Three trends that will redesign India's consulting industry

A number of major trends are set to change the face of India’s management consulting industry, according to Lalit Khanna, the Managing Director of New Delhi based SL Consultants. In an article in the Hindustan Times, the executive consultant outlines three trends that are touted to have a disruptive impact.

The consulting landscape of India is currently worth around $12 billion, with around $1.5 billion of the industry’s revenues flowing into the pockets of management consulting firms. However, after recording strong growth for consecutive years, 6% per annum, India’s consulting industry now finds itself at the onset of major disruption, as highlighted by Lalit Khanna in his review of the country’s sector trends. His warning comes at a time when the global industry finds itself in similar water. 

Growth is strong, on the back of internationalisation and the rise of new segments (e.g. digital, cybersecurity, design thinking), yet at the same time competition in the marketplace is heating to new heights while client demands are changing faster than ever. According to Lalit Khanna, who founded SL Consultants – a consultancy that provides management consultancy and digital transformation services to businesses and public institutions – in 2009, this is best exemplified by three key areas.

Digital

The first, and perhaps most obvious of these, is digital change. Digital transformation consulting now makes up a $44 billion chunk of the global consulting industry, with further growth expected as the advancement of new automated technologies and AI show no signs of slowing down. As the continual development of technology changes what can be done, so the needs of businesses keep on changing to accommodate it. Be it healthcare or telecommunications, technology is greatly impacting how organisations work.

According to Lalit Khanna, “Where startups are adopting digital technologies for bringing innovative services to its clientele, the well-established businesses are switching to AI, robotics, and machine-Learning technology for transforming their business culture and bring agility into their organisations. For serving the counselling organisations, the consultancy firms first have to adopt the disruptive change themselves and train their workforce enabling them to provide quick, profitable, and smart solutions to the clients. AI and automation significantly boost the productivity of the consultants and the customer experience.”

An example of the challenges faced by consultancies in this regard is the usage of AI-like technologies. While these can enhance the firm’s business processes as well as bring innovation to the services promising them higher growth, budgeting for and implementing such systems is no mean feat, while they also exacerbate a digital skills gap already present across the business spectrum, suggesting training issues will also be a great challenge for consultancies here.

Gig economy

Secondly, the gig economy is well publicised as having reshaped the way many businesses now work, as on-demand talent is cheaper in the long-term due to its lack of commitments to benefits such as sick-pay or a pensions scheme. At the same time, firms do not need to continue paying the wages of an expert outside of the period they actually need them if they hire them on a temporary business. For consulting firms, it is one of the best ways to tap on the right talent specialised in a particular area bringing to their clients the much-needed skill set and experience, but it also comes with a host of issues of its own, including the quality of work, availability of talent, and the efficiency of non-permanent staff.

“The revenue generation for consulting firms depends on the strategies and services developed by the consultants in close interaction and collaboration with the clients. They might even require field-tests for which many on-demand or freelance employees are not ready,” Lalit Khanna said of challenges consultants tapping gig economy talent might face. “Also, the consulting firms have started going digital with intuitive platforms and software for which they have to pay a hefty subscription amount. Misuse or exploitation of such paid tools and software and the manipulation with data meant to be kept confidential is a threat for the consulting firms. Unlike traditional employees, the consulting firms have to face a tough time while grooming the flexible workforce and encouraging them to take a proactive approach to project completion.”

Performance based working

Finally, clients are demanding more and more value for their money, with many entities both public and private coming under scrutiny for their consulting spending. As a result, many consultancies are now being forced to work for performance based payments. This means that rather than the amount of hours for which a consultant labours being considered at the time of billing, what counts is to what extent the work put in has yielded success in terms of the objectives and targets of the client.

While this is not necessarily a problem for the world’s largest firms, it disproportionately impacts on smaller-scale consultancies. It especially places them in a difficult position if a difficult client does not agree to change the tentative amount proposed earlier, after the consultant achieves success. The effective implementation of the performance-based billing totally depends on the sophistication of both the consulting firm and the clients entering into the contract, and can land either in trouble if they fail to appreciate this.

Lalit Khanna concluded, “Moreover, one of the biggest nightmares the consulting firms have is by the time a consultant prepares a research report or any strategic plan for the client after collecting data, analysing it, and pilot testing, those trends and issues become outdated and are replaced with the new emerging disruptive forces. Such vulnerabilities affect the revenues of small-scale consulting firms which do not have an easy access to Big Data, Data Analytics, Cloud, and other cognitive technologies. However, the consulting giants who are the early adopters of dynamic nextgen technology dominate the market leveraging the relevant insights, automation devices, and scalable data gathering. They are better able to advise clients on the seamless implementation of disruptive technology as they themselves harness the potential.”

For more information on key developments in the consultancy industry, see the article ‘Trends and challenges in the management consulting industry’ on Consultancy.uk.