The pricing and cost analysis helps in deriving and forecasting the actual cost of products or services over the forecast period. It considers all the cost components and provides a competitive edge during supplier negotiations. Moreover, the outcome helps procurement leaders understand detailed and fact-based cost drivers for the category.
In this HR consulting service procurement intelligence report, we have estimated the pricing of the key cost components. Consultant salaries, hiring and training HR consultants, legal costs, IT and technology costs, and research, marketing and advertising costs are some of the key cost components. Other costs can include website design and development, travel expenses, and insurance. Having an HR consulting business website is important in today’s digital world. A well-designed website showcases the firm’s services and helps in attracting and retaining clients. The cost of designing a basic website can be around USD 2,000 to USD 5,000. Additional features will quickly increase the cost and can range from USD 5,000 to USD 15,000. More customization and complex design can lead to an increase in costs.
Legal charges while setting up the business can vary based on the location and the legal structure it chooses. For instance, according to the FINMODELSLAB 2023 report, the cost of commencing a business in the U.S. can range from USD 500 to USD 1,500. Within the U.S. also there are differences between the states, such as, in California, the minimum cost to register an LLC can be around USD 75 while in Delaware it can be around USD 90.
Every organization and its procurement team look forward to negotiating the best deal while procuring a set of products or subscribing to services. Rate benchmarking involves price/cost comparison of more than one set of products/services to analyze the most efficient combination that can potentially help the procurement team in getting the optimum rate.
When analyzing rate benchmarking of HR consulting services, consulting rates can vary depending on the location, industry consideration, and scale of business. The availability of the number of consultants, technological advancements, and cost per human power within the location also impact the consulting rates. For instance, in India, the average HR consulting rate is USD 6.74 per hour. Similarly, the consulting rate in the U.S. is around USD 38.51 per hour. The consulting rates in India are way lower than in the U.S. or the U.K. due to the availability of cheap labor.
In Singapore, the HR consultant rate is USD 24.11. The average salary of an HR consultant in Singapore is around USD 64,000 per year. A McKinsey & Company 2022 survey indicates that 86% of clients give priority to consultants with extensive industry-specific knowledge in Singapore. According to a Singapore Business Review study in 2022, clients are prepared to pay up to 20% more for consultants who have a track record of accomplishments in their respective fields.
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Labor cost is one of the key components of the total incurred costs while offering a product or service. Therefore, an organization must decide on whether the focus category should be retained in-house or outsourced if the organization is providing its products or services at competitive prices. If the organization decides in favor of outsourcing, it must understand the difference in the salary structures of suppliers before selecting a supplier and formulating a negotiation strategy.
According to our research, the consultants at Boston Consulting Group and McKinsey & Company receive a 10% - 15% higher base salary compared to the salary received by the consultants working in companies such as Accenture and Hewitt. However, the year-on-year increment rate in all these companies majorly depends on the Key Result Areas (KRAs).
Organizations may find it cumbersome to continuously track all the latest developments in their supplier landscape. Outsourcing the activities related to gathering intelligence allows organizations to focus on their core offerings. At this juncture, our newsletter service can help organizations stay updated with the latest developments and innovations and subsequently assist in preventing disruptions in the supply chain. We have identified the following developments within the HR consulting category over the last two years:
In October 2023, EY and IBM announced EY.ai Workforce, an HR solution driven by IBM's technology. This solution empowers businesses to incorporate artificial intelligence into their HR operations seamlessly.
In September 2023, Workday announced an update on its products by introducing workday AI and machine learning within Workday HCM (human capital management) software. This would simplify manager experience, recommend actions, and provide timely insights related to employee skills, important dates, team time off, and goals. This would result in creating opportunities for team career growth.
In March 2023, PwC acquired People Force, a firm operating in people technology selection and implementation. The acquisition is part of PwC’s technology alliance strategy with employees joining PwC’s team. This will help in the growth of PwC’s HR technology arena.
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Component wise cost break down for better negotiation for the client, highlights the key cost drivers in the market with future price fluctuation for different materials (e.g.: steel, aluminum, etc.) used in the production process
Offering cost transparency for different products / services procured by the client. A typical report involves 2-3 case scenarios helping clients to select the best suited engagement with the supplier
Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.
A typical newsletter study by capturing latest information for specific suppliers related to: M&As, technological innovations, expansion, litigations, bankruptcy etc.
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