Deloitte to Refund the Australian Government After Using AI in $440k Report

That's how it went for Craig Wright, famous Satoshi imposter-- prior to his bitcoin infamy he stole millions via fraudulent GST refunds and fraudulent refundable R&D tax credits then got caught attempting tens of millions more. He fled Australia, repaid part of the fraud and has generally been living it up elsewhere in the world with no further consequences from his tax fraud.

To be fair this is pretty much how it has to work.

Imagine one rogue employee out of 10 commits fraud, do you get all your money back? No you get the billable hours + damages for the fraud.

If it worked the other way contracts would be longer than the actual work to be performed.

I think that's not quite the way consulting should, and to some extent does, work.

The ideal goal of consultancies like Deloitte's is that they hire a small number of people with experience and combine them with a larger number of young bright people and have them come in to review and advise organizations. The people with experience (so who have worked in that field before) direct the engagement and the leg work is done by the juniors, producing a report for the customer.

As to why companies would choose to use consultancies, there's a variety of reasons, some good, some less than good.

- Outside perspective & experience. The consultancy has done engagements with other companies in your field and can provide that experience.

- Neutral point of view. The consultancy should be neutral to any internal politics within the organization.

- Appeal to authority. Many times organizations use consultancies to provide evidence to external stakeholders that the thing they want to do is the right thing.

Now that's not to say that it always (or even often) works out that way, but in theory at least, there are some not terrible reasons.

Well, when you have a bad idea you want to implement but don't want to take responsibility for it, you keep on hiring consultants until you hear what you want to hear. Quality of the consulting is irrelevant and interns or AI will do just fine. When the project inevitably implodes, you blame the consultant. Your own employees will give you advice on what's best for the company, not necessary what's best for you so you stand on their neck until they quiet down and learn their place. By the time anyone figures out what happened you already moved on with outstanding resume bullet point.

A couple of uses of consultants that I've seen at first hand:

- They helped our company to negotiate the minefield of government R&D tax credits, by interviewing all the developers and assessing how much was R&D compared to the guidelines (which are complicated). I think this was a good use of consultants: You get someone with specialized knowledge, and unless you're an enormous company, you couldn't afford to have someone with this knowledge on staff all the time.

- They ran a survey of our software development practices, which they also ran with many other software companies, and then compared our performance to the other companies. I think if you're a completely useless manager with no idea about software, then this could be good, as it might highlight obvious ways that you could improve your processes. For us, it was a waste of time and money.

It's not only "giving advice". "Consulting" includes a range of things, down to implementing software.

The customers are big companies with huge budgets, and a lot of red tape. The guarantees they want the most are legal. If things don't go well in a project, or if a project isn't implemented on time, they want to have someone to sue. Someone that will not simply go bankrupt and disappear. "Quality" is almost a nice to have, compared to the legal guarantees.

Enter the Consultancy companies. They have a huge amount of workers, a lot of them fresh out of university. The quality of the work they produce might not be great, but when problems arise, they can always throw more people at the problem (or to make them work longer unpaid hours). They are sometimes called "meatfarms", because of this. They will not go bankrupt easily.

The way these companies develop software is by third parties, often overseas, sometimes, frequently via several intermediate companies, each one adding their cut.

I must stress out that it work. Boring, soul-crushing at times. But it is not easy. Just dealing with the red tape is a job on itself. The kind of contract that needed to be written before a medium-sized project has to be very detailed. It details things like what will happen when the project derails, what will be the penalty and who will pay what. It's a small book.

Source: I was one of those "fresh out of college" people when I joined Accenture. I once was asked to estimate how much would it cost to change one (static) website's scrollbar color from default to yellow. The quote for that change alone, perhaps 10 LOC change implemented by someone in India, was 3000 euros. This was around 2010. I was glad when they offered me a severance package.

Leaders are usually insecure. They need validation. Management consultants give it, for money. In theory, they can take the blame if things go very wrong. But in practice, management consultants tell you to do what everyone else does, and that means both leaders and consultants are saved by the "nobody ever got fired for buying IBM" effect.

But there's more to it than that. Your investors don't trust you if you're not the sort to trust Deloitte. (Your investors probably also invest in Deloitte, by the way.)

The trope you’ll often hear in circles like ours is that big 4 consultants exist to provide cover for unpopular decisions. That’s sometimes true. However…

Big corporations and governments aren’t startups in which everyone is encouraged to do as they please in service of the mission. Corporations and governments hire people for very specific roles with very specific responsibilities. Stepping outside of your responsibilities is discouraged. Employees inside big organizations have to think, “how fucked am I if I make this decision and it goes wrong?”. A startup can write off big losses without a second thought, a big corporate or government has to investigate.

If you need to make a big decision, you don’t let an intern take a shot at it, even if they are convinced they have the perfect idea, because if it goes wrong, it’s on your head — which idiot let an intern fuck it up?

