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India is among the fastest-growing mark ets for most global consulting firms. But a difficult economy and tougher clients, competition and project mandates are forcing consultants to raise the game. In July 2011, Gautam Adani decided to seek the help of consulting firms to engineer a complete transformation in his $7.7-billion group. One by one, CEOs of leading consulting firms flew into Sardar Vallabhbhai Patel International Airport, Ahmedabad, armed with their usual arsenal ideas, insights and promises of 'impact.' A lot was at stake a fat fee, some major bragging rights and a chance to convert the assignment into a relationship that could be milked over multiple years. Gautam bhai is known to cut a tough deal and with his businesses not in the best shape, he took a good 15-16 months to decide. Finally, Booz got the nod for their corporate centre, Accenture bagged the infrastructure business, AT Kearney snagged the power part, while KPMG managed to get hold of the ports business. The consultants started work in October 2012. This engagement captured many undercurrents of change that are reshaping high-value consulting in India. Newer companies are buying consulting services; buying cycles are getting longer; consulting relationships are getting more promiscuous; competition is getting tougher, and the missing marquee names from the Adani consulting roster also indicate that clients now don't get taken in by the 'messenger' but go by the message. With the economy slowing down, the nature of consulting is also changing. Coming off many years of easy growth, consulting firms now have to work harder to keep clients happy. The Consulting boom Twenty three years ago, when Gautam Bhai was laying down the foundation of his empire, CK Birla roped in global consulting firm McKinsey for a turnaround project for Hindustan Motors BSE 2.86 % . That birthed the management consulting story in India. Since then, the consulting space has exploded true-blue strat 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 BSE 2.17 % are fighting for their share. "A lot of new capacity has been created over the last five years but the good thing is that it has been absorbed by the market," acknowledges Arindam Bhattacharya, managing director, BCG. Consultants are a secretive lot. That, and the fragmented market and nebulous nature of work that's clubbed under 'consulting,' makes it difficult to estimate the size of this business. But after speaking with CEOs of all major firms, 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.

It's safe to estimate that between the gogo 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 (a fact vouched for by their global CEOs, except McKinsey.) "The Indian firm has consistently been one of the fastest growing in the McKinsey universe over the last few years," says Noshir Kaka, the new boss at McKinsey. "We had one director in 2003. We have 13 today and 400 client-facing consultants." The firm's entry strategy come in early (1992), develop the market, and absorb losses for nearly 10 years paid off. McKinsey is the big daddy of the Indian consulting space. Others have grown too. Says BCG's Bhattacharya: "Every year, BCG has grown faster than the market." Adds Saurine Doshi, MD, AT Kearney: "We have nearly tripled in size during the last four years." Under Ashish Singh's leadership, even late entrant Bain and Co has scaled up to 17 partners and 180 consultants in just seven years the fastest scale-up for any major



consulting firm.

How are McKinsey, BCG, Bain, AT Kaerney and the likes playing the game in India - The Economic Times

Despite such growth, consulting penetration remains poor in India compared with the developed markets. "The consulting spend of just the Wall Street area is multiple times the spend of many regions, like India," says Manoj Singh, Global COO, Deloitte Touche Tohmatsu. "We are only scratching the surface in India," says Atul Khosla, partner and managing partner, Oliver Wyman India.

