Consulting Ahead - CDC Ahead Inaugural Issue... · Management New Delhi Mr Rajiv Khurana Management...

Consulting AheadVol. 1 No. 1 January 2007

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FOREWORD

The inaugural issue of “Consulting Ahead”, a bi-annual journal of Consultancy Development Centre (CDC) is a great step forward for the consultancy profession in the country. The Journal is expected to benefit a large number of professional consultants including over 1200 members of CDC in corporate, institution and individual categories. CDC represents consulting professionals irrespective of their discipline, domain or sector specialization. We thus have consultants from engineering, management, finance, information technology, architecture, healthcare, education, urban development and several other socio-economic areas.

“Consulting Ahead” journal will be positioned to address issues concerning consulting profession, which will also include concerns, expectations of stakeholders other than consultants themselves i.e. clients (such as industry, government agencies, civil society, financial institutions, domestic and international trade bodies, international bilateral as well as multilateral agencies, etc.), policy makers, regulators, other services and goods industry constituents affecting and facilitating functioning of consultants. Towards attaining this objective, I look forward to intellectual inputs from all concerned.

The need for bringing out a journal was felt by the consulting profession for a long time. An Editorial Advisory Board under the Chairmanship of Prof. C.S. Venkataratnam, Director, Intercontinental Management Institute (IMI), New Delhi deliberated in great depth the scope, coverage, contributions, reach of the journal so as to make it a world class journal. I congratulate Prof. C.S. Venkataratnam and every member of the Advisory Board for shaping the dream of a journal on consultancy into a reality. I am confident that the entire team involved in bringing out the “Consulting Ahead” will be able to meet the expectations of its highly knowledgeable readers.

Dr. Uddesh KohliChairman

Consultancy Development Centre

Uddesh Kohli

Editorial Advisory Board

Chairman

Prof. C. S. Venkata RatnamDirector, International Management Institute

New Delhi

Members

Prof. B. BhattacharyyaDirectorInstitute for Integrated Learning inManagementNew Delhi

Mr Rajiv KhuranaManagement ConsultantThe Personnel LabNew Delhi

Mr Navyug MohnotManaging DirectorQAI (India) LimitedNew Delhi

Mr N. S. RajanPartner, Human CapitalErnst & Young Pvt. Ltd.New Delhi

Mr G. ShankerMadras Consultancy GroupChennai

Mr S. S. ChakrabortyManaging DirectorConsulting Engg. Services(India) Pvt. Ltd.New Delhi

Dr Bhimaraya A. MetriAssociate Professor, Operations ManagementManagement Development InstituteGurgaon

Dr Kiran Kumar MomayaAssociate Professor, CompetitivenessChairperson, Strategic Management GroupDepartment of Management Studies Indian Institute of Technology New Delhi

Mr S.R. RaoExecutive DirectorExport Import Bank of IndiaMumbai

CONSULTING AHEAD - VOL. I - ISSUE 1

Global Consulting Insights for Management Consultants for Enabling Indian

Companies to go Global Successfully

Aneeta MadhokThis article draws on the experiences of a selected group of Indian companies that have successfully gone global in their market and operational reach. It has been written on the basis of discussions and interviews with 45 CEO's who are responsible for global operations of Indian companies. There are many challenges faced by them in their quest for a global market share and these are highlighted in the article. The article takes a peek into the future of business strategy for such firms and the implications for knowledge gathering and research in management. Directions for providing consultancy to such businesses have also emerged as a result of the explorations done in this article.

Globalisation And The Indian Economy

India was a traditionally managed protected economy for many years after independence. The socialist zeal that had led to the independence movement continued to power the initiatives taken by the government, and led to a spate of growth in national and state level public sector undertakings. The world around, however was undergoing a change in a different direction. Capitalism had taken root in the western world, the communist countries were disintegrating post perestroika, and the buzz was about free market economy and several neighboring Asian countries were unleashing their economies. India experienced its first spate of economic liberalization in the year 1991-92 when Dr. Manmohan Singh, our current Prime Minister was the Minister of Finance. What began as first tentative steps, gathered an irreversible momentum and liberalization, privatization and globalization had begun. In the fourteen years since, Indian industry has been going through a process of adjustment to the new emerging contexts. Having gone through forming and storming processes that saw voluntary retirement schemes for manpower reduction, business process re-engineering, equity restructuring, etc, Indian companies are now in the first stage of an economic boom that is expected to last the next five years or more.

