Feasibility analysis of starting and sustaining a management consulting firm in India

Abstract

The late 1990s saw the emergence of a whole new generation of consulting firms - like IXL, Sapient, Scient and Razorfish all of who grew phenomenally fast. These new firms appeared to offer fresh ideas, a new way of doing things and a dedicated focus on the new economy. These firms play a major role in redefining the meaning of consulting whatever fate they met with in year 2001. In the industry that prided itself on working invisibly, these firms were willing to talk about consulting industry and their role in it. What also changed was not so much the content of delivery but the process and the manner it is delivered. Assignments that were taking months to complete converted into weeks because of the concept of Internet time. The technology-based consultancies enjoyed an immediate benefit from e-business. Technology became a strategic priority. E-business opened a temporary window in which technology based consultancies could reposition themselves. Consulting firms were looked upon for fresh model for doing things. Consulting firms are competing on two axes of reputation and specialisation. The incumbent firms that were one stop shopping earlier failed to have the required specialisation and in-depth knowledge about the new economy. On the other hand the new e-consulting firms have the in-depth knowledge of new economy without the brand. On a long run both firms need to converge at high specialisation and high reputation. What it means for consulting industry is the disintegration of one stopshopping firms into buckets of specialisation with no holding thread. The firm may act as a holding company and needs to live with heterogeneity rather than homogeneity. They also need to place a process to have a regular flow of new ideas and ways of doing things. Another thing e-business has done is to change the client perception of the consulting industry. Clients want consulting firms to walk the talk and put their money where their mouths are. This also calls for change of ownership pattern and the concept of contingency fees that were not even talked about in conventional consulting. It also provides consulting firms an opportunity to charge heavily and venture into new areas as outsourcing, which gives them a constant stream of revenues for a considerable large amount of time. The one stop shop-consulting model is dead with clients looking for best of breed solutions. This will require for high specialisation and the knowledge of consulting firm of where they fit in the picture. Collaborative consulting is likely to emerge where competition will be between networks of allied firms. The ability of a consulting firm to survive in the changing scenario will be its ability to form alliances that give them access to new markets or are synergetic to their operations. Diversification and flexibility of consulting firm in order to manage their relationship with client will give them competitive advantage. India is strategically placed at the right time at the right place. With the available manpower, low cost advantage and liberalised economy, companies are looking towards India for outsourcing activities. The collaborative model of consulting can be exploited by building a specialisation around outsourcing and making alliances with the outer consulting world. Vertical integration of software services and consulting present another opportunity for the existing software and consulting players. Software firms are looking to enter consulting business where relationships are of prime importance. Alliances with software firms can give consulting firms in India an opportunity to provide best of breed technology solutions to their clients in cost effective manner.