Contractor. You bill time and materials to the customer, rather then charging for the product. It means you're not going to grow because you're not hunting for value multipliers anymore (insert joke about the difference in cost between what IBM bill you for those people and what IBM pays them).
A consultancy company I used to work for referred to this as 'brains by the pound'. The implication was that the only way to increase revenue (assuming constant rates and expenses) was to add more staff (perhaps working for new customers).
There is one way to make it scale, sort of. Find a consultancy solution that is applicable across multiple customers. E.g where multiple customer teams have essentially the same problem. Once you have ironed the bugs out of your consultancy solution, you can template it and reuse in new situations with fewer surprises. You can still include a risk bucket in your charge-out rates, but this is more likely not to be used and thus taken as profit. In the case with which I'm familiar, a very large organisation had multiple teams writing business requirements that would be put out to tender. The central organisation had never tried to standardise this process, and multiple similar mistakes were made by multiple customer teams. Hence a good business opportunity for a small external consultancy who could spot the mistake patterns and solve them multiple times.
Whether the template approach is good for all customers is a wholly different question. You can also get badly burned (in cost and / or reputation) if you find after starting with a new customer that the template isn't applicable after all. Hence the common situation where a consultancy organisation deploys its 'A-team' to win and start the work, and then swaps them out for cheaper and less skilled staff to complete the deliverables.
> Find a consultancy solution that is applicable across multiple customers. E.g where multiple customer teams have essentially the same problem. Once you have ironed the bugs out of your consultancy solution,...
That is called product and apart from few top vendors product companies are getting hammered in similar fashion or worse.
The difference: when GM cuts a person and still ships a car their margin goes up. When IBM cuts a person from a project their revenue falls.
Having a template or cookie cutter helps because you can reduce execution risk (which can also help sales) and also assign a more junior person, at the same rate, to the later projects, which does goose profits.
> because you can reduce execution risk (which can also help sales)
Yes. This was exactly the case in the example I mentioned in my earlier comment. The specific aspiration was that once we had successfully solved the problem for one customer team, that team would act as our internal reference for the next customer team.
Huh. I always thought body shop would refer to companies who hire at scale. Indians call them MRCs - Mass Recruitment companies.
IBM/TCS/Infosys/Wipro/Cognizant are consultancy shops which are some examples of MRCs. They generally hire at scale - like 10,000 people in one go or scooping up a whole college’s batch. Thats how they have also been able to keep a freshers salary static at 3-5 LPA (~4k-6.5k USD) for 13 years now.
Local jargon. In the states a body shop* is a company where they are sending people to do work and charging a commission on hours worked. They could do some project consulting too (clearly some people cost more than others and some payments are structured around milestones or even efficacy) but essentially at the end of the day revenue is roughly proportionate to headcount.
Some firms using this model are, due to pretentious courtesy, not described this way (e.g. law firms, landscaping firms, and other such service industries).
By contrast large employers like Walmart or GM aren't considered body shops as their revenue is not proportionate to headcount, and in fact improving productivity helps their model.
* it's a joke name as "body shop"s original (and continued) meaning is a company that repairs dents in a car's "body" (the non-engine parts).