Indian Companies Get Ready To Go Global

A recent phenomenon that is seen today is the process of companies of Indian origin going global in their operations. There can be a lot of room for discussion as to what really makes a company claim that is of Indian origin, as there are many corporates with Indian roots but having some degree of Foreign Direct Investment, many MNC's of non-Indian origin having been in India long enough to be considered Indian (Hindustan Lever Limited) and so on. Similarly, the decoding of the term 'going global' also has multifarious definitions. The term could include companies that add a significant export component to their revenues, or companies that acquire foreign organizations, or companies that set up manufacturing units abroad, or companies that market their brands in foreign soil against foreign competition, or companies that trade internationally in commodities, or companies looking for globally placed supply chains, and so on. For the purposes of this article and study, we will consider a loosely held definition of Indian companies going global, which includes all the above definitions. The essential aim of this article is to explore the nature of the journey of encountering global competition and establishing global presence, and the inherent challenges encountered therein. The nature of this exploration will throw up avenues and opportunities for Indian

CONSULTING AHEAD - VOL. I - ISSUE 1 l 1

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as well as non-Indian consultants and consulting firms. The audience for this exercise would be consultants in the Asian region and the rest of the world, who would use this information as an input in their strategy in the region.

Strategies Deployed in the Globalisation Process

Indian companies many strategies which enable them to meet the competition and thrive on a global scale. They can be placed in the following categories:

1. Seeking partnerships in the form of mergers, acquisitions, joint ventures, strategic alliances with foreign partners. Videocon, a leading company in the white goods sector now has access to R&D facilities of companies it acquired across the globe. Such acquisitions have also enabled the company to have direct access to distribution channels and brand equity of the company in the local market. Similarly, Essel after merging with Propack have become a world leader in packaging. When Tatas acquired Tetley they became become one of the leading players in the global tea market.

2. Expanding the scope of operations by getting into related products or services. An apt example here would be that of the service companies that are moving up the value chain to offer other high-end solutions and by getting into products and Business Process Outsourcing (BPO) services to Knowledge Process Outsourcing (KPO) services. Some of the IT service firms are getting into consultancy to offer end to end solutions that provide greater value to the client. Such add-ons in the service provided also facilitate higher operating margins. Some of the IT business majors have also concentrated on the lower end of the value chain like business process outsourcing to expand operations across the globe.

3. Entering niche markets with high degree of specialization. Another strategy that

companies are adopting these days to foray into the global markets is getting into the niche products. This is especially true for the software companies as is evident from the various examples of Indian companies that have specialized in certain software product categories and have created a place in the global markets. One such company is Impulsesoft Pvt Ltd which is one of the few Indian companies wholly focussed on building wireless/Bluetooth OEM products and solutions PCs, Notebooks, PDAs and cellphones for OEMs Similarly, Integra Microsystems Pvt Ltd with its WAP server product Jataayu, has placed itself among the few companies in the world to develop a WAP server. Talisma Corporation, the parent company of Aditi Technologies has already been able to establish itself in the global eCRM market. Non-IT areas see companies like Bharat Forge, Shehanaz Hussein etc. carving a niche for themselves.

4. Searching for new markets in countries hitherto unexplored. Indian companies have been focusing too much on the western world. But there are many opportunities for expansion in nearshore locations like China, Malaysia, Singapore, Phillipines, Dubai etc. Some Indian companies have started looking beyond the US and UK and are entering the developing countries that are yet untapped. Ajanta Quartz is one such example. It completely shifted its manufacturing base to China that has allowed it to produce their products at a much cheaper rate now. Also to expand globally, Ajanta Quartz decided to enter the untapped markets of Africa and South America. Now its major revenues come from these regions.

5. Global supply chaining. Today many Indian manufacturers have adopted the practice of global supply chaining. The entire world is a source of raw materials, components, finished goods. Like the old fashioned nomads,

2 l CONSULTING AHEAD - VOL. I - ISSUE 1

Aneeta Madhok

corporates now traverse the globe in their quest for optimizing their manufacturing costs. The logistics and supply chain management skills called for in optimizing the costs are now being learned and applied. Asian Paints has been one of the pioneers among Indian companies to implement global supply chain practices and show results in terms of cost reductions. Asian Paints prowess in managing the complexities of such practices is commendable and has been recognized by the Indian Institute of Materials Management. Continuous use of IT has enabled companies to use global supply chaining to reduce costs and increase service levels.