The Client Changeth Firms are getting more traction despite the ongoing economic slowdown. But the nature of growth is changing. Over half of all assignments in the last 4-5 years have come from newer clients like family-owned mid-caps, private equity and private equity-owned companies, infrastructure projects, public sector (excluding banks), and state governments. "The midcap companies are very loyal, just that getting in is tough," says Suvojoy Sengupta, CEO, Booz and Co. "They will squeeze you but they present a good opportunity." Even as the client mix is changing, the nature of work is evolving. Take Thermax, for example. The Pune-based company hired BCG in 2000 for a portfolio analysis: the firm was into multiple businesses like finance and paints and wanted to focus on a few. In 2003, the company hired McKinsey for help on how to grow the company by design. And now, Thermax is working with Accenture on business process improvement to be globally competitive. "Earlier assignments were at company level. Now we are focused on making individual businesses globally competitive,"explains MS Unnikrishnan, MD, Thermax. "Each time we have drilled down a level." Gone are the times when the promoters and CEOs wanted reports or ideas or portfolio analysis; now they want on-theground changes; streamlining distribution, better go-tomarket strategies, operational excellence and an efficient supply chain management. In fact, pure strategy kind of projects would add up to only 10% to 15% of the highvalue consulting market. Clients want consultants to get their hands dirty; not just give them a study. Take Anurag Chaudhary, CEO of Kolkata-based Himadri Chemicals. "The first time, I hired a consulting firm to do a diagnostic and the implementation was to be done by us. In the end it became a big fat book that was lying in a corner! Now we have a team that works with the consultants and there is constant monitoring of the progress," he says. "Premium is now on outcomes. Fifteen years ago, the premium was on ideas," adds Sengupta of Booz and Co. Clients who have worked with consultants over the years have learnt to extract best value. The Godrej Group has been one of the most prolific buyers of consulting services. Most recently, McKinsey helped the company with integration of GCPL with Godrej Sara Lee, Bain worked with Godrej Properties, and BCG consulted for Godrej and Boyce. "Each time we have used the consultants, we have used them for a specific reason," says Adi Godrej, Chairman, Godrej Group. "In each case, we have looked for specialised knowledge from the firm or a particular partner. And right from the start, we are clear about our expectations and deliverables from them, and yes, we have managed to extract value out of our engagements," he adds. Godrej recently elevated ex-Bain partner Vivek Gambhir as CEO of GCPL. Moreover, rarely can consultants quickly execute a project and scoot; companies now want consultants to also help them embed the capabilities in their organisations. "The 90s were about ideas and insights. The last decade was about insights and implementation. This decade will be about capability building," says Kaka of Mckinsey. For example, Thermax made sure the company benefitted long term from each consulting assignment with a pollination method. So for a typical project, the first three months was a diagnostic study, in the next six months, consultants led the implementation, and during the last phase, company talent started replacing the consultants. "This has ensured continuity and enablement," says Unnikrishnan of Thermax. Smarter clients are now demanding more. Earlier a firm's name would be enough to get projects; now partners are becoming more important in the equation. 'Am I one of the two clients the partner will work on personally?' is now a frequent question. When Himadri Chemicals asked McKinsey, Bain and Booz to pitch for a blueprinting exercise a few months ago, Chaudhary was crystal clear about his requirements. "Apart from experience, the most important criterion was, how much time will the partner be able to give us. I need total commitment from the partner." And, as a corollary, partners now have to sweat harder."What we give in a proposal today, used to be the end of a strategy report 10 years ago," says Janmejaya Sinha, Asia Pacific head of BCG. Companies are also becoming more aware of the differentiation between firms. For strategy or portfolio kind of work they might prefer a McKinsey or BCG, the PE firms might choose Bain for strategic diligence, AT Kearney might get a heads-up for supply chain and operational kind of work, and a Big Four might get preference for sales distribution reorganisation. In fact, the Big Four's consulting arms and Accenture have made big inroads in the mid- and low-value part of consulting. "A wider bouquet of services, much more grounded approach, and a price value equation that's much more in favour of the clients drives work towards the accounting firms," says Sunil Chandiramani, national director, Ernst and Young, who leads a team of 70 partners and 2,700 consultants in business advisory services. Like Adani, large companies often split projects. For example, Britannia is doing a strategy review with Bain and, at the same time, AT Kearney is working on a cost reduction and inventory reduction project; similarly Vedanta works with both McKinsey and Accenture. Clients also increasingly want the consulting firm's skin in the game too. "We have in the past linked the payments to the deliverables. We make sure that we get 34 times value on the amount we spend," says Adi Godrej."There is more contingency and variable pay now," explains Sengupta of Booz. And, when clients like Chaudhary pay the full fee, they want clear deliverables. He sums it up well: "I will give you whatever you ask, but I want to get 15-20 times returns what I have spent." McKinsey and Co: NOSHIR KAKA, MD SIZE: 40 partners (13 directors) 400 consultants FIRM'S PRIORITIES: * Maintain market leadership and the McK aura * Create newer and deeper capabilities * Maintain the track record of creating impact BCG: ARINDAM BHATTACHARYA, MD SIZE: 27partners 280 consultants FIRM'S PRIORITIES: *Challenge McKinsey's market leadership *Hold on to areas of strength like Fin Services, consumer goods & industrials *Protect existing client relationships

