Consulting Business Scenario in India

It is more than 2 decades since Management Consulting has landed in India, this all started with CK Birla roped in global consulting firm McKinsey for a turnaround project for Hindustan Motors. That birthed the management consulting story in India. Since then, the consulting space has exploded, there are true-blue strategic firms (McKinsey, BCG, Bain, AT Kearney, Booz,) straddle the top end; consulting arms of technology firms like Accenture, IBM, occupy the mid-tier, the Big Four's consulting arms target the mid and bottom layer of the pyramid, a handful of boutiques (Universal Consulting, Avalon Consulting etc.) fill in the niches, and some credible newcomers like Oliver Wyman and Rolland Berger are fighting for their share. Between the exciting years of 2004-2010 (barring the 2008-09 blip), when companies were growing rapidly but were struggling to manage growth and complexity, the management consulting market grew at 20%-plus Indian subsidiaries of McKinsey, BCG, Bain and AT Kearney were among the top three firms in terms of growth in their universe globally

Key Parameters in Indian Scenario

1
a) Entry Level b) Top Partner c) Top Level Director Average Billing

Salaries
Entry Level Rs 20 Lakh per year plus Rs 6 lakh variable McKinsey Rs 5 Cr Others Rs. 2 - 4 Cr Above Rs 12 Cr

2
a)

Fees & Margins

$50,000 - 75,000 per week for one manager and two consultants 30 - 50% $8000 - 10000 a day ( 4 - 5 lakh ) 30 - 40% $5 - 7 mn 8 - 10 Consultants 30% in top firms 40 - 60% Consulting revenue comes from Industrials McKinsey $3.5 mn BCG $2.5 mn Bain $2mn 20 - 40% 60 - 80%

b) Margin per partner c) Fee of Top Level Global Partner d) Differential Between Firm's Global Fee and Indian Fee e) A Global Project According to Global Firm

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a) Each Partner oversees b) Attrition c) Biggest Business Generator

Business Teams

d) Average Annual Business Done by Indian Partners

e) f)

Time spent by partner on a project Internal Costing Done

ET reckons that between 500 and 600 high-value consulting engagements (most expensive consulting that's largely the domain of the strat firms) are awarded each year. That's a $250-300 million market, including 30-40 projects that are worth about $2 million each.

Indian consulting companies have strong capabilities in areas like civil engineering, telecom, power, metallurgy, chemical and computer software. Largest concentration of consultancy organizations is in the four metropolitan cities: Delhi (25.7%) has the highest number of consultancy organization among four metropolitan cities followed by, Mumbai (25.5%), Chennai (12.1%) and Calcutta (9.1%). Specialties that attribute to the strength of Indian Consultancy Well dispersed and wide ranging areas of specialization to service diverse range of clientele needs. Advanced technical talents/ skills at reasonable cost. Familiarity with local conditions Problem Areas

Drivers for Consulting Services After Independence, the Indian Government had focused on investment in core industrial sector and infrastructure. The investment in these sectors attracted various construction and engineering companies to explore the business opportunities and contribute their expertise in these sectors. Domain experts were required who could provide their core skill and competence in designing and building the core industry, dams, roads, buildings etc.

Over the years, as the Indian industry started maturing, the Indian consulting industry also started expanding, not only in terms of size, but also in terms of the service offerings. Over the period, specialist consulting advice was being sought by clients in India and this opened the opportunity for a number of specialist organizations to draw on their specialist knowledge base and resources to meet the demand for specialist consulting services.

Latest Trends in Consulting Industry Fast Growth The business world is desperate for consulting help. With excess staff being cut down, most organizations lack the technical, strategic and project management skills to handle the benumbing rate of technological and market change. The consulting industry is trying its best to accommodate the demand. Big consulting firms are inhaling new employees, gulping up smaller firms and merging with peers One stop for all your solutions In addition to a boom in the number of consulting firms, the size of individual firms is growing in response to another industry trend: one-stop shopping.