6. Seeking infusion of foreign direct investment. etc. With convertibility laws coming into the country, India is now seeing infusion of capital from overseas. Such capital is sought in the form of global fund raising through financial instruments, investment of foreign companies in Indian equity, joint ventures and partnerships, and so on.

Ceo Challenges : Views From Around The World And India

The fundamentals of building a global organization are similar to building a domestic organization you need strategy, leadership and a motivated workforce. But it is much more complex than that. Multiple markets, multiple cultures, a global workforce and the need for leaders who can frame the world globally rather than multi-domestically these factors increase the challenge exponentially.

The conference Board, 2004's global research on “The 2004 CEO challenges: Views from around the world required 539 CEO's across the world to rank 62 challenges in order of being of the greatest concern and criticality in success and sustenance of business. They ranked it thus:

1 Sustained and steady topline growth 52%

2 Speed, flexibility, adaptability to change 42%

3 Customer loyalty/retention 41%

4. Stimulating innovation/creativity/ 3 1 %entrepreneurship

5 Cost/ability to innovate 29%

6 Availability of talented managers/ 2 6 %executives

7 Tight cost control 25%

8 Succession planning 25%

9 Seizing opportunities for growth in Asia 23%

10 Transferring knowledge/ideas/practices 2 3 %within the company

(Source: Reno, Barbara; “The 2004 CEO Challenge: Views from Around the World” The Conference Board, 2004.)

Indian segment of the sample consisted of publicly traded and privately owned firms as well as small, medium and large companies from manufacturing (Consumer and Industrial) sector, communications/ broadcasting/ publishing/ software/ internet sector, and Financial and other services sectors. Challenges of greatest concern to Indian CEO's as revealed in the survey are:

1 Sustained and steady top-line growth

2 Stimulating innovation/creativity/enabling entrepreneurship

3 Cost/ability to innovate

4 Customer loyalty/retention

5 Keeping up with other, new technologies

6 Speed, flexibility, adaptability to change

7 Tight cost control

8 Speedier access to market

9 Competitive intelligence

10 Employee loyalty/commitment/job satisfaction

(Source: Reno, Barbara; “The 2004 CEO Challenge: Views from Around the World” The Conference Board, 2004.)

Indian CEO's feel that, if we play it right, growth in a global market is possible for Indian


Global Consulting

companies. They are increasingly learning to manage the scale of operations on a global level without compromising on excellence and customer satisfaction. Going beyond boundaries and operating in other countries also means dealing with a workforce that is more multi-ethnic, multi-racial, and has diverse configurations. Sustenance of excellence on the value chain against global standards is called for. Consequently, there is a need for creating speed and flexibility of response in harnessing the intellectual capital of the Indian knowledge worker. Companies are also waking up to the fact that they will come under greater scrutiny for compliance with high standards of corporate governance along with a focus on employee issues, and they will have to meet these standards in order to compete globally.

Our Research on Consulting to Indian Companies Going Global

Some of the challenges that companies have to encounter in the globalization process can be placed into seven categories, namely

1. Technology

2. Manpower

3. Markets

4. Quality Management Systems

5. Management of Change

6. Governance and Ethics

7. Risk Management.

The author undertook a survey of Indian CEO's to measure the degree and extent of importance assigned to each of the factors mentioned above. The table shows the rankings assigned by the CEO's to these factors :

Clearly, the competitiveness in the international market appears to be the biggest challenge. Grabbing a piece of the pie from local and global competition was ranked number one challenge by 42% of the respondents, followed by manpower challenges with 36% of the respondents giving the highest rank to the people issues.

Ceo's Expressed the Need for Consultants

The CEO's were asked to provide more insights into the nature of these challenges and the role of management consultants in meeting these challenges. The responses given by them are as follows:

Markets

Consultants play an important role in enabling global marketing. Companies need in depth knowledge about entry into foreign markets, in the creation of new markets, how to compete with other global brands, strategy on channels, products, consumer psychology and preferences. Entry strategies, competitiveness of other countries and improvement of value chains in terms of R & D also require due attention. Understanding consumers in other parts of the world and creating localized marketing communications to reach these consumers creates opportunities for cross-cultural market research. Marketing strategy has to be adopted to take care of the cross cultural differences in consumption patterns and media habits.