AT Kearney: SAURINE DOSHI, MD SIZE: 13 partners 175 consultants FIRM'S PRIORITIES: *Build on strong operations and manufacturing lineage *Focus on few sectors: consumer and retail, oil and gas, industrial and automotive, technology and telecom, metals and mining *Maintain distinct identity Bain & Co: SRI RAJAN, MD SIZE: 17 partners 160-180 consultants FIRM'S PRIORITIES: *Keep the momentum up *Maintain and establish a loyal client roster *Target Rs 1,000-crore-plus mid-sized companies *Keep the lead in PE work




How are McKinsey, BCG, Bain, AT Kaerney and the likes playing the game in India - The Economic Times

Booz & Co: SUVOJOY SENGUPTA, MD SIZE: 3 partners 60 consultants FIRM'S PRIORITY: *Scale fast, pick battle's carefully *Establish differentiated value proposition *Focus on energy (oil & gas) and power, and FMCG and retail Indians In Consulting Globally Rajat Gupta is no longer a poster boy, but plenty is happening for Indian consultants globally. At McKinsey, Noshir Kaka is one of the longest serving members on the McKinsey's global partner election committee (one amongst the seven global chairs). There are over 100 Indian origin partners in Mckinsey globally; at least 8 lead Asian and global practices. At BCG, Janmejaya Sinha, the Asia Pacific chief, holds one of the top four most important jobs in the firm globally. At AT Kearney, Saurine Doshi has been on the global board for three years. Now, another Indian partner, Vikas Kaushal, has joined him. Bain and Co's India chairman Ashish Singh is on its global board and another Indian Savi Baweja just got off it after four years. Vijay Vishwanathan leads the global consumer products practice while Raj Pherwani oversees the global performance improvement practice. And at Booz and Co., Shumeet Banerjee was the founding CEO of the firm from 2008-2012. Big Four vs the Consultants In a recent interview, Barry Salzburg, the CEO of accounting major Deloitte said that if its audit and consulting businesses keep growing at 2012 rates, the revenue of Deloitte Consulting ($9.2bn in FY12 and bigger than Mckinsey) will overtake all other revenue streams for the accounting firm in five years. Not only globally, but in India too the consulting arms of the Big Four are clearly back in the game. In India, all added together, the Big Four have more than 8,000 consultants, and more than 200 partners in their business advisory businesses. "We serve the entire spectrum. We will help an organisation to figure out the right strategy, the right course of action, we will help them set up the organisation structure, we will help them with the proper compensation structure and things like that, we will help them with information systems, we will do merger and acquisitions and things like that," says Manoj Singh, Global COO, Deloitte Touche Tohmatsu. Also, given the wider range of services that the accounting firms can offer at much more reasonable fees, their value proposition is compelling. For example, Hindusthan National Glass and Industries has called the big boys of consulting to their pitches, but prefers working with the big four firms. In the past, the company has used PWC for SAP Implementation, KPMG for strategy validation, Deloitte for Project Management and Ernst &Young for setting up its Personal Management Systems. "For a company our size (FY11-12 revenues: Rs 1,878 crore), we have tight budgets and we find working with the Big Four is more suitable compared to the big consulting firms" says Alok Taparia, GM, Strategy Management Cell, Hindusthan National Glass. And the wider bouquet of services the Big Four have also come in handy, like when Hindusthan National Glass acquired a German company Agenda Glas, another KPMG team helped with due diligence and merger formalities. "Our knowledge, skill sets and experience has grown over time and clients acknowledge that," says Sunil Chandiramani of Ernst&Young. The consulting arms of the Big Four differ in many ways. First, they offer a wider range of services, from IT implementation to shared services to risk management to even forensic services. Second, they work with middle management as most of the work is heavily execution led. Third, they are much more affordable with rates up to 30-50% lower than the big boys of consulting.

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