Global Consulting Firms Our New Backstreet Boys

By Vinod Mahanta , The Economic Times

A whole bunch of global consulting firms are setting up their back-office research facilities in India. Leading management consulting firm Bain & Co is the latest to join firms like Monitor Group and Everest Group, which have either already set up or are in the process of establishing their operations in India.

Bain has opened a research office in Gurgaon with 22 people to start with. Interestingly, Bain does not have consulting operations in India. A company spokesperson declined to comment on these two developments when contacted by ET. Sources say the Monitor group has also been scouting for opportunities to open a research centre in India. Some senior executives were in India recently to evaluate the opportunities and even spoke twosome third party players. Also joining the fray are some outsourcing consulting firms like Everest Group, a boutique outsourcing consultancy that started a small research centre in Gurgaon some time ago.

“The main driver for the increased off shoring by consulting firms is the fact that the value chain of consulting firms is becoming global. And from the cost and talent perspective, India is very attractive,” explains Ashish Gupta, country head, Evalueserve. The consulting firms are finding India very attractive to base their BackOffice work as they are under tremendous cost pressure in the US and other geographies and outsourcing these functions to India can boost their margins and increase profitability. But cost is not the only reason for having an India-based research centre.

Some consulting companies like Inductis have hired highly qualified IIT – IIM teams in India to provide highly end analytics support to their US based consultants, and they even end up providing consulting services from India in select projects. ” We being Indians, were already familiar with the competitive advantages India could offer in terms of rich talent required for high end analytics work as well as cost effectiveness that could be passed on to global clients. We also felt the pain of some of our clients who faced talent shortage in the US in this domain,” says Sandeep Tyagi, founder Inductis.

The consulting firms that often advise others on outsourcing and off shoring have been working with some third party companies like Evalueserve, Progcon, and Copal Partners, while others are going for the captive route. And India is increasingly becoming a part of the delivery model of these firms.

“The consulting model is fundamentally changing. Clients are less willing to “pay for base of the pyramid”. Access to the partner at the top of the pyramid with industry experience is valuable, but clients are becoming more price sensitive when paying high hourly rates for associates and analysts at the lower levels of the pyramid.

Consulting companies must transfer their junior level functions to India if they want to preserve their margins” says Joel Perlman, CEO, Copal Partners. “The consulting firms always look for and adopt the optimal delivery model, and off shoring will certainly playa part in that model, “adds a CEO of a BPO company.

Leading management consulting firms Mckinsey took a lead by opening its Mckinsey Knowledge centre in India in 98, and recently even took a step ahead by extending the ops to China where it has hired eight people. So finally consultants are practicing what they preach.