Manpower

Global mindset, talent growth in technology and change areas, professionalism, work ethics and global human resource management policies are of utmost importance for the globally-bound workforce. Such qualities can be obtained through proper process management, systems thinking and

Markets

Manpower

Technology

Quality Management Systems

Governance & Ethics

Risk Management

Management of Change and Organization Culture

Challenges Perceived byCEO's (n=45)

Ranking in orderof importance

1

2

3

4

5

6

7


Aneeta Madhok

competency development, especially domain and soft skills. The 45 CEO's who were surveyed placed a great deal of importance on the role of consultants in sourcing competencies, developing skill sets and managing of performance of diversified workforce. Global compensation management was a challenge for Indian companies as the capacity to pay varied with the fluctuations in the exchange markets. Training for open and transformational leadership and away from feudal mindsets was where many consultants were seen to be contributing.

Technology

Technology has to be frequently updated as per changing requirements. One needs to keep abreast with future global technological trends. Companies need to adapt constantly with the ever-changing technological requirements. Also, adapting technology to the local needs of the company is important. Indian and Asian companies have been able to leapfrog the technology curve since they entered the race later. A classic example of this is the mobile phone technology that mushroomed in a developing nation like India when the landline network itself had not completely penetrated the population. The role of technology management consultants will be to enable adoption of technology developed in other countries and also to develop world-class technology and manufacturing practices in India.

Quality Management Systems

Quality has always been a contentious issue in Indian industry. The inadequate attention towards quality has often been attributed as a reason for India lagging behind in industrialisation against the global rivals. However, the opening of the Indian economy in the 90s brought about a sea change in Indian companies attitude. Indian firms then realised the importance of quality as it enabled them to stand up against global competition. The initial phase of the changing scenario was marked by a spate of companies going in for different levels of ISO certification. The second phase was ushered in by

the emergence of a vibrant IT industry where quality consciousness was always important. The cascading effect of the entire quality movement has even led to the growth of a consulting sector whose sole aim is to advise and implement quality management practices.

Consultants in India have established their value addition in the implementation of international quality management systems like ISO, Malcolm Baldridge, and other quality standards like PCMM and Six Sigma. Understanding the importance of new techniques in quality systems, bringing in product and process quality assurance systems and so on will enable Indian corporates to remove the question marks on quality of Indian made goods and services.

Governance and Ethics

Different geographical areas have different kinds of parameters in terms of governance and ethics. Understanding them is very important. Low cost compliance of law is a challenge. Transparent and responsive administration towards local laws and government regulations has to be ensured. Management Consultants will help in efforts to conform with legal requirements on foreign soil, as Indian companies will now have to hold up to international scrutiny. Consulting firms will be increasingly called on to undertake due diligence of operations abroad and for help in the constitution of boards with independent directors as per local laws.

Risk Management

The industry should be able to leverage past experience of analysts and the knowledge base they are exposed to, to evaluate the risks that companies take. Financial companies/banks play an important role in making companies aware of the risks and also help in constant evaluation and elimination of credit, currency and financial risks. Management consultants can enable assessment and mitigation of operational risks and market risks. The design and implementation of Enterprise Risk Management solutions for Indian conglomerates will be futuristic


Global Consulting

consulting opportunities where consultants and consulting firms can add value in the risk management processes.

Management of Change and Organization Culture:

Change management needs to be facilitated to bring about a change in mindsets and attitudes of Indian managers, bringing in flexibility, changing old leadership styles away from feudalistic or paternalistic management, aligning the mindsets with world-class processes. A global organisation has to develop a culture that is global yet unique to that company. The global culture transcends local

cultures and, at the same time, respects national and ethnic differences.

The decisions need to be made locally that are sensitive to local cultures and consistent with the global corporation's values. Sometimes a best practice in one country may not work in another country due to cultural differences.

The following block diagram depicts a summary of the above discussion and outlines the factors which are critical for consultants to address.

These challenges give rise to consulting opportunities to Indian and Asian firms in the process of going global.

Global Consulting: Insights for Management Consultants in Enabling Indian Companies to Go Global.

