IT Consulting Rates Explained

The global IT consulting market is projected to pass 100 billion by 2028 — a truly impressive growth!

But this has not always been the case.

In the not so distant past, many organizations especially in the small and medium spectrum tended to view IT consulting as more of an indulgence than an essential investment. This perception appears to be shifting now, though: businesses are coming to understand the utility of IT consulting, especially with the current influence of technology where it’s really hard to compete without using tech tools. Without specialized expertise to guide you through it all, you might as well be writing a blank cheque for your rivals.

Nevertheless, one concern that keeps organizations from tapping into IT consulting services is the rates; there's this assumption that IT consulting is overly expensive. This simply isn't true. 

This article takes an in-depth look at the costs of IT consulting for 2023 and provides expert advice on how to get the most out of your expenditure.

What does IT consulting entail?

IT Consulting is a professional advisory service that helps businesses get the most out of technology. As an organization, IT Consulting can help evaluate your current technology strategies and make sure they are aligned with your business goals and processes.

According to Gartner, IT consulting can be broken down to a couple of core categories of planning:

  • Strategic: Helps clients to evaluate their IT requirements and devise system deployment plans.
  • Architectural: Combines strategic plans and the knowledge of new technology to come up with a logical system design plus the supporting infrastructure that will meet customer requirements.
  • Operational: These services assess the operational efficiency and capacity of the organization’s IT environment. 
  • Implementation: These services advise clients on roll out and testing of solutions. 

Think of it as a service that helps you to assess your current technology needs, identify opportunities for improvement, and provides guidance for developing and implementing solutions that increase efficiency and reduce costs. 

Current IT consulting rates

What are the current IT consulting rates? How much do IT consultants charge per hour? These are some of the top questions that decision makers in companies are constantly asking when looking to hire IT consultants. 

The current average IT consulting rate starts at around $100 to per hour among IT consulting companies, and around $50/hour among individual IT consulting professionals working solo. From here, the rates can go as high as $800 per hour and beyond.

The location, experience and size (for companies) are the key factors that determine the rates. For example, a new IT consulting company is likely to charge lower rates compared to an established company with many years of experience.

Most IT companies begin with a base rate, to which they can add more costs depending on what the client needs.  For example, consulting company XYZ can tell you that their services start from $100 per hour or $5000 per month. This means that whatever service you want,  you’ll not pay below $100 per hour. In other words their most basic service costs $100/hour or $5000 per month. This is the general concept. 

Here is a breakdown of the IT consulting rates in USA based on size, which is the top factor that influences the rates:

Average US IT consulting rates per hour

SizeDefinitionAverage Rate ($)

Individual consultant

A professional working solo. 

Can handle projects for small businesses and solo entrepreneurs, project budget ranging $5k to $50k

50-150

Small 

-10-50 employees

-$100k-$3M total assets

-$100k-$3M annual turnover

Can handle projects for small to medium business, with project budget range of $50k-$1M

100-200

Mid-sized 

-50-300 employees

-$3M-$15M total assets

-$3M-$15M annual turnover

Can handle projects for any size of company, with a project  budget range of $50k to $5 million.

150-350

Large

-Over 300 employees

-Over $15M total assets

-Over $15M annual turnover

They handle extremely large projects e.g. for fortune 500 companies and governments, budget range $5M and above

400-800

Average US IT consulting rates per month

Depending on the project, you may decide to work with IT consultants on a contractual basis. This is normally the case for projects that will go for long, say six months to one year or more. It would be too expensive to go the hourly way for this kind of project. 

In this case you will sign a contract with the consultant. The contract will specify the obligations of the consultant as well as you, the client. If you are looking for help with cloud tools, for example, you might want to go for a Managed cloud services provider

The contract should be very specific. This is important because any work outside what is specified in the contract will always attract new costs, as the consultant will have to dedicate more resources to that extra task. For example if you hire a consultant to oversee your cloud environment, and somewhere down the road you discover that you need to add new tools, you will need to pay for this extra requirement if this service was not captured in the contract. The good thing though is that a consultant who you are already working with will normally give a fairly good discount because you are already a loyal client. 

IT consulting rates outside normal working hours

Some consultants apply different rates for work that falls outside normal business hours. Good examples include weekends, public holidays, and at night. This is something you should always discuss upfront with your chosen consultant to avoid surprises. It’s also possible to find consultants who charge the same rate whatever the timing. 

How much in total will IT consulting cost you?

It starts with budgeting.

