Indian business and management consulting market picks up growth

25 September 2017 5 min. read
More news on

Business and management consulting in India has breached $11.5 billion, or Rs. 73,800 crores in revenues this year, and is forecasted to register continuous growth over the next few years as per new estimates. Business consulting is a broad field, covering a spectrum of consulting activities including finance, advisory, management, digitalisation, implementation and strategy, among others.

Having reached the $11.5 billion mark this year, the Indian business consulting market is due to book further growth over the next year, with Statista analysis now forecasting the market to rise over the $12 billion threshold by 2018. The growth is consistent with a trend over the last few years which has seen the Indian management consulting sector having registered an average growth rate of 6.75% since 2013.

Size of the Indian business consulting market

Of the $11.5 billion market, $1.5 billion (approximately 13%, Rs. 9,600 Crore) is contributed by the management consulting segment, which includes the strategic functions of the market (‘strategy consulting,’) as well as a number of other organisational advisory functions. The management segment has also registered consistent growth over the last few years, projected to reach around the $1.7 billion (Rs. 10,900 Crore) mark by next year. A number of transformational factors are responsible for this rapid development, which include a general wave of digitalisation, as well as the widespread opening up of the Indian economy since the establishment of the Modi administration in early 2014. The Modi regime has been built on promises of market-liberalisation and pro-business policies.

Among the liberalisation policies pursued by the Modi administration, perhaps the most influential has been the significant increase in Foreign Direct Investment (FDI) in the country. The opportunity for Multinational Cooperations (MNCs) to invest in the Indian market simultaneously opened up opportunities for strategic and financial advisory firms to help them integrate into the market efficiently, thereby boosting growth in the consulting industry. Both local as well as international consulting firms have benefitted from the expansion, as local firms provide assistance to MNCs in India while large international advisories help Indian firms integrate with the international market.

Size of the Indian management consulting market

According to analysis from Source Global Research, meanwhile, the largest consumer of consulting services is the financial services industry, at 30% of the total amount. technology, media, and telecoms (TMT) comprise 9% of the sectors seeking consulting services, while pharmaceuticals and biotech represent 3% of the consumers. On the other hand, the largest provider of services in the market by a huge margin is the technology consulting sector, comprising a formidable 45% of the total market size. This can be explained by the fact that rapid digitalisation is one of the biggest drivers of growth in the Indian market.

International Position

The rapid growth in the Indian consulting market has placed it amongst the biggest markets on the international stage. This year, the 6% growth registered by India exceeded the growth rate of several of the biggest members of the global consulting market, including the UK (5%), Germany (1%) and the Netherlands (0%). However, data reveals that India still has a long way to catch up with these economies in terms of total market value. The UK consulting market, for example, is worth more than seven times the Indian market at $81 billion, while the German and the Dutch markets are also significantly ahead at approximately $31 billion and $17 billion respectively.

Business consulting market of India

One of the possible reasons for this significant gap between India and the developed consulting markets  is the divide between the low value in technology implementation and the relatively high value of strategy work. Moreover, there is also considerable stagnation and deficiency in the consulting fees in India, which significantly dents the potential profits for consulting firms in the region. Similar issues are typically faced by emerging consulting markets that lie outside of the matured western consulting economy.

A number of measures are being taken within the Indian market to potentially remedy some of these issues. An important driver of these remedies is the technological capability within the Indian market. While there was growth across the board in the consulting market, Indian technology firms did particularly well, registering growth of 7.1%. According to analysts, these firms are increasingly offering end-to-end services, and might push up the standard of technology implementation within the market. With respect to the fee structures, firms are looking to boost fees by hunting more sophisticated projects, enhancing their reputation in the market, as well as maintaining flexibility to manage costs and profits. All in all, despite its challenges, the consulting market in India seems poised and well-equipped for further growth and expansion in years to come.