Opportunities for

Management Consulting

TECHNOLOGY • Adoption of technology

developed in other countries

• Investment in bringing technology to India

MANPOWER • Attraction of global managers • Managers mindsets • Retention of talented employees • Management of diversity of

cultures • Compensation management for

global careers

MARKETS • Creation of brand equity abroad • Channel management • Competition from global brands • Competiton from local brands

in other countries

RISK MGMT • Credit/currency/financial risk • Market risk • Operational risk

GOVERNANCE AND ETHICS

• Conformance with legal requirements on foreign soil

• Holding up to international scrutiny • Due diligence of operations abroad • Constitution of Boards with

Independent Directors

MGMT OF CHANGE • Mindsets of existing managers • Bringing in flexibility • Changing old leadership styles • Aligning with world class • leadership styleQUALITY MGMT

• World class business practices • Product and process quality

assurance • Six Sigma standards • Conformance with local quality

standards


Aneeta Madhok

A Peek into the Future of Business Strategy

As India evolves and integrates itself with the global economy, business strategy of corporates will undergo evolution. Management blueprints for the future will factor in ethical strategy and governance, enterprise risk management practices, diversity management, talent management, benchmarking of operations, innovation and enterprise. Companies will have to move away from feudal mindsets and go in for more transparent and measurable practices.

Looking outwards companies will need to put in place mechanisms that will feed them information on competitive intelligence, strategies for outsourcing and global supply chain management, management of image in the eyes of society and consumers alike, investor behavior management. We will see more innovation in forms of business strategy partnerships as opportunities flow to the faster and stronger minds in the business.

In Conclusion

With India doing exceedingly well in dynamic and fast-growing sectors like Pharmaceuticals and Information Technology, we could probably be witness to a large number of mergers and

acquisitions. Indian companies backed by sufficient bottom lines and proactive management strategies along with the new-gained recognition of being able to manage large-scale global operations might well be on the lookout for mergers and acquisitions as the predominant strategy to expand their wings and reach out on a global scale. This gives them adequate exposure to global operations and at the same time is a much safer bet in the short-term to middle-term. After this they might look at expanding their own operations by expanding the service/product offerings once they establish themselves in new geographic locations. Also, our survey of 45 CEO's indicates that more companies will now spend substantial amount of time understanding and analyzing the risks associated with doing business in a particular country in a particular sector before looking at other factors, as understanding the market place is of foremost importance before other challenges and issues are addressed. Consultants would have a major say in studying the feasibility of mergers and acquisitions and also studying the market places where potential opportunity lies and providing the wherewithal to achieve global eminence.


Global Consulting

Management Consultancy Profession in India

This article discusses issues relating to consultancy in India from the beginning to the present aspects and demands of consultancy. The consultancy profession started with individual professionals who collected some associates as the business grew. However, the demand for consultants was essentially because of the reputation of the individual who started the venture.

The author has highlighted the earlier issues of consultancy, historical background of consultancy, start of management consultancy in India, IBCON era, present status of individual consultants in India, consultancy as a profession for senior executives and the future of consultancy profession in India.

Sharu S. Rangnekar

Historical backdrop

An enterprise starts with the entrepreneur. The process started about ten thousand years ago when man got his first two technologies : agriculture and animal husbandry. As his enterprise grew he got assistance from his family members. Thereafter he bought slaves and/or hired servants for further help. At this stage his expertise in managing his resources including his manpower resource became vital to the success of the enterprise. So the “owner” had to inculcate discipline and productivity. He did this by himself or occasionally used his “experienced” friends giving rise to the concept of consultancy.

Prior to the advent of organized industry, the craftsman could carry out his work according to his whim and fancy without being subjected to industrial discipline. A typical handicraft worker collected materials and distributed them among the family members. About two hundred years ago the Industrial Revolution made a drastic change in this system of working. The worker had to work in a factory and had to carry out specific tasks. So systems had to be introduced to create time discipline and task discipline. And this created the basic function for management consultants.

The industrial management had to face another challenge - method discipline. It was demonstrated that the worker's productivity could be dramatically increased if the worker is made to follow a specific

method. This 'one best method' was shown to minimize his effort and fatigue and maximize his productivity. The acceptance of this finding involved an additional role for management: instituting method discipline.

