As business slows in India, consultants seek greener pastures

Be it roads, airports, ports or any other infrastructure area, where big consulting firms such as EY, PwC, KPMG, Deloitte, Bain, BCG, Accenture and McKinsey offer expertise, action is clearly missing.

Illustration: Uttam Ghosh/Rediff.com

The economic slowdown is showing not just on ground but in the sky as well.

While corporate honchos have always been flying in and out of cities, it is the Indian consultants who are now increasingly crowding the flights to places such as Qatar, Riyadh, UAE, Bahrain, Saudi Arabia, Yemen, Tanzania, Nigeria, Sudan and China in search of business.

Not too long ago, these were among the typical destinations for construction and other labour from India.

Work has virtually come to a standstill for consultants in the country’s infrastructure sector.

Be it roads, airports, ports or any other infrastructure area, where big consulting firms such as EY, PwC, KPMG, Deloitte, Bain, BCG, Accenture and McKinsey offer expertise, action is clearly missing.

Faced with piling debt, many infra companies are busy trying to get their balance sheets and existing businesses in order. On top of that, new projects are hard to come by.

Vinayak Chatterjee, chairman, Feedback Infra, says that while many of the traditional functions -- tax, audit, risk, valuation -- are doing fine, verticals like growth, strategy and diversification as well as PPP have taken a big hit.

Indian corporate are strapped for cash and therefore very few are looking at new diversification opportunities. So, strategy advising has taken quite a beating.

Also, many countries in West Asia have been going through a financially stressful phase due to the depressed oil prices.

This has resulted in many of them looking at cheaper avenues: consultants who work for lower fees.

“Instead of hiring people from UK and the US, business is flowing to India and other developing countries that have the skills and expertise,” points out a senior PwC partner.

Moreover, PPP (public private participation) is a new animal for countries in West Asia.

Most projects were till now fully government-funded, but with the crunch in resources, PPP is catching up fast.

Many of these countries are hiring Indian consultants for both PPP and full privatisation projects. Besides infrastructure, other sectors in focus include education, healthcare and transport.

“It works, as they have never explored PPP as an option of infrastructure development,” says Abhijit Bhaumik, a senior consultant with 26 years of experience who worked with firms like Feedback and others before going it alone.

Bhaumik says that he spends most of his time in Tanzania and is soon starting a new project in China.

In the last four to five years, he’s worked in Bangladesh, Kenya, Indonesia and Vietnam.

In fact, consulting has been on decline since the last few years of the UPA government. But it has now virtually come to a standstill, industry watchers believe.

With the sharp spike in business in West Asia and Africa, EY created AIM Advisory (Africa, India and MENA businesses of EY Advisory) in January.

Already, it is 7,000 people and 250 partner strong.

Ram Sarvapelli, Partner and National Leader, Advisory Services, EY India, says that many of these countries are at similar crossroads as India and are looking at building capabilities in newer areas like digital, analytics and cyber.

They were also focussing on transformational solutions for some of the largest and similar industry problems -- digital and smart cities with governments, smart grid for power and utilities, building digital businesses in financial service and newer ways of accessing consumers in telecom and retail.

“This has allowed us to hire partners with wide global experience and use teams seamlessly across these markets,” Sarvapelli says, adding that EY has doubled revenues from these two markets.

Many of the African countries are exploring identity (Aadhaar like) based citizen service delivery models.

Access to high quality automation and technology capabilities is big in demand across GCC nations. Sarvapelli says that EY is also working with several Indian origin groups like Sobha, Alanasons and Landmark which are looking at expansion in these markets.

Back home in India, "What’s happening can at best be called body shopping -- low level work that needs hands and feet so to speak,’’ according to a consultant.

This involves more data collection, collating stuff and making some presentations rather than any high-level strategic inputs or work.

A lot of the work can be done by juniors and doesn’t require the partner’s expertise. Some engineering and EPC construction work too is on.

As for government work, it’s mostly based on the “L1” syndrome. That is, the business of consulting has been reduced to who can “deliver at the lowest cost”.

The consultant community says that one of the Big Four in India has in fact cornered a substantial chunk of the government business but at ridiculously low rates.

The firm is now believed to be in a dilemma on how to deliver.

“One can quote anything to win the business, but delivering at such prices is a challenge to consultants who are not low frill creatures by nature,” according to a senior consultant.