You bring in consultants who are (ostensibly) experts so that your responsibility ends at having done the right thing and if anything goes wrong, it’s not on your head.

You would be surprised how many companies dont have the expertise in house. And of that set, you would be surprised how many make financial and technical decisions based on no expertise and get themselves into all sorts of trouble.

You may also be surprised how many companies have 1 guy in house who pretends to be an expert and does his damned best to prevent people getting hired who might out them.

Good consultants come in, tell you how it should be done, with evidence. Better consultants then provide those services if needed on a project basis. Usually "Good Consultants" in the IT industry are absolute heavy weights. Like we carry a bunch of different skillsets where there are few other people in our country with the same experience, and no one can afford to carry that expertise on an ongoing basis, but lots of people are willing to pay for a couple hours a month.

That ofc, does not reflect the sales channel for most consultancies. Sales is focused on finding anyone they can schmooze into paying for services. Generally where large consultancy firms are involved, the decision maker is treated like royalty. Usually it involves helping them cheat on their spouse or get access to drugs. Weeklong out of town trips, usually vegas, paid for by the consultancy, with a hefty petty cash card. Smaller decision makers might only get local strippers and beer.

One time, I was involved where a company we were consulting to on X, was concerned they were being lied to by consultants on Y project, and we stepped in and sounded them out in a meeting in front of the client making it evident they were just being told to justify Dynamics CRM and Sharepoint at all costs.

I think one part that gets easily overlooked is that they not in-house, and that's a feature.

That means even when an in-house team has the same expertise, they have to adhere by in-house processes and hierarchy.

If a CEO signs off a consultant contract, they dont play in the same arena, and can often side-step the hurdles an internal team would face, without anyone internally getting too upset (compared to an internal team side-stepping processes).

> If a man had no real skills except giving advice left and right

I love how you summarized 99.99% of influencers and lifestyle/business coaches.

In theory, there exist people who are exceptional at solving unique problems/challenges or managing things related to such endeavors. Some might specialize in certain classes of problems and gain experience solving variations for many companies. They might be both underutilized and underpaid in traditional companies for various reasons.

What if you built a company by recruiting such people and sold their expertise at a premium?

I also think assuming there's no real skill at any consulting company is probably a mistake. Or if anything, they're not just all "management consultants" and many of these places have tech consultancies as well. There are also tech companies that are basically specialized consultancies---compsec is probably a very visible area where it's a more common model and at least some firms get some respect for competence.

There's plenty of criticism for consulting firms and it can be very valid. You can probably even dig up stories of bad consulting experiences in the comments on HN.

But I've known people who worked at places where they didn't really have the talent to solve some unique problem, or their own people had caused the problems.

Good consultants will try to pick the brains of employees for insight that's been missed, ignored, or simply wasn't communicated well. They have have problem solving skills that overlap with a good software engineer, such as requirements gathering, communicating with managers, etc.

Many of the people hiring the "consultants" simply don't know any better. They are easily persuaded by stuffed shirts with AI generated slide decks yapping about cost savings, scale, and deep domain knowledge. Also, they want someone to blame when it all goes south.

Taking responsibility so you can blame someone for your decisions and to find 'logical' Arguments for your decisions after you already made them but don't want to look stupid.

Often times you're just paying a consultant to recommend what you don't want to accept responsibility for. You pay a slight premium to launder the responsibility onto a third party.

There's also asking for good advice for narrow problems from experts with decades of experience.

Both of these play major roles and they're often very easy to tell apart.

Aside from the thing where it's useful to have an outside (expensive) influence to help make your decisions sound more confident than they actually are, a genuinely useful side of consulting is as a form of knowledge laundering between companies.

Let's say you're a supermarket chain. You have lots of problems that only a small number of other companies - your competitors! - also need to solve.

If you hire a big enough consulting company, they will have a large amount of internalized knowledge relevant to those problems that they gained through previous projects working with your competitors.

Of course, they're never going to deliberately reveal other company's internal secrets, or directly assign people to work with you who worked last week with your competition... but industry expertise and "best practices" still flow through these channels.

Consultants are just professional contractors. An organization will call them when they can't/won't/don't want to do it themselves.

Why do you have an accountant? Or a lawyer? It's the same thing. Corporations don't have all skills in house for a ton of things.

I was an IT consultant. A big energy company wanted to go to the AWS cloud. Their folks were too busy and had no experience. We (my consultancy company) already had the knowledge.

Consultants don't only give advice. In many cases, they also do the work. But advice is also a "product". If your in-house team does not have the knowledge or time, you hire a consultancy firm.

Consultant here!

Two reasons:

- Expertise

- Bandwidth

That's it. That's the reason you hire consultants. Your team either doesn't have the expertise or the bandwidth to do the work you require. Could you hire for expertise and bandwidth? Absolutely. Is it hard ($$) to do that? Yes, and in most cases it's arguably WAY harder, especially when the effort is episodic.