While the industrial engineers were thinking that they have got the success of productivity and management, they were shaken by the Hawthorne experiment. In this experiment, the effect of intensity of light on productivity was being studied. As the intensity of light increased, the productivity went up and it went further up when the intensity of light went down. It was then discovered that discipline regarding time, task and methods do not decide productivity by themselves. The motivation of workers is also an important factor. It is not only the skill, but also the will that determines productivity.

This expanded the role of management consultants. The management consultant helped the management to establish time discipline, task discipline and method discipline and suggested schemes to inculcate motivation. The incentive system was the hallmark of the first generation of management consultants.

After the Second World War, computers came in the picture. It was possible to carry out millions of computations very reliably and promptly. Even the manufacturing processes were automated and there


was a feeling that all problems of productivity were sorted out and productivity need not depend on human beings any longer. Consequently the management consultants concentrated their efforts to apply automation to improve the efficiency.

As the tempo of technological change increased, it became clear that productivity or efficiency did not determine the ultimate prospects of an industrial organization. It is not efficiency but innovation that counts. It is not the company that makes a product at the least possible cost that makes good profit; it is the company that is first with an innovative product that make good profits.

Thus, over a period, the management consultant's role has developed into helping the management to:

Institute time-discipline and task-discipline

Institute efficiency through method-discipline

Improve efficiency through computers

Mobilise full human potential through motivation and innovation.

Persons having experience in formulating and implementing systems became valuable for those who were interested in improving their productivity, quality and innovation. As it is stated in Sanskrit : “Siddhanam lakshanam, sadhakanam sadhanam.” (The symptoms of those who have reached are good guidelines for those who want to reach). As the complexities and competition in industry increased, so did the use of management consultants.

Beginning of management consultancy in India

Since industrialisation started in developed countries, the management consultancy also came from abroad. Mr. Bedaux established the first organised consultancy under the title “Eastern Bedaux” in 1937. Mr. Bedaux was a Belgian who hired American, British, Australian and Indian consultancy staff. The company concentrated on time and motion studies to determine optimum labour strength and introduced incentive systems to maximise productivity. The company had a significant success particularly in textile mills, which became conscious of becoming uneconomic due to the burden of labour. So initially the

managing consultancy was focused on worker productivity.

Mr. Bedaux was executed for collaboration with the Nazis in 1943. The Indian organisation headed by Mr. John Moore reformed the company under the title “IBCON” (Industrial and Business Consultants) and continued operations in India.

After the Second World War, Mrs. Bedaux came to India and filed a suit against IBCON since IBCON was using the reports generated by Mr.Bedaux. The matter was settled out of court by compensating Mrs. Bedaux. She then restarted the firm “Eastern Bedaux” with Mr. Rao as chief executive and Indian Staff. However, it was not able to compete with IBCON and closed down.

The IBCON Era

IBCON played a significant role in establishing management consultancy in India. During the Second World War, it carried out significant assignments to help the government's war efforts e.g. rifle factory at Ishapur, military accounts in Pune, movement of railway wagons to move war supplies by Central Railways, etc.

After the Second World War, IBCON grew and spread into various industries. From textiles, which initially formed more than half the business, it covered other industries like engineering, cement, and administration. It had consultancy assignments of long durations with Bombay Municipal Corporation, Times of India, Income Tax Dept., etc. IBCON expanded with headquarters in Bombay and branches in Calcutta, Kanpur and Bangalore. Mr. JRD Tata was a personal friend of Mr. John Moore and IBCON undertook assignments in TISCO, TELCO, various Tata textile mills, ACC, etc. extensively. In most of these companies IBCON established what were called “Standards departments” using staff from clients to implement IBCON reports. These departments later became “Industrial engineering departments” and formed the basis for developing industrial engineering profession in India. IBCON gave rise to more consulting firms as some of the senior personnel from IBCON left to start on their own. Beacons, Cobin, Imdesco, Sigma, etc. were offsprings of IBCON.



In 1953 Mr. John Moore established an “international” IBCON under the title of “International Business Consultants” with headquarters in Hongkong. This company got assignments in Iraq, Mexico, Panama, Burma, Sri Lanka, etc. and IBCON of India became an important collaborator contributing consulting manpower. IBCON undertook an assignment in Sri Lanka on for a turnkey project with operating management support for two years after completing the project. Thus, IBCON introduced the concept of “exploring” Indian consultancy abroad.

