Consulting Industry

Consulting Industry
1
Table of Contents
Topic Page no.

What is consulting? 4
Why are Consultants used? 5
Historical Perspective of Consulting 6
Main types of Consulting Organizations 7
The Consultancy Model 8
External and Internal Consulting 12
Areas of consulting 13
Financial Management 14
Marketing Management 15
Needs for Consulting 16
Asia Pacific Region: Trends 17
Indian perspective 18
Consulting Companies as an oligopoly 21
Present scenario of Indian Consulting 24
The World Market Trend 25
Predictions for future growth in the IT industry 27
Competitiveness of the Indian Consulting Firms 29
Recommendations 30
Annexures
The Consultants Viewpoint 32
II World Wide Positions of Top Consulting Firms 34
Consulting Industry 2
Of all the businesses, by far,
Consultancy's the most bizarre.
For, to the penetrating eye,
There is no apparent reason why,
With no more assets than a pen,
This group of personable men,
Can sell to a client more than twice,
The same ridiculous advice,
Or find in such a rich profusion,
Problems to fit their own solution.
Bertie Ramsbottom,
in The Financial Times,
April 11, 1981
What is Consulting?
The functional view of Consulting describes the consulting process as any form of
providing help on the content, process, or structure of a task or series of tasks, where the
consultant is not actually responsible for doing the task but is helping those who are.
The second view of consulting is as a special professional service. Management

Consulting is an advisory service contracted for and provided to organizations by specially
trained and qualified persons who assist, in an objective and independent manner, the client
organization to identify management problems, analyze such problems, recommend solutions to
these problems, and help, when requested, in the implementation of solutions.
Management Consulting can be viewed as a professional service or as a method of

providing practical advice and help.
Professional Service: Management Consulting provides technical knowledge and skills relevant
to practical management and business problems. A consultant accumulates, through study and
practical experience, considerable knowledge of varying management situations, and by acquiring
skills needed for solving problems, improving organizational performance and sharing experience
with others : understanding the nature and goals of organizations; finding information; analyzing
and synthesizing; developing proposals for improvement; communicating with people; planning
changes; coping with resistance to change; motivating people; helping clients to innovate and
learn from experience.
Advisory Service: Consultants are usually not used to run organizations or take delicate decisions
on behalf of the managers. They have no direct authority to decide on changes and implement
them. Their responsibility is for the quality and integrity of their advice; the clients carry all the
responsibilities that accrue from taking it.
Independent Service: Consulting is an independent service. A consultant must be in a position to

make an unbiased assessment of any situation, tell the truth and recommend frankly and
objectively what the client organization needs to do with detachment. The consultant should have
technical, financial, political, emotional and administrative independence.
Temporary Service: Consulting is a temporary service. Clients turn to consultants for help to be
provided over a limited interval of time, in areas where they lack technical expertise, or where
additional manpower is temporarily required.
Commercial Service : Consulting firms are sellers of professional services and clients are buyers.
Consulting firms are businesses.
Management consulting is thus an independent professional advisory service assisting

managers and organizations in achieving organizational purposes and objectives by solving
management and business problems, identifying and seizing new opportunities, enhancing
learning and implementing changes.
Generic Consulting Purposes
Achieving organizational purposes and objectives
All consulting tends to pursue a general purpose of helping clients to achieve their
business, social or other goals. These goals may be defined in various ways sectoral leadership,
competitive advantage, customer satisfaction, total quality or total productivity, corporate
excellence, high performance, profitability, improved business results, effectiveness, growth etc.
Solving management and business problems
The consultants task is described as professional assistance identifying, diagnosing and

solving problems concerning various areas and aspects of management and business. The term
problem is used to describe a situation where there is a discrepancy or difference between what
is actually happening and what should or might be happening. Therefore a problem can only be
described in relative terms, as a difference between two situations. In addition, someone has to be
concerned about this difference and aim to overcome it, or to reduce it.
Identifying and seizing new opportunities
Consultants are not just used for troubleshooting. Organizations which are successful and
well-managed may call in consultants for tracking back deviations that have taken place and
finding and correcting the reasons for them . They use consultants for identifying and taking new
opportunities.
Enhancing learning
Many clients turn to a consultant, not only to find the solution to one distinct problem,
but also to acquire the consultants special technical expertise. They also gain knowledge about
the methods used in assessing organizations, identifying problems and opportunities, and
developing improvements.
Implementing changes
Change Agent is a label given to consultants. They help client organizations to

understand change, live with change and make changes needed to survive and be successful in an
environment where continuous change happens.
Why are consultants used?

Generally Consultants are used for one or more of the following reasons.
Providing special knowledge and skill
Consultants are called when an organization is short of people able to tackle a given
problem with the same chance of success. It may often involve new techniques and methods in
which a consultant has acquired special expertise. Consultants can be used to achieve the
principal purpose and the gaps in knowledge concerning general management policy and
planning.
Supplying intensive professional help.
Consultants are called when companies are in need to examine the company organization
or marketing policy, and require the full attention of senior managers. as this may effect the day
to day business and senior managers cannot concentrate on both operational and conceptual
problems simultaneously.
Giving an impartial outside viewpoint.
Sometimes even the best of the people in the organization may be too influenced by the
personal involvement and fail to see the problem in a true light, hence cannot propose feasible
solutions. As a consultant is independent of the organization he can be impartial in situations.
Providing management with arguments which justify predetermined measures
A manger might know what he wants and what his decisions will be, but consultants are
approaches with a request to undertake assignments, so that a manager can justify his decisions
by referring to the consultants recommendations. But sometimes consultants services might be
misused for in-company politics.
Historical Perspective of Consulting

Pioneers of Scientific Management
Pioneers of scientific management, like the American manufacturer Charles T Sampson,

who reorganized the whole production process in his shoe-making factory in order to be able to
staff it with unskilled Chinese labor, gave a major impetus to the development of consulting.
Their technical and methodical approaches to simplifying work processes and raising productivity
gave rise to the application of the scientific method to solving production problems.
Towards a general management approach
New areas of consulting came into being. One of the first consulting firms of the kind
known today was established in Chicago by Edwin Booz under the name Business Research
Services. Consulting in finance developed rapidly. In the 1920s and 1930s, management
consulting gained ground. Consulting for the army and to governments was of importance during
World War II.
Golden Years of Consulting
Post-war reconstruction, rapid expansion of business coupled with acceleration of

