The DNS Group is 21 years old as of this writing. We’ve been larger, smaller and then larger, smaller again. Some people think that companies have to grow or die. It’s sort of the Capitalist Mantra. I would counter that there is also a thing as smaller but better.
At the core of the consulting business model is billing a person at X and paying Y. The difference between X and Y is the gross margin. The gross margin is what you have to operate the company, including insurance, recruiting, sales and accounting/payroll. In the early days, we would place any position and even some that had margins of less than 5%. I can definitely say, those were loss leaders that didn’t really produce.
A comfortable placement for us has a 20% gross margin but we target something around 30%. Setting the bar higher affords us time to pay more attention to the customers that we do have, improving the relationships.
In the early days, we placed java, c#, vb, sql developers, etc but these days we’re focused exclusively on SAP Callidus Incentive Compensation. You can’t really get great on anything if you are doing everything.
The last item that makes smaller now better than larger then, is that we previously ran thru staff augmentation middle layer companies to get into Fortune 1000 accounts, at times. We also sub-contracted from various large consulting companies, like SAP. We do not believe that multi-layers to an end client is in the best interest of the end client. Every company in the chain is taking a cut of the profits. This both raises the cost to the client and lowers the payout to the consultant.
These days, we’re focused on direct relationships. We go through the steps of marketing a little more thoroughly and playing a longer game with the customers that we do have. When you run through other companies for the business, they aren’t truly your customers. We’re not opposed to helping a fellow consulting company out and we will do that when asked. It’s just not the doors that we’re knocking on…
