Platform Businesses
Platform businesses create value by enabling direct interactions between supplier and customer of products or services. There are already many successful platform businesses for various markets: product platforms (e.g., Amazon), content platforms (e.g., Medium, YouTube, Wikipedia), asset sharing platforms (e.g., Airbnb), application platforms (e.g., iOS, Android stores), recruitment platforms (e.g., LinkedIn), education platforms (e.g., Coursera, Skillshare), property platforms (e.g., Rightmove), relationship platform (e.g., Tinder) and service platforms (e.g., Uber, Deliveroo, Fiverr).
Platform businesses reduce the search time and costs for participants in both supply and demand sides. Platforms also provide more timely and transparent information, and traceability of interactions among participants. Most platforms operate with the new revenue model so they can provide to users for free. However, due to the need of network effects, platform businesses within each market tend to evolve into oligopoly. The complex nature of platform algorithms, participants, stakeholders also make it hard to regulate from traditional standpoints.
Consulting Service Marketplace / Platforms
Service platforms boomed with low-skilled / administrative and small-scale services such as delivery, driving, cleaning, and assisting with someone’s travel and appointments. In the last 5 years, more service platforms were created to target professional / creative / high-skilled services such as designing, programming, marketing, accounting, and consulting.
From my research, I found a few frequently mentioned consulting platforms below:
- Toptal, founded in 2010 in San Francisco.
- Expert360, founded in 2012 in Sydney.
- Graphite, founded in 2014 in San Francisco.
- Comatch, founded in 2014 in Berlin.
- Umbrex, founded in 2015 in New York.
- Consultport, founded in 2017 in Berlin.
- Riverflex, founded in 2018 in Amsterdam.
Opportunities
Consultants already work in a short-to-medium term (3–6 months or 6–12 months), as-required and time-based manner. The pandemic also rebuked the myths of client-based facetime and business travelling as consultants can work fully remotely. Consulting service platforms will play more significant roles in the future way of consulting considering the benefits mentioned above for platform businesses. Particularly, start-ups and small to medium firms usually cannot afford to engage with large consulting firms, they will be able to easily find consultants through the platforms to support business strategy, business analysis, operational process design, project planning and management etc.
Limitations
Today, the consulting platforms’ market has not consolidated into oligopoly state. Thus, it faces a “multi-homing” issue where consultants and clients form ties with multiple platforms at the same time. This cost both consultants and clients more time to maintain profiles and contacts with multiple platforms, brews price war on much reduced hourly rate and limits platforms from growing bigger to benefit from network effects.
Comparing with consulting firms, the platforms would still need to ensure the project and consultant quality vetting (i.e. will project actually happen, do consultants have the skills and experiences described) and project to consultant matching (i.e. project role and time to meet consultant’s motivation and availability) which are not easy to be automated to be accurate.
Consulting firms perform lengthy process and make huge time and people investments in replying clients’ request for proposal. But this will be challenging for platforms to undertake. In the end, probably the consultants would undertake lots of work along with the platform for free in the hope to win the project work.
Summary
The consulting platform business models are still evolving. This market will need to either split into a big variety of very niche market segments or consolidate into oligopoly which has better core team, better platform design, trust from both consultants and clients and better operation and algorithms. With the nature of work, consultants in general would prefer a more flexible way of working. So this trend towards platform businesses is going to continue and hopefully most limitations will be resolved.
Interested in this topic? Below are articles I found useful during the research
- https://think-boundless.com/the-failed-promise-of-freelance-consulting-talent-platforms/
- https://www.consultantsmind.com/2018/01/02/online-market-for-consulting/
- https://www.consultport.com/consulting-marketplace/consultport-a-platform-for-the-future-of-consulting/
- https://www.smartup.io/2018/05/15/a-platform-for-the-future-of-consulting/
- https://www.codementor.io/blog/toptal-vs-upwork-vs-codementorx-popular-freelance-websites-comparison-27jufd7or4