technology, emergence of developing economies and growing internationalization of industry
created favorable opportunities and demand for Management Consulting.
The current market
The current market is a global market, where all larger consulting firms operate
internationally and have offices in several countries.
It is an important market with worldwide consulting revenues being in the order of tens of billions
of US dollars.
It is a competitive market, where supply has matched and even outgrown demand.
Clients can be more and more selective service quality and innovation have become criteria in
judging consultants.
It is an open and liberal market. Entry into foreign countries is easy since there are
minimal legal barriers to business consulting services. Language and cultural barriers persist but
do not constitute serious obstacles to consulting across national boundaries.
Main types of Consulting Organizations
Large Multifunctional Consulting firms employing several hundred professional and with
offices in many countries
Management consulting services of major accounting firms have grown into large
multifunctional management consultancies
Small and Medium sized consulting firms employing from a few to 50-100 consultants
Sole practitioners exist despite competition from large professional firms because their
strength is in a highly personalized and flexible approach
The consulting professors are those academicians consulting on a part-time but regular
basis
Consulting services of management institutions offer consulting services in conjunction
with experienced consultancy firms from other countries
Non-traditional suppliers of consulting services is formed by a heterogeneous group
consisting of suppliers and vendors of computer equipment, commercial and investment
bankers, suppliers of equipments in energy, statistical research institutes etc.
The Consultancy Model
The model is person-centred rather than problem-centred. Hence it focuses on the characteristics
of the client as an individual to be worked with, rather than as a bringer of a problem which the
consultant needs to solve.
The results for the clients business have far more consequences than for the consultants if the
problem is not solved. Consultant solutions are rarely as supported or committed to by clients
as solutions which they believe have grown from a deep understanding of their own, particular
business realities. Consultant solutions have a greater likelihood of failure and an often-seen
consequence of blaming the consultant Not invented here. The model views consultancy as a
sharing of mutual expertise, a building of trust, and a joint commitment both to the process and
the outcomes of the consultant-client relationship.
As a result the model explicitly recognizes that it is essential to gather accurate, valid data on
client operations in advance of proffering solutions which may well have worked in similar
businesses. At the very least it is impolitic not to have been seen to complete this data-gathering
phase effectively. At its worst the consultant is seen as failing to understand the specific, unique
realities of the clients position often seen as being only interested in selling catch-all packaged,
generalized solutions.
This model has several distinguishing characteristics:
It has four progressive stages with each stage being divided into an information
gathering and a decision-making phase.
As a general rule, each stage is successful only to the extent that the preceding stage was
successful. For this reason, stage one and contracting are critical.
The skills required build on the skills needed in the preceding stages.
The skills of stage one are those which most people typically use least in the course of
everyday life.
The entry stage recognizes explicitly the additional requirements of work as an external
consultant and the need both to sell and to cost consultancy work accurately. It does not,
however, require any additional behavioural skills, merely high levels of business area
familiarity and in-depth knowledge of the technical capabilities of the consulting firm.
Each complete diamond shows a stage, the widening out of the diamond the first phase that of
information gathering the closing of the diamond the second and decision-making phase.
Stage one Sensing and Feeling
Stage one is about the consultant seeing the problem from the same perspective as the client:
putting yourself in their shoes. The consultant has to understand the problem, as it is stated, in
such a way as to see it in exactly the same way as the client sees it. For most people, this is
extremely difficult at first.
Stage one requires the consultant to suspend the use of their technical expertise and evaluations
and particularly the desire to say how they personally see the problem. As such, the opening-out
phase of stage one is a Sensing phase. Its currency is the history, experiences and detailed
perceptions of the client. The consultant needs to understand the facts of the case, factors which
affect it now and in the past. To reach some kind of conclusion needs a focus on the clients
Feelings, their wants and needs.
At this stage, typically a somewhat painful stage for the client (in some sense they cannot cope
either because they have not got the time or the expertise), the cold, dispassionate logic of
Thinking is rarely helpful. It fails to make the client feel valuable or worthy, and would not
explore the emotional issues that typically underly the contemplation of making change.
Similarly, relationships are rarely founded on pure logic, rather on factors such as empathy, liking
and respect. In stage one the consultant is committed to building a relationship of trust: trust that
the consultant is interested in helping because he/she sincerely (Feeling) wants to understand
(Sensing) the client and his organization, not to judge prematurely.
Typically the clients criticism of consultants early in the relationship is that they dont really
understand our specific business or fail to treat the client organization as having particular
characteristics and concerns.
By the end of stage one, the client and consultant should have agreed on which issue(s) need to
be addressed further in stage two, which can be dropped, and those which they can return to later,
if appropriate. Stage one can be said to be complete when both parties agree what the issue is,
what the boundaries of the issue are (i.e. what relates to the issue in the wider arena and what
does not), and whether or not the issue needs further mutual exploration. Stage one ends with a
clear and shared definition of the problem as seen by the client. If the relationship stops here it is
most likely because the client, through exploring the issue with the consultant, has reached some
resolution.
Stage two Intuition and Thinking
Stage two begins by exploring alternative perspectives of the problem: a much more rewarding
role for the typical NT consultant where his or her strengths are called for. If stage one has been
completed well, and the consultant has earned the trust and respect of the client, this can now be
used to help the client see the problem in a new light. Stage one allowed the client to describe
him/herself and the issues faced so that the consultant could fully understand them. In stage two,
consultants draw on their own perception of the clients problem, their experience of analogous
situations, to help the client see how others might view the issue. The focus is still on the problem
elements as described by the client.
Essentially, stage two involves the consultants relating together these elements, highlighting
inconsistencies (for example between what the client said and how he said it, or between two
actions Thinking), and sharing a broader vision (Intuition) of related problems in parallel
organizations or business environments if these will help the client to understand his own
situation better. A key element of stage two is to help develop a logical framework (Thinking) by
which client perceptions can be revisited and objectified.
The decision-making phase of stage two is objective, resulting in logical goals (Thinking). Stage
two skills can be potent medicine used too soon, these can compromise, or even destroy, a
nascent relationship. Successfully operated, clients are brought face to face with different
perspectives on both themselves and their problem, and are aided by the consultant to understand
themselves better. The consultant may need to clarify understanding of new, deeper issues that
arise from using stage two skills.
In a complex change programme, the consultant(s) and client organization may well be at
different stages of the model at the same time; they may be determining corporate vision and
values with top management (stage two) while assessing effective ways to introduce new
technology to the manufacturing plant (stage three) while researching employee attitudes to
empowerment and work satisfaction through questionnaire (stage one).
By the end of stage two, clients should feel that they understand both the problem and themselves
well enough to feel able to make some changes. Hence the final skill of stage two is setting
realistic, achievable goals. Many consultants stop the process at the end of stage two by assuming
that the client is capable of knowing how to achieve a goal once they have decided what that goal
is.
Stage three Intuition and Feeling
Stage three is the process most likely to be skipped in a change programme as clients (and
consultants too) assume that there is only one way to reach a goal (i.e. stage four follows stage
two).
The opening-out phase of stage three is essentially creative. It helps the client to explore many
possible ways of achieving the goal, with the consultant aiding the client to suspend judgement
about which of these are better or worse until a large number of options have been generated.
This data gathering phase is clearly about what could be the possibilities (Intuition). In
addition to determining how to achieve the what defined at the end of stage two, stage three
focuses on planning the strategies best suited to the route determined. It is also the time at which
the specifics of change dynamics are best addressed.
Stage three may also include explicit development of some behaviours (through training,
development or coaching) required in stage four. The better stages one and two are done, the
easier stage three, which ideally is of two parties working together, on a common problem, to
achieve a common goal on an equal footing.
Stage three requires the consultant to support the client and build the clients confidence in their
own strengths (Feeling): to have the confidence to act and to determine the best solution for him
not one that is necessarily the best (according to some objective criterion if available) but the
one most likely to succeed for that particular individual, team, or organization. The solution
which has the best chance of motivating people and engineering their commitment is most likely
to succeed (Feeling).
Stage three is completed when a programme of action has been determined including the
provision of time for the unexpected a programme to which the client is committed. Without an
effective stage three, the risk of historical approaches (Sensing) or uncaring implementation
(Thinking) is likely, as is an inadequate consideration of the possibilities available (Intuition).
Stage four Sensing and Thinking
Stage four begins when the programme of change with the best probability of success for the
client has been agreed, and implements this programme as a sequence of actions (the opening-out
phase stressing Sensing) which is monitored by client and consultant, and then evaluates how
well the actions are working or have worked (the closing down phase stressing Thinking).
Stage four is essentially about helping clients to deal with the details of implementation (Sensing
preferences for detailed plans, time-scales and sequences) as the plan is actually carried out.
A strong preference for Intuition is not likely to help in getting the necessary details right in stage
four. The goal of stage four is to achieve the goals set at the end of stage two. The evaluation
process should be dispassionate and objective (Thinking).
Many consultants feel themselves frustrated that they do not really know whether a consultancy
project has been successful or not. Sometimes this is caused by rapidly moving on to another job,
sometimes because of the lack of clarity of goals or of evaluation itself. Both parties may collude
to fuzz evaluation, as negative results against known criteria would adversely affect the
standing of both client and consultant. Hence Feeling can intrude on Thinking, understandable,
human, but perhaps not effective in ensuring the goals of change are achieved. If the process has
been successfully conducted clients may then choose to use consultants again, but would not feel
that they had to. Skills should have been transferred to the client. New issues may emerge
through stage four which may require recycling back to stage one to address them.
The final close of the stage four diamond recognizes that a choice point is reached: to terminate
the relationship (the contract is over) or to move jointly to address new issues emerging.
A consulting Project will typically end with one of these events:

