By Chandranath Chakraborty, Founder & Managing Partner · [email protected]
As consulting fees shift toward outcomes and tooling compresses delivery, panels priced by the hour are paying for a seniority mix nobody checks.
The consulting market is growing while its pricing basis dissolves. Source Global Research expects seven per cent growth in 2026, up from six in 2025 and four in 2024, with technology consulting passing US$400 billion. McKinsey reports that roughly a quarter of its global client fees in 2025 came from outcome-based arrangements.
The buy side has moved rather less. Most panels are still governed by a rate card negotiated against a pyramid of partner, principal, manager and analyst. The quoted mix is treated as a description rather than a commitment.
That is where the money quietly leaks.
A rate card prices seniority. Nothing in most contracts obliges anyone to deliver the seniority quoted, and the tooling now compressing junior hours makes the gap between quoted and delivered mix wider every quarter. Management needs to know what mix the business is paying for, what mix it is receiving and what the difference costs.
MomentumX works from that fact base through demand governance, deliverable pricing, negotiation, implementation and value delivery.
For the worked model behind this analysis, or to discuss an advisory spend base: [email protected]
On demand the picture is unambiguous. Growth is running at seven per cent, fastest in pharmaceuticals and life sciences and in healthcare at around ten per cent each and energy and resources at nine, with technology consulting forecast to pass $400bn in global revenue for the first time this year. Any argument beginning from the assumption that clients are simply spending less does not survive contact with the numbers.
On pricing the evidence points in two directions at once, and the tension is the useful part. The General Services Administration named its ten highest-paid suppliers, ordered them to justify each contract or accept reductions, and secured concessions above $20bn together with a shift onto performance-based fees. That was a single buyer with unusual concentration and unusual bargaining power. The mechanism it used, however — insist on the outcome, price against delivering it — is available to any large buyer with the appetite to run it.
The supply side has moved in the same direction without being compelled to. McKinsey has disclosed that approximately a quarter of its global client fees in 2025 came from outcome-based contracts, having begun piloting outcome-linked fees in late 2025. EY published a formal outcome-pricing playbook in February 2026.
Source's own commentary then adds a nuance that gets lost in the general narrative of fee compression. Price pressure eased slightly towards the end of 2025, partly because the discounting earlier that year had reached a level clients themselves recognised as unsustainable, and the expectation is that price pressure continues to fall through 2026 even as outcome-based pricing rises. The two are not in contradiction. What clients appear to be buying is a clearer relationship between fee and value rather than a lower hourly figure, and Source finds that the factor most likely to make a client willing to pay more is a firm's ability to articulate the incremental business value it created.
Underneath sits a change in delivery economics that neither side has settled. Where tooling compresses the time required for standard analytical deliverables, an input-priced model produces an uncomfortable arithmetic: the same rate card, fewer hours, an invoice that looks similar. Firms have responded on the supply side. McKinsey moved from around 45,000 employees in 2022 to approximately 40,000 by mid-2025 and announced a further reduction of about ten per cent in December 2025. Accenture cut roughly 11,000 roles while committing to 80,000 AI-focused hires, and trimmed its fiscal 2026 revenue guidance to three to four per cent from three to five.
The published material describes what firms charge and how they are restructuring to keep charging it. It says nothing about how the category is bought, and that is the half a buyer controls.
Two decades on the buy side at Disney, Nike, Unilever and Procter & Gamble left one observation that no market report captures: professional services is managed with less rigour than categories a fraction of its size, and the reason is structural rather than careless. The work is sponsored by whichever function wants it, awarded on relationship and prior familiarity, competed occasionally against a shortlist assembled from memory, and scoped in a statement of work describing activities rather than deliverables. Rate cards are negotiated once and rolled, so the discount looks increasingly impressive against a list price nobody pays. The category is bought by people whose success depends on the work happening rather than on what it cost, which is an incentive no sourcing process overrides.
The category engine work makes a sharper version of the same point. Of the seventy categories in the library, professional services is the only large one where the demand lever — whether the engagement should be commissioned at all — is reliably worth more than the price lever. It is also the lever procurement is structurally least able to pull, because the person who would have to concede it is the budget holder who requested the work. That mismatch, rather than any weakness in negotiation, is why the category resists the tools that work everywhere else.
There is a second thing the reporting does not measure, and it is the one that moves money. A rate card prices seniority. It does not oblige anyone to deliver the seniority quoted. Across engagements examined in the engine work, the mix actually deployed skews more junior than the mix priced, and no standard contract requires the difference to be reported, let alone refunded. The compression now under way makes this worse rather than better: as tooling absorbs analyst hours, the quoted pyramid and the delivered pyramid diverge further, and the fee does not move.
The United Kingdom's public sector experience is a caution about halfway measures. The Cabinet Office introduced controls intended to save over £1.2bn by 2026, with ministerial sign-off for any consultancy spend above £600,000, and the Public Accounts Committee subsequently found departments were not complying and that compliance was not being monitored.