Estimation will help you get a rough idea of how much money you need to put aside for a certain project. This is normally useful at the planning phase when you are preparing to roll out a project but you are still a bit far from the actualization or execution. You need not bother IT consulting companies or professionals at this point. The price they give you today might have changed by the time you are ready to execute. 

To estimate, simply define what you want an IT consultant to help you achieve, then check out and compare the prices of the various IT consultants that offer that service. As a resource for IT companies, we have many companies in the IT consulting services section. So this is a good place to start.

Confirmation

By the time you want to confirm the rate from your shortlist of IT consulting companies, it means you now have a clear idea of your project and now you just want to execute.

Well, you will call or email the companies and ask for their rates based on your needs. The companies are going to quote their rates either by the hour for small projects, per month or per project for large projects. Remember you had done your own estimations and budgeting earlier so the rates they give you should not be very far from your estimation.

If the rates they quote for you are below your estimation, good job! If they are more than your estimation, then you'll have to try negotiating. We have some tips for negotiation.

How to negotiate lower IT consulting rates

The rule of thumb in negotiations is to approach it from the interest of the other party. For IT consultants, their main interests are to secure profitable work. If you can make it long term, then you’re going to be good friends and they are likely to get you a very good rate. 

These tips can help you to negotiate a lower rate while also building a strong working relationship with IT consultants. 

  1. Research the market rates for similar services: This will give you a good idea of what is considered a fair and reasonable rate, and will give you solid data to use as a starting point for your negotiations.
  2. Ask for a volume discount: If you plan on using the consultant's services frequently or for an extended period of time, ask for a volume discount. This can be a percentage off the hourly rate or a flat discount on a fixed-price contract. Many consultants and agencies will be willing to offer a discount to secure a long-term client.
  3. Be open to alternative solutions: Be open to discussing alternative services or solutions that may be less expensive but still meet your needs. For example, if you're looking for a complex software solution, there may be a more cost-effective option that still fits your needs.
  4. Negotiate with multiple vendors: Contact multiple vendors and compare the quotes, negotiating with all of them to get the best deal while paying attention to the quality of each vendor’s services.
  5. Discuss long-term agreements: Long-term agreements may result in lower rates than short-term agreements.
  6. Provide references: Showing the consultant that you have a good track record with consultants like them can also help you negotiate a lower rate.
  7. Be flexible on payment terms: Consider paying in advance, this can help vendors to offer you a better deal.

Benefits of utilizing IT consulting services

The overall benefit that comes with making use of IT consultancy is that this service simplifies things for you. They bring that extra eye that compliments your internal capabilities. 

Here are some of the standout advantages:

Access to specialized expertise

IT consulting services can provide access to specialized expertise and knowledge that may not be available in-house..

For example, a small retail business may not have the in-house expertise to effectively implement an e-commerce platform. The business may have a website, but it is not optimized for online sales and the conversion rate is low. In this case, the business can hire an IT consultant with expertise in e-commerce to help them expand their reach and improve their online sales.

The consultant will first conduct a thorough analysis of the business's current website, identifying areas for improvement. They will then work with the business to create a strategy for the new e-commerce platform. This will include creating a user-friendly design, implementing a secure payment gateway, integrating the website with the business's inventory management system, and optimizing the website for search engines to increase visibility and drive more traffic to the website.

The consultant will also train the business's staff on how to manage the e-commerce platform and provide ongoing support to ensure that the platform is running smoothly. Additionally, the consultant will help the business to create targeted marketing campaigns to promote the e-commerce platform and drive sales.

Improved efficiency and productivity

IT consultants can help to identify areas of inefficiency and recommend solutions that can improve overall productivity. 

For example, a manufacturing company might hire an IT consultant to optimize their inventory management system. Let’s say the company currently uses a manual system of data entry, with employees manually inputting data into spreadsheets. This is a time-consuming process, prone to errors and data inconsistencies. Additionally, the company has no real-time visibility of the inventory and no automated reorder system.

The IT consultant will first conduct a thorough analysis of the manufacturer’s current inventory management process, identifying areas of inefficiency. The consultant will then work with the company to design and implement a new inventory management system. This will include items such as automating data entry, implementing a barcode scanning system, and integrating the system with the company's accounting software to improve data accuracy and real-time visibility of inventory. The consultant will also create an automated reorder system, so the company will never run out of stock.

Risk management

IT consultants can help organizations to identify and mitigate potential risks, such as data breaches or system failures. 

For example, a financial services company hires an IT consultant to conduct a security audit of their systems and infrastructure. The consultant identifies several potential vulnerabilities, such as weak passwords, outdated software, and lack of network segmentation.