(1) The needs of the client, as determined by the contract up front, are met (the client has solved
the problem satisfactorily).
(2) When it is clear that the client has taken control of his or her own destiny and no longer needs
help.
(3) When the client decides to stop (whether or not progress is being made).
(4) When the consultant feels unable to continue to help the client.
(5) When it becomes clear to either client or consultant that the costs of helping are outweighing
the gains.
For the external consultant in particular, difficulties may be experienced in confronting items 2 to
4 above owing to the commercial nature of the consultant-client relationship. However, to do so
is to act ethically, and to optimize the chance of being invited back in the future, rather than
continuing to offer assertive assistance to a client for short-term financial gain.
External and Internal Consulting

From the viewpoint of an organization using consultants we can classify them in to
External and Internal consultants
External Consultants
An external consultant is administratively and legally fully independent of the
organization for which he works. External consultants are preferred, even by organizations, which
have some internal consulting capability, in situations where the internal consultant would not
meet the criteria of impartiality and confidentiality or would be short of particular expertise.
Internal Consultants
An internal consultant is a part of particular organization entity, which can be a company,
group of companies, a government ministry and so on. Internal consulting services are often
thought to be more appropriate for problems that require a deep knowledge of the highly complex
internal relations, procedures and political factors in large organizations awareness of the various
functions of the organizations and specific constraints affecting its operations. Internal consulting
can be cheaper and more productive arrangement.
Now a days large organizations in the public and private sector use both internal and
external consulting for complex assignments. Internal consultants may be requested to define
precisely the assignment for an external consultant
Areas of consulting
Consulting in General Management
Nature and scope of assignments in general management

There are 3 principal occasions in which consultants have to deal with problem of general
management.
During management (diagnostic) surveys.

During assignments on specific functional areas of management, when it is found that
certain changes in general management are required.
During assignments dealing with one or more of the typical issues of general
management.
In general management process consulting would be the appropriate approach, it is much

more effective to stimulate people in key positions to examine their attitudes and style of work
rather than giving a report suggesting a range of measures. The scope and objectives of consulting
in general management tend to be less precisely determined, and in some cases it may be even
impossible to express the ultimate objectives in clear.
The role of consultant is in many ways analogous to that of general manager, like he
should avoid situations in which the basic choices are dominated by considerations of a single
management function, irrespective of the needs and possibilities of other functions. He should
ensure that specific contributions to strategy formulation would be mutually harmonized.
The decision making process
The main reason why a consultant has been brought in by a firm is to examine and reform
the total decision making process. For example excessive centralization of operations may
deprive the organization lose its flexibility. On the other side an autocratic owner may be taking
decisions based on wishful thinking rather than rational analysis. The consultant can look up the
following areas.
The ways in which typical decisions are taken.

Roles played by specialists and line managers in decision-making.
Role of collective bodies in discussing and adopting situations.
Participation of workers representatives in decision making.
Use of decision making techniques, Models or formalized procedures.
Consulting in Financial Management
Nature and purpose of financial consultations
Finance is a means of procuring resources to carry out business operations and it

