Kiran Kothekar on Vector Consulting Group’s journey into a leading player

Kiran Kothekar, Founder of Vector Consulting Group, discusses the firm’s journey from a start-up to one of India’s leading management consultancies, the challenges it has overcome along the way, and its ambitions for the future.

What was the idea behind setting up Vector Consulting Group?

Back in 2006, when we embarked on our journey with Vector Consulting Group, we saw a unique opportunity to revolutionise the management consulting industry. This industry, often shrouded in opacity, was ripe for a fresh approach. We identified three key practices that were prevalent.

First, the consulting industry doesn’t disclose client names but claims successes that can never be verified. Second, most industry players generate significant revenue from selling ideas and recommendations while the implementation risk is transferred to the clients. In this setup, clients bear the entire risk of failure, yet consultants receive full payment regardless of the efficacy of their ideas.

Third, a large portion of the industry’s value comes from exclusive access to databases of ‘best practices,’ which, in many cases, were not invented by the consulting industry itself. As a result, consulting companies often act as intermediaries, profiting from their privileged access to information rather than through real innovation.

We aimed to redefine management consulting and address these issues by doing the opposite of what the industry typically does. We always share success stories in the public domain, including client names, so that the information can be verified anytime. We provide our recommendations upfront and free of charge, ensuring complete buy-in of our ideas before the client spends a single penny. Clients pay for implementing ideas, and the risks are shared. A significant portion of our fees is linked to to actual successes (not just promises).

All our ideas are derived from the first principles thinking – we do not believe in copying ideas from one company and passing them on to another. We approach problems using systems thinking to find simple yet high-impact solutions for our clients. We do not believe in promoting solutions under the guise of ‘best practices.’

What does Vector provide, which areas does it operate in, and how has it grown over the years?

We are primarily problem solvers. Give us any significant, chronic, unresolved problem in areas such as sales, operations, supply chain, or new product development, and we will solve it for our clients.

Clients have always presented problems to us that they have yet to be able to solve for ages. For example, many textile and garment players in India face a problem of long lead time and delivery performance, and they end up either paying penalties or losing volumes–we have helped companies crash lead time to less than half of what they were doing before while ensuring near 100% delivery performance.

Similarly, many generic pharma companies struggle with invalid OOS, which puts them at odds with regulatory authorities. We have helped companies achieve near-zero OOS events.

Many auto companies struggle with operations where demand variation is not in sync with operations planning, leading to mismatched inventory and firefighting. We have worked with auto companies to resolve this and helped them improve sales and business by ensuring that the required inventory is available as per requirements.

Likewise, many organisations in equipment manufacturing get stuck at a particular sales level and are unable to scale up efficiently – we help companies scale up while ensuring desired profitability and ROI.

Over the past five years, we have grown at an approximately 18% CAGR. Most of our assignments are in India, but we have recently expanded into the East and Middle East Asian markets.

What were the challenges when you started Vector, and how did you overcome them?

One of our primary challenges has been scaling up. We’ve always taken a cautious approach to growth because it takes years to develop consulting leaders within our company. It typically takes four years for a new entrant to acquire the necessary skills and knowledge to lead a project. Since implementation is our forte, we cannot assign rookies to our assignments.

Unlike the typical consulting industry, we cannot recruit senior talent from outside to grow our business. Therefore, our in-house competency development team is dedicated to coaching and grooming our consultants. We use elaborate trackers, IT tools, and review systems to ensure that development happens quickly. We aim to reduce the lead time for creating a consulting leader from four to three years.

How difficult is it for a homegrown consulting firm to get a break, given that the consulting space has big multinationals?

We stood out because of our unique offering and model of engagement. That was the only way to break into the market. If we had followed the same practices as most players in the industry, we would not have gained a foothold. We present diagnostics and recommendations free of cost to our client, which is unique in the industry where payouts are for the recommendation. We charge a fee for implementation along with a gain-sharing model.

Today, we work with many clients who are engaging with a management consulting firm for a transformational journey for the first time. In this way, we are expanding the market for ourselves. While we compete with multinationals in some engagements, we distinguish ourselves with our unique engagement model and the simplicity of our solutions.

What critical skills do you need to successfully launch and scale a consulting business?

The consulting business is a people-centric industry, so it’s crucial to attract the right talent and groom and retain them. It’s essential to get all three aspects right. There is always a talent scarcity in the market, so HR policies must ensure employees can work stress-free and enjoy their work. The consulting industry is known for high stress and attrition rates, often exceeding 20%. However, our attrition rate is less than 5%, and our unique culture is the main reason for this outcome.

What has been the company’s growth year-over-year? What are your plans when it comes to growth and expansion?

We have been growing at around 18% CAGR over the last six years.Looking ahead, our growth strategy is ambitious. We aim to achieve a 20% CAGR, becoming a Rs 500 crore revenue and 500-strong consultancy firm by financial year 2028/29.

This growth will be realized through a mix of organic and inorganic components, with strategic support from our investor TIS, who holds a 20% stake in the company.

How big is the consulting space in India, and how do you see it evolving?

In the high-end management consulting space, where clients seek solutions for complex problems, the market is valued at around Rs 7,000 to Rs 8,000 crore. This estimate excludes a significant amount of program management work, also called consulting. A large segment of the market still does not engage consultants due to various apprehensions and issues with the industry.

However, almost every company needs an outside perspective when stuck with a problem. As these companies recognize the value of external insights, we expect the consulting market to continue evolving and expanding. Innovative players like us will help develop the market in a big way.