The True Cost of Consulting in New Zealand

Author Introduction 

After years on both sides of consulting engagements in New Zealand, I keep seeing the same pattern: premium rates, fuzzy outcomes, and knowledge that never sticks. The invoice looks tidy - the value does not. This piece unpacks the hidden costs leaders overlook and offers practical questions to help you buy outcomes, not activity. Before you commit your organisations to its next engagement, pause, take a few minutes and read this Blog series.

Outline

• Current state of the NZ$13.2 billion consulting market

• Why high day rates do not equal better outcomes

• The hidden cost of global consultancies - inflated fees, scope creep, and poor transparency

• Real examples of poor ROI measurement challenges

• Questions every business leader should ask before their next consulting engagement

Introduction

Consulting remains one of the most significant discretionary expenses for New Zealand enterprises - but is it paying off? Senior leaders are increasingly asking whether the millions directed to global firms translate into measurable outcomes that withstand board scrutiny. The need is not to spend less for the sake of it, but to spend smarter - buying impact, not slide decks.

The current state of New Zealand’s consulting market

By any measure, consulting is a material part of the local economy. Independent industry data places the size of New Zealand’s consulting services market at roughly NZ$13.2-NZ$13.3 billion in 2024 - after steady growth in recent years. (IBISWorld, IBISWorld)

Beyond revenue, the footprint is broad. Stats NZ records large numbers of firms operating in management and related consulting services across every region, reflecting how widely consulting capability is distributed in the economy. For procurement leaders, this translates to abundant choice, but also information asymmetry - it is not straightforward to tell who delivers value and who merely presents it persuasively. (Figure.NZ)

Why high day rates do not equal better outcomes

Price is a signal of scarcity and brand power - not a guarantee of business impact. Research featured in the Financial Times, drawing on economists’ analysis of firm outcomes, finds that consulting can deliver modest productivity gains over multiple years - but value is uneven and contingent on the specifics of the engagement. Expensive brands are not an automatic proxy for results. (Financial Times)

From a buyer’s perspective, the right question is not what a firm charges per day, but whether the engagement defines and measures outcomes that matter to the business - and whether the cost structure leaves enough budget for implementation. Even advisory voices inside the industry emphasise the need to assess returns before and after the engagement rather than assuming reputation equals value. (Harvard Business Review)

The hidden costs you do not see on the proposal

1) Inflated fees and layered delivery

Large firms carry substantial overhead and operate with multi layer pyramids that can diffuse accountability. That cost can surface as higher rates and a delivery model where senior people sell and junior teams deliver. Without tight outcome definitions, effort expands to fill the budget.

2) Scope creep

Independent project management research consistently associates scope creep with lower project success - missed deadlines, cost overruns, and diminished quality. In practice, scope creep often starts with unclear baselines and expands via small, unpriced changes. If your agreement is output focused rather than outcome focused, you are especially exposed. (ScienceDirect, ResearchGate)

3) Transparency and ethics

The last two years have produced high profile cases in Australia highlighting governance failures at major firms, including misuse of confidential information and questions about conflicts of interest. While these are not universal, they underscore why buyers should insist on clear engagement rules, data handling standards, and transparent commercial terms. (The University of Sydney, SSRN)

The takeaway for New Zealand executives is simple - if you cannot see how a proposed fee structure, staffing model, and scope control mechanisms drive measurable outcomes, you are buying risk disguised as certainty.

Why ROI is hard to measure - and how to make it easier

Many organisations struggle to prove consulting ROI because they begin with activity and outputs, not baselines and outcomes. Classic finance guidance stresses the importance of agreeing both the expected impact and the measurement approach up front - including how to isolate the consultant’s contribution from other changes in the business. That starts with defining net benefit over cost using a consistent method, then stress testing assumptions before you sign. (Harvard Business Review, Harvard Business School Online)

There is also an intangible side. Knowledge transfer, capability uplift, and decision quality are harder to monetise, yet often determine long term value. Harvard Business Review has long cautioned against ignoring these factors - the absence of a perfect measure does not justify the absence of measurement. Build qualitative indicators into your governance plan and track them alongside commercial metrics. (Harvard Business Review)

Practical tip - Align to SMART objectives and a concise KPI set before the first invoice: for example, time to decision, cost per transaction, error rate, cycle time, conversion rate, or customer churn. Document a pre engagement baseline, target ranges, and the data sources to be used. If these are not in the proposal, ask for them.

Real world pitfalls to watch

• Deckware instead of delivery - impressive presentations without operational follow through. If the vendor’s deliverables are documents rather than changes in a live environment, your ROI is at risk.

• Over centralised governance - decisions escalated through remote chains slow delivery and dilute accountability.

• Incentives misaligned to outcomes - time and materials models can reward effort rather than impact; consider fixed price for well defined work packages with outcome milestones.

• Weak change control - if your statement of work is vague or does not articulate acceptance criteria, scope creep and rework are almost guaranteed. Evidence from multiple domains shows how unmanaged scope change undermines success. (Semantic Scholar)

Five questions to ask before your next engagement

1. What business outcome will this work change, by how much, and by when - and how will we measure it?

2. What is our baseline and data source for each KPI?

3. How will you ensure senior expertise is present where the real work happens?

4. What is in scope, what is out, and how will change requests be handled and priced?

5. How will knowledge be transferred so we are not dependent on you to sustain benefits?

Closing thought

The true cost of consulting in New Zealand is not only the invoice - it is the opportunity cost of time, attention, and credibility. When you buy outcomes with clear baselines, governance, and measurement, consulting can create real productivity gains. When you buy on brand and activity alone, you risk paying premium prices for marginal impact. Start your next engagement by insisting on clarity - the numbers will follow.

Further reading

This article is part of a five part series on improving consulting outcomes for New Zealand enterprises. It is designed to educate and equip leaders who want measurable results, faster time to value, and stronger capability retention.

Further reading on the topic of RO driven Consulting in New Zealand

Blog 1 - The True Cost of Consulting in New Zealand

Blog 2 - Why "One Size Fits All" Consulting Doesn’t Work for Kiwi Enterprises

Blog 3 - Measuring Real Consulting Outcomes - Beyond the Slide Deck

Blog 4 - The Smarter Path to Consulting - Local Specialists Delivering Measurable ROI

Blog 5 - Realising Long-Term Value - Building Trusted Consulting Partnerships Onshore