Are usability agencies overblown?

As usual, some very insightful comments from Harry Brignull, on the competition usability agencies face from freelancers who offer essentially the same service, without the overhead of expensive offices or testing suites. Recently had a similar conversation with a client whom I was helping select an agency to carry out research. Not to mention that agencies, running at a low level of permanent staff in order to limit their overheads, often, themselves, use freelancers to staff their projects.