measures performance and results, both in detail and globally. Financial consulting may involve
planning financial structures, finding funds and designing accounting systems. Financial
consulting can be broadly divided into 5 categories.
1. Enterprise development
This includes the feasibility studies of new developments. New ventures, adding new
product lines, changing product processes, installing new equipment etc. in each of these
instances the consultant measures the resources required and the income and costs that follow.
The main objective is to assess whether the expected benefits justify the resources the client will
put forth.
2. Capital Management
The consultant has two main concerns under capital management. The first one relates to
source of funds and other to the best use of funds. The consultant frequently advises the client on
the proper use of funds. His guidance is invaluable on the correct balance between assets and
liabilities and the maintenance of liquidity. The financial consultant stresses the need for sound
depreciation and replacement policies to ensure continuous renewal and upgradation of
installations and equipment.
3. Least-Cost operational alternatives
This involves the case of a management consultant who has to choose the best possible
option fro the available choices. A financial consultant may be called to evaluate which is the
most favorable. For each alternative he evaluates the amount of resources need to be invested, the
income or output that will result and the costs that will arise.
In many cases devising an evaluation strategy suitable to the particular condition of the
clients organization and passing it over to the client will enhance the value of the consultants
help
4. Accounting systems
This involves the design and development of accounting systems. The major systems
may include:
Management Information
Financial accounting
Credit control
Inventory control
Cost accounting
Information processing
The consultant has to determine what support the managers expect, the objective of the
system and who will receive the information and how he will use it. To ensure that the system
will serve the intended purpose, the consultant has to
Create an appropriate organization
Design forms to match the procedures.
Select suitable equipment.
Incorporate checks and controls
Consulting in Marketing Management
Consulting in marketing differs from other functions. As in marketing the firm finds itself
in contact with the external entities like consumer, competitors. The firms very survival depends
upon how well it manages to adapt to the market conditions influenced by the activities of these
external entities. A consulting assignment that embraces the marketing function will usually
develop into two separate tasks, one at the strategy formulation level, which will be dealt by the
top management and other at the activities level will be dealt by the middle management which
include sales, advertising, product and market research.
The Marketing Strategy Level
As far as the matters concerning the firms overall strategy the marketing strategy is an
important part. Strategic decisions have far reaching implications for the management of
particular functions such as production, product development and finance control. A useful
starting point is to classify the clients orientation towards the market
Product-oriented
Production-oriented
Market-oriented
In most of the case market considerations are ignored and de-emphasized compared to
others. The idea of thinking in terms of providing solutions to a firm is very useful in marketing.
It helps in identifying new markets, finding new products for existing customers, finding new
customers for existing products, and most importantly discovering potential and possible
unsuspected competition. The consultants have to find out what problems the customers have and
if the firms products or services can provide solutions.
Marketing Operations
Different firms have different ideas about which operations are part of the marketing
function. Selling, advertising, promotion, dealing with distributors and market research are the
major areas. Usually the client sets advertising expenditure purely as an arbitrary percentage of
sales, either the past sales or forecast sales. It is much better to plan advertising campaigns in
terms of the objectives and calculate the required resources. The consultancy in commercial
enterprises deals with adequate checking of stock-control procedures as different types of goods
need different types of stock control systems.
Some Consulting Firms and their scope of operations
Arthur Anderson Full-service
McKinsey Full service
PWC Full-service
BCG Mgmt. Cons
Deloitte Operations
Roland Berger Strategy Cons
Karvey Portfolio Management
KSA Technopak Strategy, process and technology
Kale Airline and Banking
TCS, Infosys IT & Software
KPMG Internet and e-business
Need for consulting

The consulting business has enjoyed tremendous success during the past two decades,
with its growth exceeding that of many professions. According to most estimates, the consulting
industry is predicted to grow in the range of 15 to 20 percent each year. Whether in restructuring,
implementing systems, developing staff, changing procedures, buying new companies, or
bringing out new products and services, consultants are being asked to assist in a variety of ways.
Companies are fervently seeking consultants for their external perspectives and expert opinions,
hoping they can provide solutions that will improve business. Consultants advise on processes of
change within or between organizations, the consultant operating as a direct ``change agent''.
When the consultant arrives on the scene, the people directly concerned are often in a state of
confusion: they are aware that something is afoot, but do not know exactly what. The prevailing
fear is that their job, career or department's future is on the line. No matter how you define the
situation, the consultant's workplace is invariably dominated by uneasiness and stress. It is up to
the consultant to use his/her experience and expertise to defuse the tension and steer the
organization into calmer waters.
Unfortunately, clients are often disappointed when products and services fail to deliver
anticipated results, leaving both the client and the consultant frustrated over the outcome of the
project. While some have regarded the consulting profession as a highly desirable occupation,
others have characterized it by the lack of effectiveness of consultants and the consulting
industry. The problems facing consultants, although varying with the industry and the type of
consulting activities, generally fall into three major categories: lack of accountability, tarnished
image, and excessive costs. Each of these brings a cloud over the industry, causing some to
question the contributions of consulting projects.
Asia Pacific Region: Trends
Competitive Overview
Global consultancies that have presence in this market face increased competition from
local consulting companies. Despite the large number of local players, their services offerings are
often in the development stage. Foreign consultancies enjoy good reputations, global reach, a
large scale, high tech, critical mass, customer services, and infrastructure.
The meltdown of the dot-com sector and market consolidation caused foreign Internet
services and consulting pure-plays to leave the region. This may increase demand for consulting
work for the small local consulting companies.
Market Drivers and Trends
Banking and financial services consolidation.
In order to compete with global players, financial services companies and banks have
started the consolidation process. This would accelerate demand for consulting services for the
next 2430 months.
Production migration in the manufacturing sector.
Manufacturing is shifting from higher-cost regions, such as Malaysia and Singapore, to

the areas with lower-cost opportunities, including China and Indonesia (particularly for the
electronics sector) and Thailand (particularly for the automobile industry). The shift in the centers
of manufacturing will result in consulting services opportunities in these new hubs for major
manufacturing segments in Asia/Pacific.
Deregulation in the telecommunications sector.
Countries such as Taiwan, Malaysia, and Hong Kong will take full advantage of
deregulation in the telecommunications sector in the Asia/Pacific region.
Advent of the Internet.
The Internet market in the Asia/Pacific region is far from being mature. An increasing
number of Internet subscribers are rapidly changing the market landscape, particularly in Korea
and China. Korea is the country with the highest number of broadband subscribers, and it is
predicted to stay the same in the short term. The Internet subscriber base is increasing at the
highest pace in China. The current economic stage as well as the relative non-maturity of the
market will result in the high growth of discrete IT consulting in the Asia/Pacific region.
Market Inhibitor
Heterogeneous nature of the market.
The Asia/Pacific region is not as homogeneous as other regions of the world. Every
country within the region has its own political, economic, social, and cultural environment. This
situation is not expected to change in the near future. This poses significant challenges for foreign
and local consulting companies that are aiming at conquering the entire region. A unified strategy
for reaching out to this market wont do the trick. There has to be a customized approach when
strategizing operations in each country, and economies of scale in this region may be limited
Indian perspective
Services play a crucial role in our economy. Among services, consultancy profession
assumes significance as a catalyst of change in the ever expanding industrial scenario.
Consultants help in optimizing use of resources to enhance efficiency and overall returns from a
project. According to the ESCAP report, the number of consultancy organizations and consultants
in India is now well over 4000 with annual turnover of Rs.1000 crores which include consultancy
exports as well. Over 100,000 specialists are employed, including nearly 10,000 management
consultants. The wide spectrum of disciplines and services provided by Indian consultants range
from project identification to commissioning involving, supervision and training of personnel,
market surveys, rehabilitation of sick units as well as operation and maintenance. The
consultancy organizations in India are directly or indirectly supported by more than 1,000 R&D
institutions and research laboratories both under CSIR as well as other major scientific
organizations such as DRDO, Atomic energy and space. Consultancy organizations also work in
close unison with IITs, Universities and Financial institutions. Major financial institutions such as
IDBI, IFCI and ICICI have also promoted the use of consultants by establishing state-level
consultancy organizations. Largest concentration of consultancy organizations is in the four
metropolitan cities Delhi (25.7%) has the highest number of consultancy organization among four
metropolitan cities followed by Mumbai (25.5%) Chennai (12.1%) and Calcutta (9.1%)..
Concentration of Consultancies in the

major metros
26%
1
2
3
27%
26% 4
5
12%
9%
Analysis of consultancy organizations in terms of technical professionals employed

indicates that 68.3% of them have up to 10 technical professionals, 14.3% have 11-25
and 1.5% have more than 1000 technical professionals. Indian consultancy capabilities
are strong in several areas such as civil engineering and construction, telecommunication,
power, metallurgy, chemical, petrochemicals and computer software. The graph given
below is a pictorial representation of the division of consultancies on the basis of the
number of people that they employ i.e. the number of consultants in each firm
Professional Strength in Indian Consultancies
16%
>1000 2%
<10
14%
11-25
68%
The above graph shows the fragmentation of the market. The firms employing more than
1000 professional constitute just 2% of the total number of consultancy operations yet
contribute to more than 90% of the total revenue.
Strength of the Indian Consultancy profession
1. Well dispersed and wide ranging areas of specialization to service diverse range of
clientele needs.
2. Advanced technical talents/ skills at reasonable cost.
3. Familiarity with local conditions
Presently opportunities exists in the following fields :

