Those self-employed people who have gained experience over some years and are in a position to sell their expertise to organizations in lieu of a fee constitute the group of consultants. Younger people are hired who have substantial knowledge, are specialists in a branch and have sound technical knowledge of particular areas of business activity. Consultants offer advice to organizations about many issues but before that research needs to be carried out, new policies and procedures need to be designed and staffs need to be trained. IT companies need the help of consultants to carry out their operation. HR field also require consultancies which specialize in job evaluation and can improve the personnel information systems.

The need of consultancy services by organizations has given a boost to the field of consultancy. The consultancy industry has employed thousands of highly qualified people over the years.

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The opinion of the managers differ on a great extent, on the appointment of consultants. In public sector organizations, there is a growth in the appointment of consultants. Consultants need to be appointed in an organization only if they can add value.

Let us try to understand this by taking the help of an example. Sometimes what happens is, an organization needs specialist advice and cannot access it through its internal resources. For example, the HR of an organization needs to develop a competitive employment package for an individual who has to be sent on long-term expatriate assignment to a country. In this situation, it is useful to take advice from someone who has technical knowledge of the tax systems, pay rates and living standards of that country so that the pay can be decided on that basis.

Following are the functions of a consultancy:

  1. It provides specialist expertise and a wider sense of knowledge which might not be available inside the client organization.
  2. It provides an independent view.
  3. It acts as a catalyst.
  4. It provides extra resources which are required in order to meet temporary requirements.
  5. It helps in developing a consensus when there is disparity of views about proposed changes.
  6. It demonstrates to the employees the objectives behind personnel changes.
  7. It justifies unpleasant decisions.

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A positive outcome can be expected from two factors, which are discussed here. The chance of getting a positive results while employing consultants depends on two factors, the consultants need to go to the depth of the issue before providing advice to the client, and the second is the cost associated with their employment and the field of their expertise needs to be studied carefully.

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