The Real Difference Between Consultants and Contractors

I get asked a lot whether somebody can (or should) call themselves a consultant.

It would be easy to brush off labels, but sometimes they do matter.

In business circles, consultants are thought of as seasoned professionals at the top of their field, and contractors often as temp help. That may not be fair, but that’s what it is.

The benefits of marketing yourself as a consultant are pretty significant. Experts can justify a higher fee, are in complete control of defining their solutions and can gain widespread recognition for their work.

I’m guessing that sounds pretty good to you, so let’s start at the beginning.

Technically Speaking…

By simply pulling out our handy the dictionary, we can see:

  • A consultant is somebody who is paid to provide expert advice
  • A contractor is somebody who is paid a specified rate to deliver goods or, a service

So…a consultant who is paid to advise by the hour is technically a contractor. But, a contractor isn’t necessarily a consultant.

Make sense? Still, it doesn’t really help us draw a line in the sand, and it feels like we’re comparing apples and oranges.

That’s because we are (to a degree).

Where Things Get Messy

The rub as I see it is trying to categorize professionals based on how they are paid, rather than the work that they do.

This opens a can of worms when you start drilling into the details. For example:

Where’s the line drawn between being “paid to advise” and being “paid to do”?

Often, companies hire consultants because they don’t know the best way to solve a problem nor how to implement its solution. Let’s say a Fortune 500 company hires Deloitte to come up with a strategy for improving profitability. Deloitte delivers, the client is thrilled and then, asks them to lead the implementation of the staff reduction component (i.e. layoffs).

Does that make the staff working on the layoffs “merely” contractors?

What about the software architect contracted to help develop a new logistics system? If this person brings in best practices from previous engagements and, works with the client to define and develop said system to best align with their business, are they a consultant?

If a consultant is paid hourly, do they immediately “downgrade” to a contractor?

Hourly contracts have their downsides:

  • An unscrupulous consultant could simply focus on billing every hour of their contract rather than completing the client’s solution as quickly as possible.
  • A micro-managing buyer may try to direct the consultant incessantly, worrying about where every hour of productivity goes.
  • A good consultant may have undersold themselves by not selling their true value to the client for a larger fee.

Still, for many large companies, hiring in an hourly staffing model is the path of least resistance. You may not be maximizing their earning potential, but should this minimize your accomplishments?


But, Here’s the Main Point…

There are plenty of consultants who are paid to do more than simply advise and, even more “consultants” who simply get paid to do.

At the end of the day, my definition of a consultant is fairly simple:

Someone hired to help a client solve a problem, on their terms, using the insight they’ve acquired from past experience.

That is, you define the solution and conduct the work in a manner that you believe best helps the client. If that’s you, go ahead and feel free to call yourself a consultant.

Don’t be a starving artist

There are a lot of talking heads giving advice to aspiring consultants to take pro bono or, low rate work to build their portfolio.  That’s fair, but there is nothing noble about passing up a decent paying gig.

My experience has been that it is perfectly OK to take a contract if the project is a good fit for your portfolio (and referenceable).

More food for thought

If you find yourself second-guessing the contracting game, check out these interesting posts from Nick Crocodilos at Ask The Headhunter®:

Consulting: Welcome to the cluster-f*ck economy

Consulting Firms: Strike back & stir the pot

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