Mr. Moore was with IBCON up to 1962. Thereafter, all the foreign directors departed leaving IBCON to Indian staff. It progressed well in 1960's - but started to decline in 1970's. It did not get into the new technological innovations like computers and faded away in the new era of information technology.

The Last Three Decades

The period 1971-2000 saw a sea change in the field of management consultancy. Non-engineer consultants like Mr. Minoo Masani and Dr. Soli Parukh started on recruitment and placement services, attitude surveys and management development seminars. Institutes like Indian Institute of Management, Administrative Staff College of India and government promoted productivity councils at the national and local levels also offered consultancy using their academic staff.

Commercial computers came to India with the ESSO computer in 1961 followed by Union Carbide, Bata, Dunlop, LIC, etc. Since the knowledge about computers was scarce, this became a good ground for management consultancy. In fact Tata Consultancy Services became largely a computer consultancy service and is having its biggest revenue from the software. The one-time head of TCS Dr. Kanoria started Datamatics for consultancy in computers and software. Several persons who worked with TCS and Datamatics have branched out on their own in computer consultancy. By the end of twentieth century, Information Technology has become a significant part of management consultancy.

Management Consultants Association of India (MCAI), which later became Institute of Management Consultants in India, played a significant role in this period. It provided a professional forum to approach the government and the industry. It created facilities for professional training and qualification in management consultancy. Its affiliation with International Consultancy Organisation has created potential opportunities for management consultancy exports.

Status of Individual Consultants

The consultancy profession essentially started with individual professionals who collected some associates as the business grew. However, the demand for the consultant was essentially because of the reputation of the individual who started the venture.

Over a period of time the profession has been institutionalised and today companies like McKensey and TCS are invited due to their institutional image.

In recent years, particularly after liberalization and globalization and consequent increase of competition in industry, the demand for consultancy has gone up in India. However, it seems to be shifting from individual consultants to institutional consultants. Thus, State Bank of India, which used Professor Ishwar Dayal for their organizational development, have turned to McKensey. Andhra Pradesh government under N. T. Rama Rao used Mr. Minoo Rustomjee. Chandrababu Naidu used McKensey for the same purpose.

This trend is going to increase due to the following reasons:

The demand for consultancy is increasing more in the public sector and government as compared to the private sector. Giving assignment to an individual consultant is fraught with possibility of charges of nepotism. So institutional consultants seem safer

Over a period, institutional consultancies have created an image of versatility and up-to-date


Sharu S. Rangnekar

technology. An individual consultant is unlikely to have versatility. In fact, his versatility could be a liability than an asset. His depth of expertise in a narrow area could be the best image he can have. Furthermore, as the individual consultant gets older, he gets into a problem. There was a time when seniority was respected in almost all professions. Age was supposed to be experience, which was supposed to be wisdom. Today, age is suspect particularly in areas where new technology is coming fast, there is always a doubt whether the older person is up-to-date with the new technology. An institution can present a blend of youth and age and present the young with the latest technological jargon to make a favourable impact on the client. Thus the strategy of an institutional consultant is to show that the latest knowledge and accumulation of expertise are both available in their consultancy package.

To counter this situation, a concept of networking was promoted amongst individual consultants similar to the polyclinics organised by doctors. However, the idea never worked in practice because of the following reasons:

The doctors have recognised expertise due to their qualification in the specific area and are discouraged to give advice in other areas. Thus, a cardiologist will not advise on the kidney functioning but will refer the problem to a nephro log is t . Amongs t management consultants, there is a reluctance to accept this approach. In fact, most consultants get into the “Swamiji Syndrome” where they offer advice on all client problems

The medical profession has come to an arrangement of “referral fee” (generally 15 per cent given in cash) and this gives advantage to an individual medical consultant to refer his patients to specialists in other areas.

Thus, looking into the turbulent times ahead, one feels that barring exceptions, individual consultants would have trouble in ensuring a long regime. Even

in medical field, particularly the surgeons are finding the change of flow of clients from themselves to the next generation and many are retiring because of reduced practice.

On the other hand, in the turbulent times ahead, the supply of individual consultants is likely to grow up very rapidly. With restructuring, downsizing, merging, etc., many executives in senior positions find themselves released from their jobs in late forties / early fifties. If they have been occupying senior position before such release, they have hardly any choice except trying consultancy. The academic field is available but it has barriers of qualification and even with the increased pay scales cannot compare with the emoluments and perquisites package of executive compensation.

