Financial Daily from THE HINDU group of publications
Tuesday, Apr 27, 2004
Industry & Economy
Winds of change in consultancy biz
MUMBAI is a microcosm of India. Whatever happens to India is happening in Mumbai on a comprehensive scale. That is why the changing environment for management consultants in Mumbai spells a change in the way consultants operate throughout India.
Speaking about these winds of change in India and specially on the Mumbai scene, Mr S.P. Agarwal, a leading management consultant with experience of over 35 years and also Vice-President of the Institute of Management Consultants of India, says the market environment has changed over the past 10 years and many international consultancy companies are now more active and operating in India. Apart from the big four accounting firms namely: Ernst & Young, KPMG, Deloitte Haskins and Sells and Price Waterhouse and specialised consulting firms like McKinsey, Accenture and Boston Consulting Group, there are a large number of domestic firms that are catering to an expanding market.
The issues have changed over the years. The key issues now are related to globalisation and what is required to be global, such as meeting customer's and employee expectations, meeting competition, optimising usage of resources, including men and materials, organisational restructuring of companies, selling and marketing strategies, benchmarking, valuation, acquisitions and mergers and a host of other issues which are germane to the new market environment. A large market is determined by providing for the government and quasi government sectors through disinvestment, corporatisation, reforms in urban management, reforms in agriculture, social sectors etc., often funded by multilateral and bilateral agencies like the World Bank, Asian Development Bank and DFID. IT has become another major specialised area with the growth of groups like TCS, Infosys, and Wipro over the last decade.
Depending on the assignment Agarwal says that fees charged are in the range of Rs 3,000 to Rs 50,000 per day or even higher. Because of the competition, industry has to compete to employ the best of MBAs from top management institutes in the country, such as the IIM, Ahmedabad. Apart from the big firms employing management consultants, there are also many independent specialised consultants operating in Mumbai.
Of course, as marketing consultant Mr Ernest Fernandes points out, since the consultancy fees are high, often it is the big players like the Birlas, the Tatas and Reliance that use the services of the big consultancy groups. But there are many medium size companies in Mumbai that have also begun to use the services of consultants. Needs differ, from consultancy on total quality management (TQM) and marketing strategies to export strategies.
Fernandes cites success stories of companies like Thermax, where after the death of the Managing Director, his wife Anu Aga used the services of a consulting group and completely turned around the fortunes of the company.
Sometimes, medium sized companies could also have business abroad, and in such instances the consultants help in working out export strategies for different countries. There are times however, when companies, especially the smaller ones, do not know how to use the services of management consultants and expect them to help with operating the company, rather than merely rendering advice. There are also instances, where companies do not realise that a business consultant can really help improve business. But, with fierce competition and globalisation, all this is changing.
True, this phenomenon is more prevalent in proprietorship companies, which are often run as a one-man show. In such companies, one does not find the culture of debate, which as Fernandes points out is so important for change, restructuring and meeting the demands of globalisation.
Mr Mohan Shahani, a consultant with over 20 years of experience, pioneer of the process of certifying managers in India and former President of the Institute of Management Consultants, believes that after liberalisation, and with the evolution of the Institute of Management Consultants from what was formerly the Management Consultants Association of India, the body has become more technical and professional. In fact, Indian managers are rated so high, that many multinational companies are headed by Indians and an Indian, Mr Walter Vieira, was President of the International Council of Management Consultants for a few years. This international body is recognised in around 38 countries around the world.
While it is true that the multinational consulting firms charge five to 10 times the fees that Indian companies charge, independent Indian consultants also command a lot of respect in the field. In fact, diploma courses are run by the Institute of Management Consultants of India for 20-30 young people every year.
Today there is a vast and growing demand for consultants ranging from banks, which required help when they began to automate, to companies seeking to globalise. While originally, it was the Chartered Accountants who offered working capital management and financial management services, presently, consultants offer services in organisational restructuring and development. New theories and practices emerge every year, and Indian consultants are updated on all present developments and trends. At one time, Shahani says, Just in Time (inventory management) was popular. At another time, business process re-engineering was current.
All of these developments serve their purpose. Management consultancy is the in thing now a days and it is a growing business not only for the large players, but for many medium and smaller time consultants who can fill in a need. Mumbai being the financial capital of India, it is but natural that it sets the trend in consultancy practices all over India. Only the practice, like any other practice, needs regulation to ensure professionalism, adds Mr Kuldip Kawatra, Secretary of the Institute of Management Consultants of India.
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