Say you're some business, government agency, or whatever. You mainly focus on one or few core things (the product, or service you're providing).

Suddenly you face change, maybe the markets are changing, or tech has come a long way - but in any case, it is in something which is either outside your area of expertise, or you don't have the resources to do it yourself.

So instead of hiring N people to do that one thing, you pay external people to do it for you. This is especially attractive in agencies where you have budgets to consider, can't just hire workers on a whim, and where firing workers can be equally difficult.

That's where consulting firms come in. Most big consulting firms tend to be huge, and have expert networks all over the world - so there's a decent likelihood they'll have someone that have knowledge in the problem you're looking to get solved. And they hire smart enough people that will toil away.

In a good scenario the consultants will have interviewed you, taken a deep dive look into your organization, analyzed the data, and either answered out your problem, or laid out exactly what you need to solve that problem. Usually on the strategy side.

For the implementation itself, you can either go to step 1 and hire people to do it, or hire some other consulting agency to actually do the implementation work.

That's at least the ideal situation. Sometimes consultants are just hired to rubber stamp controversial leadership decisions, and to back up things that leadership can't get internal backing for.

When things go wrong you can blame the consultants so you don’t get fired.

Same reason all workplace PCs are Windows.

Ex Director at a Big 4 consultancy here...

While I've done more than enough Powerpoint presentations telling clients what they already knew but didn't want to say out loud, there are some circumstances where bringing in a consultancy is a very good option.

Some examples:

As a software/cloud/data/AI/cyber guy (I wore a few different hats over the years...), I regularly caught up with buddies working in legal, tax, audit, retail, space travel(!!) etc. for coffee chats. It's surprising how often those of us who specialise in one domain had breakthrough moments from offhand chats with specialists in other domains. Very few people get the opportunity to have these sorts of conversations, and it's amazing how often you learn something relevant for your own work situation over a quick coffee.

When I needed expertise in one of those domains into one of my projects, I could send a message and almost always get someone on a call within a few hours. Very few organisations could get e.g. a high-ranking ex-NASA official on a call quickly to pick their brains, but I could.

Lots of times organisations don't have the deep expertise and/or available people to deliver on their internal projects. When a major rail transport provider needs to work out how to going to deal with new government critical infrastructure regulations for their IT systems, it's consultancies who can pull all the right skills together to help them out.

When there's a critical shortage of available IT skills in the marketplace, companies use consultancies to top up their workforce. Here in Australia, there were nowhere near enough GCP experts to go around for the last 4-5 years, so companies could either try to hire the very few people around at exorbitant rates, or tap a consultancy for resources.

Big 4 consultancies in particular throw high-quality training at their technical staff like nowhere else I've seen. One reason: quality training = billable hours. I had people around me burn out from too much training, and I'm pretty sure regular companies don't have that problem. For all the pointless Powerpoint presentations we did, there's a sh1tload of technical expertise sitting in Big 4 consultancies, waiting to be tapped.

Companies are always struggling with how to use the latest IT shiny tools properly. Right now it's AI - how can I use it to save costs or increase productivity? What are the ethical and legal implications that come with AI, and how can we deal with them? How can we deploy AI solutions securely? Which of our business problems are the best fit for AI solutions? How do we train our ops staff to keep these AI solutions running? - the list goes on and on.

Now a lot of people here in HN know how to do these things, but how does a regular business tap into that expertise and filter out the bullshitters? The answer is they go to a consultancy that (they feel) they can hold accountable.

On that point, sometimes execs in a company simply need someone to shield them from blame for unpopular decisions like mass layoffs. It's pretty well know that consultancies do a lot of that type of work, and they (justifiably or otherwise) cop a lot of crap over it so some exec can say "I didn't do it".

I'm probably coming across as a huge fanboy of consultancies, but remember - I'm an ex Big 4 guy. I think their influence is too large, particularly in government policy making; I've encountered way more sociopaths in Big 4 leadership roles for it to be down to chance; by any measure staff turnover and burn out is very high, and I'm convinced that's by design.

However, they have their place.

If you have to navigate an area that you aren't an expert in nor have employees who are experts in it, it's probably wise to consult an expert.

Whether they are actually an expert, or just someone with a deep, confident voice who tells you what you want to hear is another thing.

I've seen it where a project needs to get done but the company can't hire anyone for it due to firm wide hiring freezes. So in come the consultants to bang out a sloppy version 1. In the meantime you wait it out until you can hire a real team and gradually transition them in to rewrite what the consultants did. At least the company will have learned something from the consultants trying to implement the project. When your domain is complicated and has many dependencies there's some value in having anyone trying to figure that stuff out.

Of course, when the project is inevitably a late, half functioning, buggy mess you get to blame the consultants.

