Consulting In India The Present And The Future

CONSULTING IN INDIA -THE PRESENT AND THE FUTURE

TRENDSPREPARED BY- SUMEET RATHORE (PGDM-HR)

INTERNATIONAL MANAGEMENT INSTITUTE NEW DELHI (INDIA)

INTRODUCTION

India has been globally recognized for its fast paced development. The service sector has been growing at a fast pace and now contributes more than 50% to the GDP.

Propelled by the increasing demand for consultancy services, both for domestic and foreign firms, a study by Assocham pegs the consulting sector in India to grow at an annual rate of 30 per cent, progressing rapidly towards becoming a Rs17,000-crore industry by 2010..

Presently (2008), the consulting industry in India reportedly stands at Rs13,000 crore.

INTRODUCTION

According to Assocham (The Associated Chambers of Commerce and Industry of India) president Venugopal Dhoot, the US, the UK, Japan, China, Saudi Arabia and Gulf nations acknowledge the competence of Indian consultancy firms, with demand growing in the EU as well.

INTRODUCTION

He cited the competitive edge of these firms over their counterparts in the ASEAN countries as the reason for their preferred status.

Indian consulting companies have strong capabilities in areas like civil engineering, telecom, power, metallurgy, chemical and computer software.

Few Facts About Indian Consulting Industry

Largest concentration of consultancy organisations is in the four metropolitan cities: 1. Delhi (25.7%) has the highest number of

consultancy organisation among four metropolitan cities followed by,

2. Mumbai (25.5%), 3. Chennai (12.1%) and 4. Calcutta (9.1%).

Specialities that attribute to the strength of Indian Consultancy

• Well dispersed and wide ranging areas of specialisation to service diverse range of clientele needs.

• Advanced technical talents/ skills at reasonable cost.

• Familiarity with local conditions

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.

Drivers for Consulting Services

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.

Strengths and Weaknesses of Indian Consulting

The major strengths of Indian consulting organizations include professional competence, low cost structure, diverse capabilities, high adaptability and quick learning capability of Indian consultants

The major weaknesses of Indian consulting organizations, which has hindered the export growth of consulting sector in the country, are low quality assurance, low local presence overseas, low equity base, lack of market intelligence, low level of R&D

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 client’s 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.

Example

It has been learned from Andersen's part in Enron that, when one firm is severely damaged, it affects everybody. One way in which consulting firms can protect themselves from being damaged by future scandals is through differentiation.

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 (A recognized expert on measurement and evaluation, Dr. Jack Phillips is the author or editor of more than fifty books, including The Consultant's Scorecard: Tracking Results and Bottom-Line Impact of Consulting Projects) 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.

Conclusion

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://www.timesascent.co.in/index.aspx?page=article&sectid=2&contentid=20080707200807071229031867dc432a7

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

Consulting Club’s article, IIM Calcutta

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Consulting In India The Present And The Future