1. Infrastructure and Resource Development
2. Technology upgradation
3. Energy Management/ Conservation/ Non-conventional sources
4. Power, Telecommunication, Road Construction
5. Environment protection & planning
Over the years, consultancy capabilities have grown in several sectors, public and private and
more recently a number of foreign consultants have also started operations in India. However, the
domestic consultancy capabilities need to be strengthened and skills be upgraded continually in
several sectors, since the consultancy profession growth in India has not kept pace with the
industrial and economic developments over the years. Thus, there is a need to support and
strengthen the domestic consultancy capabilities, in order to meet the emerging challenges and
business opportunities in domestic and export markets, particularly in the context of new policy
environment and WTO. At the same time, there is a need for professionally competent and
reliable multidisciplinary services at affordable costs to the clients including SMEs as well as for
greater awareness about the role of consultants.
The above graph gives an relative domain specializations of the Indian as well as the
Multinational consultancies. Some firms like Kale consultants specialize in niche areas like
Aerospace consulting. While firms like Pricewaterhouse Coopers offer consultancy services in
over 30 areas
Measures being taken by the Government
Department of Scientific & Industrial Research is concerned with the task of promoting
and strengthening the consultancy services in the country. Towards this, a Plan Scheme
"Promotion and Support to Consultancy Services" is being implemented in DSIR.
The main objectives of the Scheme are to strengthen and promote consultancy services in various
areas including :
Consultancy services within the country for the establishment of new enterprises,
improving the performance of the existing units including sick units, mergers and
acquisitions, etc.
Infrastructure development
Consultancy services for acquisition or import of technologies, requiring technological
and managerial competence to evaluate the technologies and engineering them as per
local requirements, Promoting quality Foreign Direct Investments (inward and outward).
Consultancy services for export of projects, technologies and services and setting up Joint
Ventures abroad, etc.
Consultancy services for development and transfer of technologies from R&D institutes
and strengthening linkages of R&D system with industry.
Consultancies for new and emerging areas of national interest.
Other areas as may be identified including special efforts for consultancies for SMEs and
tiny sector.
Strengthening consultancy capabilities
Support R&D efforts of consultancy organizations and consultancy efforts of R&D

organizations.
Support for pilot studies, infrastructural facilities, etc for commercialization of
indigenous know-how.
Support for studies related to assessment of consultancy capabilities in various sectors /
fields.
Support for skill Upgradation, training, quality management, etc to consultants.
Support for developing consultancy capabilities in emerging and newer areas.
Development of Consultancy for SMEs
Promote and support the availability of consultancy services to tiny and small & medium
sector.
Supporting the setting up of consultancy clinics and design & engineering services
facilities in specific sectors particularly for SMEs.
Support for consultancy for commercialization of technologies from R&D, and academic
institutions for multiple licensing for SMEs.
Training programme etc.
The Economics of Consulting
As organization acquires power, it uses that power, not surprisingly, to serve the ends of those involved.
These ends - job security, pay, promotion, prestige, company plane and private washroom, the charm of
collectively exercised power - are all strongly served by the growth of the enterprise. So growth both
enhances power over prices, costs, consumers, suppliers, the community and the state and also rewards in
a very personal way those who bring it about. Not surprisingly the growth of the firm is a dominant
tendency of advanced economic development.
- John Kenneth Galbraith
Consulting Companies as an oligopoly

Oligopoly is the theory of imperfect competition among the few; it refers to an industry
that contains only a few competing firms. Each firm has enough market power to prevent it being
a price taker, but each firm is subject to enough inter-firm rivalry to prevent it from considering
the market demand curve as its own.
In contrast to a monopoly which has no competitors and to a monopolistically

competitive firm, which has many competitors, an oligopolistic firm faces a few competitors.
Because there are only a few firms in an oligopolic industry each firm realizes that its competitors
may respond to any move that it makes. Thus its actions will be determined keeping the reactions
of the other firms in mind.
This is the key difference between the oligopolists on the one hand and perfect
competitors, monopolistic competitors and monopolists on the other hand. The behavior of
oligopolists is strategic, which means that take explicit account of the impact of their decisions on
the other hand. Oligopoly is also consistent with a large number of smaller players called a
competitive fringe, as long as a big few dominate the sector.
The consulting industry in India can be called as an oligopoly on the basis of the following
factors.
1. Few consolidated companies exist in the market. The market is dominated by a few
Multinational entities which control over 90% of the total consulting market
2. The firms are not price taker nor are they price givers. There is intense competition firms
and they frequently resort to understating their fee but the fee is still determined by them
and not the market
3. The competition exists in the upper strata of the market where the bigger names jockey
for space.
4. The action of each firm is not independent of each other rather the decisions taken by an
organization are taken after a detailed analysis of the reaction that the decision will attract
What are the causes of Bigness?
1. Economies of scale: applying the term economies of scale to an industry is fraught with
dangers however the point that is meant is that in a service industry which is inherently
knowledge driven the larger the expanse and scope of the firm (in terms of number of
employees and type of services offered) the higher the probability of it being able to resolve
an issue successfully. This would in turn get it better clients and thus more experience.
2 Economies of scope : This is related to financing and marketing. It is costly to enter a market
to establish a knowledge setup , create a reputation and make consumers aware of services.
These costs are same irrespective of the size of the firm and thus affect a smaller setup more
than a larger firm.
The basic dilemma of oligopoly
Oligopolistic behavior is essentially a strategic behavior. In deciding on strategies,

oligopolists face a basic dilemma between competing and cooperating. The firm in an
oligopolistic market will make more profits as a group if they cooperate; any one firm however
may make more profits for itself if it defects while the others cooperate.
The cooperative solution
If the firms in an oligopolistic industry decide to cooperate, either overtly or tacitly, to