When The Government Asks For An Independent Consultation | Utopia

https://www.youtube.com/watch?v=3M7SzS_5PlQ

pretty much covers it in under two minutes.

Well that’s the core idea - build an environment of hungry folks who don’t quite know how the world works and suck all that you can out of them.

>Consulting firms are total crooks.

Amen to that. They rip off the consolutant and the customer.

Indeed. This is something that isn’t said a lot.

A person who has been in an industry for 10+ years will be fine from exposure to LLM’s. Because they already built the discipline. Frankly if you’re an expert I don’t see where the value of an LLM fits.

People keep talking about productivity increases. But that just speaks to the quantity. What about the quality?

It’s tiresome to see people who just don’t get this.

It then continued: "I'm sorry, but as an AI language model..."

The people working inside the company may be both judge and party to the issue, it’s not always a bad idea to call in consultants. Do you prefer independent and somewhat misinformed or stakeholder to the issue and knowledgeable?

What if your in-house engineers are morons but you need to have one particular project done correctly. I don't understand the glorification of normal engineers - quite often they're normal people drawn from normal distribution, with all consequences of that.

You are missing the role that consultancy plays in diffusing responsibility for legal and performance problems.

If shit hits the fan, the director can pull the "we just followed Deloitte's advice" where "Bob from IT said so" just does not have the same responsability shielding.

That’s a kind of due diligence theater. In particular, managers want to know what their competitors’ engineers would recommend, which is the best static advice consultants say they can give.

Rich people helping out other rich people.

There is a simple expression for that: decision laundering. You use a third party to convey credibility to a decision you have already taken internally. Even CEOs themselves say it in private.

This entirely depends on industry and geography. I've worked with big companies where the customers of consultants were effectively middle management, several layers removed from execs.

Tell them what they want to hear with some light research. Now this sounds like an AI disruption waiting to happen

Years ago, I was introduced to a “what would Elon do?” assistant. Execs want to know what their (current or hypothetical) competition would do given their decision-support data. But they also want to know what a consult-assistant cutout would know.

(This was long before his political achievements)

Bingo. Therein lies the difference between a “client” and a “customer”.

To balance that with a positive comment - one of the reasons for going with a consultant/outsourcing is if you have a big one/off type project that you can't resource internally with perms.

So the choice is trying to hire a bunch of individual contractors and forge them into a team, or hire a pre-built team for a period of time [1]

[1] Sometimes it's sold as a re-built team - but in reality it might be hired in exactly the same way by the consultancy....

From my experience with using a $WITCH for a large support engagement, the A team woos you, the B team is what you get initially, and as soon as they think you've got your eye off the ball, they swap in the Z team.

This was for a contract where we made it very clear that quality/skill was paramount and we would happily pay above market rates forever if they could maintain it. Of course they got greedy and lost the deal entirely.

I have heard this before, but my experience when working as Consultant, is that Customers will do a lot of diligence before accepting a substitute. Maybe these are Contractors and not Consultants? ;-)

That's the whole game. Meet the partner, get the juniors, pay for the partner. And if you're really unlucky you can spend your time educating the juniors.

This one aged well

https://dilbert-viewer.herokuapp.com/2000-01-01

Normally you just have a few team A people and they are needed for the next client.

When I worked for an MSP this happened so much. I was booked 4-6 weeks out. But an emergency got me deployed asap.

I'd get them up and running and then put together a plan to fix them up, but then some junior got assigned that job. The client then gets mad at me for not helping them anymore.

Especially when the teams are bigger, you have some A person who works with 100 teams who pops in when you are really fed up to calm you and who is 'definitely on top of your project' and the rest are all juniors (and now less juniors with AI). One of my clients paid 500k for a project and asked us to vet the quality; they believed they were paying 15 people for the past months; when we went on zoom to talk to the team, after many camera/connection issues, we got the 15 people. So we asked to interview them all. Only one of them knew technical details about the project, the rest did not. The one guy that does know is the tech lead my client originally hired and seems he works part time on the project, or at least reads the tasks. Looking at the vast amounts of (bad) code, our suspicion is that there are 5 or so people using codex/claude code to paste in the tasks, wait for the code, go to some 'fake QA process' and then commit and deploy. This happened before AI definitely, but probably then it would be actually 15 people hammering code, but juniors instead of the seniors you are paying for.

I've worked for a Big 3 and can't say this happens that much.

What does happen is that you were pitched/sold by a perfect PowerPoint presented by a senior partner/manager, but all the work afterwards is done by the 26-year old fresh-out-of-MBA consultants. The partner is still responsible for the project, but mostly on a “I'll review your work later from an expensive restaurant I'll bill the client for”.

They'll also invent the wildest things when it comes to tech work. I was working as an expert on software development and integrations, and often had to tell clients that what the consultants promised is simply not possible.