting, and other fields.
About half a million people work in the industry, which is made up of approximately 21 thousand firms. The majority of these are small, and the industry is concentrated. The top 250 or so companies, earning $50 million or more (up to the multiple billions) garner 85- 90% of the $75 billion in revenue. And the strongest have recently been growing revenue at annual rates in the 15-25% range. Few of these firms do much work for the Fortune 1000, which is why they have continued to grow through the recent economic downturn.
Fully one-fourth of federal prime contract dollars are awarded to firms that the government has officially designated as “small businesses.” These companies, defined by precise standards of headcount and revenue for over a thousand industrial classifications, often have large-business subcontractors that frequently consume up to half their prime contractor’s revenue.
The fundamental driver of growth in this government services industry is spending, which is proposed by the White House and approved by the Congress. In the aggregate, year after year, it only goes up. Mid-level bureaucrats usually make buying decisions, with career executives and political appointees in a position to veto them by various means.
The growth of particular government programs depends on needs, filtered through the political process. Not surprisingly, homeland security and defense are the top priorities now. Programs in such areas as social welfare, agriculture, and the environment are getting squeezed at the present time. But priorities often change swiftly with Congressional and Presidential elections.
But, as consultants everywhere know: change is good for business. The more successful firms are looking a few years ahead to spot the next big thing, and building capabilities and doing strategic marketing accordingly.
While commercially oriented management consultants will recognize all of the essential elements of a client assignment in a federal contract, the federal business model and the operating environment are rather different from the commercial setting. The primary reason is that the business is moderately regulated, and “the contract” is a lot more visible in routine activities. There’s more oversight, more reporting, and much larger deliverables, for example. Regulations also govern marketing and selling cycles. In general, contacts with customers before a sale are more controlled, and the government goes to great lengths to try to ensure a level playing field. More time and effort go into marketing and sales of federal work, but the contract awards are typically much larger than in the commercial world.
Recruitment and Hiring
The elements of the recruitment and hiring processes bear strong resemblance to commercial consulting world. However, given the volumes of staff needed and a much broader labor market in terms of expertise and sources, there are important differences.
Hiring takes place year round and uses all of the channels imaginable to source candidates. At two of the larger firms, at least a third of the staff hired was originally identified on the Internet. Given the volumes, if you have a way to target a prospective hiring manager, use it. Many firms do their first screen of resumes using artificial intelligence programs.
Middle and larger firms have a recruiting department, which typically does a pre-screen before selecting a subset for live interviews, typically seeing from three to five people. These screens are often done by phone. Live interviews typically do not feature sample-problem techniques. Hiring decisions are usually faster that at commercially oriented firms, but there is not as much courting of candidates as often occurs in the commercial world. The senior person a candidate sees, and the one who makes the hiring decision for a mid-level slot may be a senior associate of possibly a principal.
Candidates who are new to the world of federal consulting have many choices. The firms involved are far more numerous, their corporate lineages are less homogeneous, and the work is far more diverse functionally. In addition there is the attraction, and some, but not all firms, to get involved in both marketing and selling, even at a junior level. The government consulting business in general provides an earlier exposure to the business, as opposed to just plain professional tradecraft, than does commercial consulting. This is, in part, due to the fact that the margins are much thinner and there is less room for error. In keeping with that, utilization rates of mid-level and junior staff are typically 90% or more.
Selected Firm Hiring Posture
The chart below summarizes the hiring posture of eleven selected firms. For some, the federal work is not the main business. Since firms do not conveniently publicize their federal revenue and staff counts, estimates (e) from informed sources were used in some cases.
Click here to view Chart Growth and Hiring in Selected Government Services Firms
Michael Lent
About the author: Michael Lent publishes the Government Services Insider, a monthly for managers and executives, in Washington, DC and at www.gsinsider.com. The newsletter provides best practices, business strategies, and selected competitive intelligence. Mr. Lent was a senior member of Booz Allen’s federal business for more than 20 years.
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