create among themselves the monopolistic situation, they can maximize their collective profits. If
they do this they will reach what is called a cooperative solution. Which is the position that a
single monopoly firm would reach if it owned all the firms in the market.
The non cooperative Equilibrium
Although the condition that the firms act together would give rise to a monopolistic
situation and thus increase their joint profits, it will be profitable for any one of them to cut its
price or raise its scope provided the others do not do the same. If they all make the same changes
then they will be worse off as a group and individually. An equilibrium that is reached by firms
when they proceed by calculating their own gains, without cooperating with others is called non-
cooperative equilibrium or a Nash equilibrium named after the US mathematician John Nash who
developed the concept in 1950s and was awarded the Nobel Prize in economics for his work. Its
an equilibrium in which each firms best strategy is to maintain its present behavior, given the
present behavior of other firms.
Absolute Size
Oligopolistic firms that operate on a national or global scale are also huge in another
sense - they are just plain big. Many have several hundred thousand employees and multi-billions
of dollars in assets. Size is itself a source of power. Size provides protection against potential
competition - remember that ease of entry is one of the factors by which we measure competition.
The sheer size of their operations gives them financial leverage. Creditors are less likely to force
a large firm into bankruptcy. There is an old saying to this effect: 'If your owe your banker a
million dollars you are a customer, but if you owe your banker a billion dollars you are a partner.'
Size also opens opportunities for further expansion by swallowing other firms. IBM paid
$3.5 billion for Lotus in 1995. That is about equal to the entire annual output of Nepal, which has
a population of 20 million.
Global Operations
Another source of economic power is the ability to operate on a global scale. The
consulting industry like the automobile industry is an example of global oligopoly. Major firms
have their operations in not one but several countries and this gives them inherent bargaining
power since they are able to shift focus from one country to another without a very big impact on
their operations
Wide Scope of Operations
Firms might increase their size and financial power by expanding into unrelated or only
peripherally related areas. Such strategies can also reduce risk. This conglomerate fad was
particularly popular in the 1960s. Corporate leaders and business school professors talked about
achieving 'synergy' from the joining together of unrelated firms. Business schools in the United
States also supported the conglomeration fad by promoting the idea that management is a
profession unto itself and that there is no essential difference in managing a soft-drink company
from managing a computer manufacturing firm.
Present scenario of Indian Consulting
The consulting industry in India is presently not going through a good phase. The foreign
consulting firms in India are slashing billing rates, pruning costs, discreetly downsizing and
desperately diversifying, all this, just to stay alive. The diversification makes things worse in some
cases: consulting firms are stepping on the toes of the software companies in a desire to capture a
slice of the lucrative technology transformation pie, and on those of investment banks as they try to
get afoot into the happening corporate finance advisory business. The sheer number of their
consultants on the bench in India is also forcing some firms to body shop. Increasingly relatively
inexpensive Indian hires are assigned to global projects if any: the business is not booming
anywhere in the world.
Separated at Death
A year ago, the Big Five could have got away with a presence in both audit and consulting. On
paper, the synergies between the two businesses are considerable: accounting firms have
specialized practices (such as telecom); auditing the books of several telecom companies gives the
insights into the dynamics of the business and a presence in consulting provides them with a
profitable outlet for such expertise. Now post Enron, most audit companies are trying to hive off
their consulting arms - Ernst & Young was the first to do it when it sold its consulting practice to
Cap Gemini in May 2000.
On July 30,2002, PricewaterHouse Coopers sold its consulting arm more than 32,000
employees, offices in 52 countries and revenues of $4.5 billion to IBM for $3.5 billion. Not that
other Big Five consulting arms are in the pink of health: Anderson Consultings Indian arm is still
looking for a lifeline-its parents deal with KPMG Consulting seems to have stalled and the
company is close to arriving at an understanding with Deliottes India arm. KPMG consulting
created on 2000 hasnt quite set the corporate world on fire. And Deliotte is the midst of a painful
amputation of its consulting division. Much of the damage is at global level, but the Indian
operations are hurting too.
Indian Performance of MNC consulting firms
HOW THE CONSULTING FIRMS STACK UP

Firm No: of Revenues Remarks
employees/ (in Rs Crore)
No: of
employees in IT
MCKINSEY Over 135 / NA 90-100 The firm has been growing its India practice but
the competition claims it is deep in the red
BCG 60 / NA 25-30 BCGs Indian strategy has been cautious and mild
KPMG 60/ n.a 45 The Indian arm is yet to separate from the audit
CONSULTING business; reported to have high significant IT
consulting strength
PwC CONSULTING 850-900/n.a 125 PwC Consulting has a strong presence in IT

consulting in India
CAP GEMINI E&Y 400 /600 n.a The firm has recruited over 100 people last year;
the focus is clearly on technology
DELOITTE n.a n.a Deloitte doesnt have a presence in consulting in
TOUCHE India; reported to be in talks to acquire Andersen
TOHMATSU Business Consultings India practice
A.T. KEARNEY 40 / NA 25-30 Kearney has a strong presence in infrastructure
and retail sectors; setting up an M&A advisory
ACCENTURE 700 / 500 105 The original IT consultant, it has ramped up its
offshore operations in India
ANDERSEN 130 / NA 25 Its parents deal with KPMG has gotten nowhere.
BUSINESS Reported to be in talks with Deloitte, but its
CONSULTING future remains uncertain
The World Market Trend

The worldwide consulting market is undergoing tremendous changes. The changes are
taking place on the demand and supply sides. On the demand side, the changes are caused in part
by the end of the first wave of the e rush. This has resulted in end users taking a more cautious
approach to initiating e-business projects. This will drive new spending patterns as well as
dramatic changes in the nature of consulting engagements. On the supply side, there are
significant changes in the competitive landscape, caused by a meltdown of e-business services
boutiques, the reshaping of the Big 5 segment, and the aggressive entrance of hardware and
software manufacturers to the consulting space.
Another factor that has an impact on the consulting market is the state of the economy.
The U.S. economys slowdown should not significantly affect overall spending on business and
IT consulting services on the global scale during 20002005.
However, the market will take a slight short-term hit and will experience redistribution of
spending on different sub-segments of consulting services and different services lines.
Following are the major changes that the supply and demand sides of the consulting market
experienced in the recent past:
Significant changes in the nature of consulting engagements were expressed in such trends as
lengthening sales cycles, decreasing the velocity of projects, increasing the length of projects,
lengthening decision-making processes, and moving the decision-making process higher up in
an organization.
For end users, measurable ROI validation became one of the most important factors when they
made decisions regarding e-business spending.
There were significant changes in the competitive landscape.
This section of the report will look at the Worldwide Consulting Services market, the current
market trends, as well as drivers and inhibitors of future growth. The worldwide consulting
service providers have been ranked, and some of their key success factors and winning market
strategies have been identified.
A research done by IDC presents the worldwide and US total consulting market through
2005. The worldwide consulting services market will increase at a five-year compound annual
growth rate (CAGR) of 15.2%, reaching $138 billion in 2005. In the United States, which
represents the largest portion of the total consulting market, the growth rate is expected to be
14.8% and spending volume will reach $70.8 billion in 2005.
Key assumptions made in arriving at these figures were as follows:

The decisions of the corporations regarding outsourcing or insourcing will not change
dramatically over the years.
The economic situations are assumed to remain fairly stable for the period of time.
The slowdown of the US economy will not dramatically affect overall worldwide consulting
spending.
Natural Selection At Work