Providers that can't compete on size will still try to offer one-stop shopping by outsourcing a chunk of a client's project to another firm while maintaining responsibility for the overall project. Knowledge management tools, best practices databases and the Internet make it possible for consultants to draw upon the knowledge of every consultant in the organization as many as 27,000 people in a firm like PriceWaterHouseCoopers, for example Shortage of people The greatest threat to the growth of consulting firms is their inability to get enough qualified people. Some firms are already devising creative solutions such as launching their own accredited MBA programs - geared toward the specific needs of consultants. Smart people are continuing to gravitate toward the consulting profession, especially with its heightened demand and visibility, not to mention inflated salaries In a down economy, highly successful companies will invest more in customers, not less. Companies will compete for customer share, not market share. Companies will realize customer satisfaction doesn't translate to loyalty and will stitch their customer channels together. And finally, companies will shift to a long-term focus. Only one thing is for sure the only thing that is constant in the consulting industry like any other industry is change! The Future of Consulting Is Reflected In Its Past Over the decades, the management consulting industry has responded creatively to the changing needs of clients, leading to the growth of a thriving industry. The insights of history provide guidance as consultants seek the innovations to meet the future needs of clients. Milan Kubr, an authority on the management consulting industry, reminds us that Consultants are inventors and creators of their own markets and their future. In the early years of the industry, consultants built highly flexible businesses on two market realities: the rise of management as a science, and evolving economic conditions. As inventors and creators of our own markets and future, management consultants will continue to rely on the delivery of knowledge and general economic conditions. We can benefit from examining our past to understand the types of expertise our clients need from us. This is our source of value, and as history indicates, this changes as our clients needs change According to a Czerniawska (an author and recognized authority on the consulting industry), in an interview by Management Consultancy News The consulting industry could begin to look more like the film industry, with different firms and individuals collaborating on a specific project, and then going their separate ways, will be because of the client pressure.

Clients want greater specialization and a clearer view of what consultants do. Types of services to be important in the future According to Czerniawska one among many consultancy services is about change management, organizational change. Clients are looking for more than just completed consulting engagements; they are looking for help with organization-wide change. There are people working on change but for the most part, they are niche consultants, independent consultants, coaches or mentors. It's small scale and fragmented. How a consulting firm can differentiate itself in the market in future? It's an industry in which differentiation is very difficult because of its inherent homogeneity. The reputation commons problem for consulting is that there is a reputation for the industry in total, and the survival of all firms depends on it. Is consulting a good or bad thing in the public's mind? No firm has a mandate to protect that reputation because it's a collective resource. Differentiating Factor A firm can differentiate itself from others in two ways, one has to do with the value of consulting input. So, the firms that differentiate themselves will be the ones that find a way of articulating and perhaps even quantifying the value that people talk so much about. It is a commonly talked about concern among the clients that what they would really like for the consulting industry is some kind of rating system to help them make more informed decisions, to allow them to compare different consultants in a meaningful way ROI on Consulting Projects According to Dr. Jack Phillips there is a tremendous interest in return on investment (ROI) these days and will surely be in the future. Many clients want to know the payoff of a consulting project. The Consultant's Scorecard is a systematic way to develop a balanced perspective on the success of consulting projects. Clients can use the Scorecard to see the monetary payoff of a project and to examine cost versus benefit The score card captures satisfaction with the consulting intervention, the learning that has taken place, and the success of application as the new process or system is implemented. Then it assess the business impact of the project and evaluate intangibles, such as employee and customer satisfaction. Finally, using the business impact assessment and the cost of the project, it calculates the ROI for the project. These six quantitative and qualitative measures track the chain of impact for a consulting project and provide a balanced profile of success up to and including ROI, always trying to isolate the

effects of the project. From the client's perspective, the Scorecard adds up to ultimate accountability for a project Concern There is a concern related to measurement. The clients are becoming more willing to make the extra investment in time and money to study the ROI of projects but the most important issues is that the evaluation needs to be as objective as possible. Ideally, neither the people on the consulting team nor on the client team should facilitate the study. An external person or group is better for objectivity Conclusion The management consulting field is highly developed in only a few key geographies, including the United States. Thus, the US-based firms face relatively little foreign competition. However, with the very fast rates of economic development in countries such as China and India, this situation would change over time. The large firms who have globalized proactively could find themselves in a favorable position should demand for consulting services in these markets increase. Firms consider or use a variety of means when establishing an international presence. All methods have advantages and disadvantages (for example, the partner-led model can be time consuming, while the acquisition or contract models can result in a heterogeneous firm culture) Reference Source http://articles.economictimes.indiatimes.com/2013-04-02/news/38218047_1_consulting-boom-firms-highvalue-consulting http://articles.economictimes.indiatimes.com/2013-04-28/news/38862562_1_kpmg-consulting-pwc-bigbucks?intenttarget=no http://www.timesascent.co.in/index.aspx?page=article&sectid=2&contentid=20080707200807071229031 867dc432a7 http://www.managementconsultingnews.com/interviews/czerniawska_interview.php http://www.managementconsultingnews.com/interviews/phillips_interview.php http://www.managementconsultingnews.com/articles/thorp_article.php http://www.domain-b.com/management/consulting/20071003_assocham.html