The consultant then works with the company to implement new security measures to address these vulnerabilities, such as implementing multi-factor authentication for all user accounts, upgrading software and patching management systems, and segmenting the network to limit the scope of any potential data breaches.

In addition, the consultant ensures that the company is in compliance with industry regulations, such as HIPAA and PCI-DSS, by implementing the necessary controls and procedures.

As a result of the consultant's work, the financial services company experiences a significant reduction in the risk of data breaches and is able to demonstrate compliance with industry regulations to regulatory bodies. The company also benefits from improved data security and peace of mind knowing that their sensitive customer information is well-protected. This directly impacts the company's reputation and revenue, as customers are more likely to trust a company that can demonstrate a strong commitment to data security.

Innovation

IT consulting services can provide access to new technologies and innovative solutions that can help to improve business processes and help clients gain a competitive edge. 

Example: A healthcare organization hires an IT consultant to help them explore new technologies that can improve their patient care and reduce costs. The consultant conducts a technology assessment and identifies several potential solutions such as telemedicine, telehealth, and machine learning.

The consultant works closely with the healthcare organization to understand their specific needs, such as providing remote patient monitoring, reducing wait times and improving the accuracy of diagnoses. The consultant recommends the implementation of a telemedicine platform that allows patients to consult with their doctors remotely, using video conferencing, and machine learning algorithms that can assist in diagnostic processes.

The consultant also helps the organization to implement the necessary infrastructure, security, and compliance measures to ensure the telemedicine platform is compliant with regulations and patient data is protected.

As a result of the consultant's work, the healthcare organization is able to provide better patient care by reducing wait times and increasing the accuracy of diagnoses. It also helps to reduce costs, as patients no longer need to travel to the clinic for routine check-ups. It can also open the organization to a larger patient base. Additionally, it improves the accessibility of healthcare services, especially for patients living in remote or underserved areas.

Long-term strategic planning

IT consulting can help organizations to plan for the future, by identifying potential challenges and opportunities, and helping to develop long-term strategies for growth and success.

Example: An airline company hires an IT consultant to help them plan for the future of their business. The consultant conducts a comprehensive analysis of the airline industry, identifying potential challenges such as increased competition and the impact of new technologies on the industry.

The consultant also identifies opportunities for growth, such as the increasing demand for air travel, the potential for new routes and markets, and the possibility of implementing new technologies such as artificial intelligence to improve the customer experience and increase operational efficiency.

Based on this analysis, the consultant works with the airline company to develop a long-term strategic plan that addresses these challenges and opportunities.

For example, the consultant may advise the airline to use predictive analytics to identify that there is a growing interest in travel to a certain destination, based on an increase in social media posts and news articles about the destination, as well as positive forecasts for weather. The company can then decide to launch new flights to this destination, and use machine learning algorithms to optimize pricing and flight schedules for these flights.

The company can also use machine learning to predict which routes are likely to be less profitable and adjust their pricing and flight schedules accordingly.

There are many more benefits we can talk about. But hopefully, these few plus the examples do open your eyes to the immense advantages of using IT consulting services. There's a reason why the big companies rely on IT consultancy — they enjoy these kinds of benefits. It’s often easy to think that your organization has everything figured out, yet you may be surprised to find new opportunities you likely never considered.

How to get the most out of your investment in IT consulting

There are several ways your organization can maximize the return on investment in IT consulting services:

  1. Clearly define your goals and objectives: This is like the most obvious of all! Before engaging an IT consulting firm, it's important to clearly define your goals and objectives so that the consulting firm can provide services tailored to your specific needs.
  2. Communicate effectively: Open communication with the consulting firm is key to ensuring that they understand your needs and can provide services that align with your goals and objectives.
  3. Consider long-term engagement: Long-term engagement with an IT consulting firm can help ensure that your organization is continuously improving and staying up-to-date with the latest technology and best practices.
  4. Use the consultant as an interim CTO or CIO: Hire an IT consultant as an interim CTO or CIO to provide expertise and guidance on strategic IT decisions, such as technology roadmaps and digital transformation initiatives.
  5. Use the consultant to build an MVP: Use the consultant to build a minimum viable product (MVP) to test a new business idea or product before investing significant resources into development.
  6. Use the consultant for a «Hackathon»: Hire an IT consultant to lead a «hackathon» where a team of developers and business stakeholders come together to brainstorm and prototype new ideas or solutions.

Conclusion

Instead of viewing IT consulting services as a one-time expense, consider it as an ongoing partnership that can help your organization stay competitive in the long-term. 

This means not only choosing a reputable consulting firm with the right skills and expertise, but also regularly reviewing and adjusting your technology strategy to align with your business goals.

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