You dont need a consultant to figure out what went wrong. There are too many consultants.
According to Arun Maira, Chairman, BCG India,There is over-capacity all around. And there is
too little business. The companies that needed help to design their strategies have already taken the
help of companies that provide this service and have not always benefited. Yet, consulting firms
remain bullish on India. Also their ranks have swelled and swelled. The old style of consulting is
changing ways to a partnership style relation between the client and the consultant. It is no longer
possible for consulting firms to send their best and brightest to pitch a project and then hand over
execution to a clutch of trainees. Interestingly, some companies are even hiring former consultants
to manage the consulting firm (or firms) they hire.
Any Business is Good Business
With business drying up, consulting firms are diversifying into hitherto untapped areas such
as technology (or IT) consulting. The margins in strategy are higher, but the volumes are more in
technology consulting. So the firms are looking at offshore software services (as part of their
larger offering), even outsourcing services targeted at the Indian market. All this flux is certain to
change the topography of consulting. Diversified firms will survive and others will resort to
alliances or even, joint bids.
80000
70000
60000 United States

50000 Western Europe
Japan
40000
Latin America
30000 Asia Pacific
Canada
20000
ROW
10000
0
2002 2003 2004 2005
Predictions for future growth in the IT industry
Analysis of Market Drivers and Inhibitors
Market Drivers
The consulting services market will grow and evolve because of various market forces
that keep generating demand and initiating new developments on the market. Although the impact
of each driver is different across the regions, the set of drivers is relatively common worldwide.
Positive market drivers in the consulting market include:

Mergers and acquisitions
Deregulation and privatization
Restructuring
Adoption of new technologies
Globalization
Market liberalization
Economic prosperity
Favorable conditions of capital markets
Market Inhibitors
Market dynamics that have adverse effects on consulting services spending vary from region
to region. Among market inhibitors for the global consulting market are:
Global economic slowdown and recession
Political instability
Legislative constraints.
Market Size and Trends by Industry and Type of Consulting
Industry Sector Opportunities
On a global scale, financial services, banking, manufacturing, and communications

represent the largest markets for consulting services. The sectors that are growing at the highest
pace are financial services, banking, communications, retail, and business and engineering
services.
Regional Opportunities
Although the United States remains the land of opportunity with the largest market,
solid growth, and a wide variety of possibilities, other regions growth opportunities and rapid
evolvement seem very promising. Some economies of Latin America (such as Mexico and
Brazil) and Asia/Pacific (such as South Korea, Hong Kong, and Thailand) will experience stellar
growth of the consulting opportunities.
Services Segment Opportunities
Business and IT strategy are expected to be the fastest growing services segments. In
light of merger acquisition activities and consolidation on the global market, change management
and consulting services around mergers and acquisitions are expected to grow at a high pace.
Considering changes in the client mindset and a shift toward ROI validation and cost saving,
process improvement and business process reengineering will be the segments with high growth
opportunities.
Key Competitive Success Factors
There are a number of competitive factors that are likely to contribute to the growth and
success of the consulting services industry. Consulting services players are advised to address the
following factors:
Focus on total solutions and integration of services
Enhancement of depth and breadth of services provided
Multiple pricing strategies
Relationship building on the end-user side
Synergistic partnerships and cooperation
IT Consultancy
According to a survey done in the United States by TCFA( Technology Consultant

failure Analysis ), over 60 percent of Consultant Led Technology Projects including new Systems
Development, Package Installation (e.g., CRM, ERP etc.) and those involving Business
Reengineering utterly fail. And, 80 percent of Consultant Led Projects don't achieve the results
they proclaim at the project's onset. Every consulting firm quotes these statistics and say they are
somehow different. They majority fail however not due to the technologies nor methodologies
designed to deliver high quality results. They fail from poor consulting practices and poor inferior
consulting firms. There is a huge potential for Indian firms specializing in CRM implementation,
and can leverage the Brand value associated with Indian Software Firms in the Global market to
their advantage.
Competitiveness of the Indian Consulting Firms
Consultants have crucial role to play in the knowledge Era. Not only firms from all
sectors manufacturing and services but business houses, public sector as well as governments are
increasingly turning to the consulting fraternity for assistance. Many business houses have sought
help, mostly from global majors, to develop corporate strategies for survival and success in the
twenty-first century. Ironically, Indian consulting industry itself has some major challenges ahead
in face of globalization of the industry. Indian firms are very small by any indicators of size,
revenues or human resources, no. of countries served or their information technology
infrastructure
Size does matter! Along with size, the international audit firms are realizing the benefit of
having richer global databases, which only mergers could provide them. The worldwide
consulting business is dominated by the Big Six firms, with billions of dollars in revenues from
audit and consulting operations that sprawl over the globe. Recent times have seen some major
realignments in the consulting industry. Coopers & Lybrand announced a merger with Price
Waterhouse (PWC). Ernst and Young, too, announced plans to merge with KPMG, but then had
to call off the alliance, not being able to work out an agreement reasonable for both the sides. The
consulting and audit wings of Arthur Andersen are still fighting it out over who contributes more,
and how profits should therefore be shared.
But what does all this mean for India? The Big Six are all represented here already. With their
size, experience, superior financial, information technology and other resources they are
successfully exploiting the opportunities offered by vast emerging Indian market. Whether it is
banking sector, global firms have comfortable wins over their Indian counterparts. Many
researches indicates that Indian firms might not have prepared for globalization and resulting
challenge of international competitiveness.
International competitiveness will decide survival and success for Indian firms in
globalized world. Is the Indian consulting industry ready for globalization? Is it internationally
competitive? These are questions that can only be answered in the future
Recommendations
Expand both breadth and depth of the total solution offering.

For total solutions providers, it is imperative to build in-depth expertise while expanding
the range of services offered. This could be achieved through organic growth, partnerships and
alliances, and merger activity.
Experiment with new pricing models in order to maximize revenue, increase customer
satisfaction, and tap into new client segments.
The time of pricing model uniformity, in which the main billing system was based on
time and materials, has passed. In the modern economy, consulting vendors are experimenting
with a number of alternative pricing models, including fixed time/fixed price, risk-and reward
sharing, and equity payment. It is imperative that consulting vendors evaluate various pricing
structures and choose pricing models in accordance with client needs and strategic objectives of
an engagement.
Turn economy slowdown into an opportunity for growth and strengthening the core
business model.
Besides such important activities as managing costs, maintaining focus, validating ROI,
and getting lean and mean, the vendors should consider taking advantage of the downtime to
make strategic investments and conduct strategic hiring and training of human capital.
Build long-lasting relationships with decision makers on the end-user side in key industry
verticals.
As the decision-making responsibility for IT consulting engagements is shifting to senior
business management (as opposed to IT management) and is moving higher up in an
organization, consulting vendors should work hard on building strategic relationships that are
crucial for the consulting business. The relationships have to include decision makers in the
boardrooms of end users, industry experts, and strategists in the prospect and client bases. This is
equally important for high-tech manufacturers that dont have strong relationships on the business
side of end-user business and for professional services companies that need to strengthen these
relationships after separating from their accounting divisions.
Define, evaluate, and modernize global logic and global footprint.