A spending threshold changes the shape of what gets bought, since engagements arrive priced just below the line. It does not change how any of it is specified, evaluated or measured afterwards.
One engagement, taken through in the open, shows where a rate card stops describing what is being bought.
A $2m engagement is quoted on a pyramid: 10 per cent partner time, 20 per cent principal, 40 per cent manager, 30 per cent analyst. At a rate card of $900, $600, $400 and $250 an hour, the blended rate is roughly $438. The negotiation that preceded it won 12 per cent off the list card, which reads as $240,000 saved and is recorded as such.
Now suppose tooling removes 40 per cent of the analyst hours, which is well within the compression the firms themselves describe. Delivered analyst time falls from 30 per cent of the engagement to 20 per cent. If the fee is fixed against the original scope, the effective blended rate rises to roughly $487 — an increase of 11 per cent, arriving silently, which more than consumes the 12 per cent discount that was negotiated. The buyer records a saving and pays a premium in the same transaction.
A Rate-Anchored Should-Cost™ is what closes that gap: rebuilding the engagement price from the mix of seniority actually deployed rather than the mix quoted, the elapsed weeks, the deliverable count, and the proportion of the work now produced by tooling, with each element traceable to an objective reference. A discount expressed against a list price is not evidence of value. A build-up showing what the delivered work costs to produce is, and it matters more as the market moves towards outcome pricing, because an outcome fee agreed without a view of the underlying cost base only moves the pricing question to a different line.
Sizing what is recoverable then requires the levers to be kept apart, since value counted under two of them is counted twice. The Four-Lever Framework™ splits the category into price, specification, demand and cadence. Price covers rates and fee structure. Specification covers the deliverable itself, which is usually the difference between a full diagnostic and the two workstreams anyone will actually read. Demand asks whether the engagement should be commissioned at all. Cadence covers retained and recurring work, where an annual review running for six years has generally become a subscription nobody has re-examined.
The worked file behind this piece is available on request: [email protected].
The starting point is a change of instrument. Defined work is priced as a deliverable, with the quoted seniority mix written into the contract as a commitment. Open-ended advisory work stays on rates, with delivered seniority reported quarterly against what was quoted.
The case against is made by people who have tried it. Outcome pricing transfers the pricing question rather than answering it, because a firm asked to carry delivery risk prices that risk into the fee, and a buyer without a cost build-up cannot tell whether the premium is fair. Most buyers cannot define the outcome tightly enough for the mechanism to work, and a loosely defined outcome produces a dispute at the end of an engagement instead of a negotiation at the start of one. Contracting on a delivered seniority mix invites gaming, since a firm can meet the ratio with nominal partner involvement. And the sponsor who commissioned the work does not want procurement in the room, which is the objection that defeats more of these initiatives than all the others together.
The definitional objection is the strongest and it constrains where this applies. Deliverable pricing works on defined work — a diagnostic, a benchmarking exercise, a system selection — and fails on genuinely open-ended advisory. The answer is to stop pretending one contract shape covers both and to price them differently, rather than to give up on the half that can be defined.
The sponsor objection is not solved by procurement and should not be claimed as solved. What changes it is a quarterly review that reports delivered against quoted seniority to the person who signed the engagement, since a sponsor shown that arithmetic once tends to ask for it thereafter. That is slower than a policy and it is the only version that holds.
MomentumX can take the work through the full cycle. It starts with the advisory spend map and the delivered-against-quoted seniority review. It ends with deliverable-priced contracts and the recovery verified in the accounts.
For CFOs, a single view of advisory spend across entities is usually the largest ungoverned number in indirect cost. The delivered-mix review turns an invisible leak into a measurable one.
For CPOs, professional services is the one large category where the demand lever does most of the work, and where the sourcing lever alone has repeatedly disappointed.
For operating leaders and engagement sponsors, the quarterly delivered-against-quoted review is the single discipline that changes supplier behaviour without souring the relationship.
For private-equity sponsors, advisory and transaction spend accumulates across a portfolio without ever being seen as one category, and consolidating that view generally pays for itself in the first quarter.
The pattern holds across industries and across the region. The management challenge is constant. What seniority is the business paying for, and what seniority is it getting?
For the worked model behind this article, a Confidential Spend Review of an advisory category, or a discussion on an APAC cost programme: [email protected]
MomentumX works from opportunity identification through commercial strategy, negotiation, implementation and value delivery.
A Confidential Spend Review — a senior look at a single category or contract, on client data under a non-disclosure agreement or on an illustrative basis.
Or the Spend Exposure Index, a confidential self-assessment completed privately, with no data shared.
Written by Chandranath Chakraborty, Founder & Managing Partner, MomentumX Consulting. Two decades running procurement for The Walt Disney Company, Nike, Unilever and Procter & Gamble, with structural cost reductions above 12 per cent across a US$1B+ regional spend base in his most recent role. LinkedIn · [email protected]