It will be increasingly important to align global logic of consulting vendors with their
overall business strategies. It is also imperative to fully understand benefits, challenges, and
tradeoffs of being global compared with being local and a centralized compared with a
decentralized organization. Most vendors are facing the challenge of redefining and updating
their global footprint in accordance to market demands. Successful and timely development of a
consistent global strategy will provide the vendors with competitive advantage.
Work on partnerships and competition
In the environment of high-level competition, new entrants to the market, potential
channel conflict, building strong synergistic partnerships, and creating ways for cooperation are
among business imperatives for consulting vendors.
Adjust human capital strategy to the new market requirements while keeping both short-
and long-term goals in mind.
Although the war for talent is over, there is still a shortage of seasoned IT professional
skills. Therefore, while its important to keep the costs, capacity utilization, and financial metrics
under control, long-term strategic goals should not be disregarded. Considering that human
capital is the major asset of a professional services company, it is imperative to benchmark short-
term cost-cutting strategies with the companys overall long-term business strategy. Evaluation
and update of performance measurement, compensation, and reward strategies should also take
place in light of the new economic conditions.
ANNEXURE I
The Consultants viewpoint
Prof. Anil Chaturvedi

The services of Prof. Anil Chaturvedi were hired for the projects done for the
Airport Authority of India Ltd., which was to do with Pre-leasing and Post-leasing
Organizational development, as well as Organizational restructuring of NIFT. Presented
below are his views on the state of Consulting in the current scenario.
Airport Authority of India Ltd. Required the services of a consultant for providing
organizational direction in the wake of leasing of the airports to private parties in the
future. The project required designing and steps for successful implementation of the
changes in the organization due to leasing. Issues like the role to be played in the
future, the control areas, security issues, ATC department, VRS schemes, re-
employment, grievances, disciplinary actions were addressed as part of this project.
Some bottlenecks faced during the execution were regarding maintaining a balance
between the civil servants and the officers, unplanned approach due to frequent
changes in ministries, bureaucrats etc.
NIFT: This project involved suggesting ways to successfully reorganize NIFT from
being an institute under the purview of the Ministry of Textiles to being an
autonomous authority.
UP Power corporation: This project was an initiative to build a model distribution
center near IIM, on the banks of river Gomti for power generation companies, which
could be implemented across India at a latter stage. It was funded by Power Finance
Corporation, and required inputs on the approach, technology and feasibility. IIML
was roped in to basically provide inputs on managerial aspects. The estimated cost of
the distribution center worked out to about Rs. 250 cr. A canadian firm, Mot
McDowell was roped in to give advice on market structure and use of IT.
A few more insights provided by Prof Chaturvedi can be summarised as follows:
The Indian consulting firms are good to operate in the Indian market only, because
they are able to understand the Organization structure better.
A lot of Indian firms like BHEL, Ranbaxy, Jet Airlines are going for in-house
consulting.
The Indian firms should look towards integration of their Databases.
Indian firms should focus more on HR consulting rather than strategy consulting.
The focus of the client is increasingly going to be on Cost cutting and actual
Implementation of the suggestions.
Prof. JanakiRaman Moorthy
The project was undertaken for UP Forests Corporation, and the services of Prof.
JanakiRaman and Prof. Ravi Sundar were hired for this purpose. Some insights can be
summarized as follows:
The problems related to efficiency, marketing, inappropriate government policies for
running business, logistics and office automation are going to be the key issues.
Corporations should develop a global vision, and should think along the lines of
global restructuring.
Quite a few of the Indian firms do not trust the MNC consulting firms, and Indian
forms can take advantage from this.
Confidentiality is a major issue when it come to operational consultancy.
ANNEXURE II
World Wide Positions of Top Consulting Firms
THE BIG FIVE

(Parent company worldwide revenues for fiscal years
ending in 2001)
PricewaterhouseCoopers $22.3 billion

Deloitte Touche Tohmatsu $12.4 billion
KPMG International $11.3 billion
Ernst & Young International $10.0 billion
Andersen $9.3 billion
Source: company press releases for all but Ernst & Young, which is an estimate from the Forbes
500 Privates list
The Ranks of the Big Eight prior to the beginning of the consolidation wave in 1989 were:
Arthur Andersen
Arthur Young
Coopers & Lybrand
Deloitte Haskins & Sells
Ernst & Whinney
Peat, Marwick, Mitchell
Price Waterhouse
Touche Ross

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Topic Page no.

The second view of consulting is as a special professional service. Management

Management Consulting can be viewed as a professional service or as a method of

Independent Service: Consulting is an independent service. A consultant must be in a position to

Management consulting is thus an independent professional advisory service assisting

Solving management and business problems

The consultants task is described as professional assistance identifying, diagnosing and

Identifying and seizing new opportunities

Change Agent is a label given to consultants. They help client organizations to

Why are consultants used?

Supplying intensive professional help.

Giving an impartial outside viewpoint.

Providing management with arguments which justify predetermined measures

Historical Perspective of Consulting

Pioneers of scientific management, like the American manufacturer Charles T Sampson,

Towards a general management approach

Post-war reconstruction, rapid expansion of business coupled with acceleration of

The current market

Main types of Consulting Organizations

Stage one Sensing and Feeling

Stage two Intuition and Thinking

Stage four Sensing and Thinking

A consulting Project will typically end with one of these events:

External and Internal Consulting

Nature and scope of assignments in general management

During management (diagnostic) surveys.

In general management process consulting would be the appropriate approach, it is much

The decision making process

The ways in which typical decisions are taken.

Nature and purpose of financial consultations

Finance is a means of procuring resources to carry out business operations and it

3. Least-Cost operational alternatives

Consulting in Marketing Management

The Marketing Strategy Level

Need for consulting

Market Drivers and Trends

Banking and financial services consolidation.

Production migration in the manufacturing sector.

Manufacturing is shifting from higher-cost regions, such as Malaysia and Singapore, to

Deregulation in the telecommunications sector.

Advent of the Internet.

Heterogeneous nature of the market.

Concentration of Consultancies in the

Analysis of consultancy organizations in terms of technical professionals employed

Strength of the Indian Consultancy profession

Presently opportunities exists in the following fields :

Measures being taken by the Government

Strengthening consultancy capabilities

Support R&D efforts of consultancy organizations and consultancy efforts of R&D

Development of Consultancy for SMEs

The Economics of Consulting

- John Kenneth Galbraith

Consulting Companies as an oligopoly

In contrast to a monopoly which has no competitors and to a monopolistically

What are the causes of Bigness?

The basic dilemma of oligopoly

Oligopolistic behavior is essentially a strategic behavior. In deciding on strategies,

The cooperative solution

If the firms in an oligopolistic industry decide to cooperate, either overtly or tacitly, to

The non cooperative Equilibrium

Wide Scope of Operations

Indian Performance of MNC consulting firms