Some of these executives have adequate expertise to provide consultancy advice. However, many of them lack image. Ultimately, consultancy is a game of images, it is not what you know but what people feel you know that matters.

So these released executives can either seek jobs in consultancy firms or become individual consultants. Consultancy firms prefer to have younger people, as they are less expensive, amenable to learning and operating according to the modes of institutional consultancies and less likely to provide a competition by separating from the institutional consultancy. This means that the individual consultant will have to have a continuous battle to keep clients and expand their field of operation.

Conclusion

From its formal establishment in 1937, management consultancy profession in India has come a long way. It has acquired a body of knowledge, acceptance by clients and stature with the government. It is now poised for a period of growth. In this situation, the individual consultants will have a tough battle on their hand to succeed with competition both domestic and foreign. As the saying goes, “When the going gets tough, the tough get going.”




Challenging Frontiers for Indian Consultancy

M.K. RajuDue to the complex nature of problems faced by India, we need more sophistication in management than the developed countries. Given her size and complexity, India offers huge potential for consultancy professionals in the context of technological changes, globalization and information technology revolution. Government and quasi-government institutions and agencies are one of the major users of consultancy worldwide. Misapprehensions about the abilities of Indian consultants need to be erased with aggressive promotional efforts by organizations like Consultancy Development Centre (CDC) and the Institute of Management Consultants of India(IMCI). The author has identified a few challenges, which Indian consultants should take upon themselves in the present environment. Some areas of special concern have been identified for carrying out indepth studies by consultants of national repute.

India requires more sophistication in management than the developed countries, as our problems are more complex and much more difficult to manage. The various sectors of the economy must work in close harmony, which is possible only if a national perspective is taken and management consciousness is developed at all levels. Agriculture, business, industry, education, defence and above all, government can improve their efficiency only by better management and contribute towards the nation's steady growth and prosperity.

In the new millennium, regardless of how well you manage your company or the Government, you cannot afford to ignore management consultants. They share their vast knowledge and varied experience. They are result-oriented. They help you manage better.

Some Indian management consultancy organizations have made significant strides during the past few decades. Also some Indians have the unique distinction of heading large and well-known multinational consultancy organizations around the world. However, we have a long way to go.

Only about fifty consultancy companies can be reckoned to make their presence felt on the Indian scene and consultancy professionals are estimated to be somewhere between 1500 to 2000. In the developed countries there is one consultant for every

2200 working persons. whereas in India the ratio works out to about 'one consultant for every 190,000 employees in industry and commerce'.

For a country of India's size and complexity, this is woefully inadequate. It highlights the large potential for the consultancy profession, especially, in the context of technological changes, globalisation and the fast moving information technology revolution.

Globalising Indian Consultancy

Management consultancy in India is at cross roads. Consultants can build their stature by laying emphasis on top quality and service. Concerted efforts should be made in placing Indian consultancy on a high pedestal, befitting the stature and prestige it deserves.

International consultancy market is growing very fast. Europe recorded a fifty percent growth. Indian consultancy firms must form a consortium to pool up their resources, apart from tie-ups with international firms. India has a cost advantage in international markets and there is a good scope for Indian consultancy firms to become major global players. Today global consultancy business is of the order of US $ 200 billion, whereas India's share is minuscule. Consultancy is the fastest growing business in the world.


World over, consultancy firms have as much as thirty to forty percent of their business from the government and quasi-government institutions and agencies. Indian consortium of consultants must compete with foreign consultancy firms on their own merits and secure a share of this market. We have to convince the government that we have the competence and ability to provide consultancy to the best international standards, at competitive prices. Aggressive promotional efforts must be made to erase any misapprehensions with the government agencies as to the abilities of Indian consultants to provide quality service. This colonial legacy to prefer foreign consultancy firms who charge abnormally high fees must be curbed.

On this subject, Bharat Ratna C Subramaniam, former Union Minister mentioned at the M K Raju Consultants Private Limited (MKRC) Silver Jubilee Celebrations on November 25, 1999 as follows:

“These days, I see a tremendous spurt of consultancy activity amongst banks, financial institutions, industry and the government. In most cases, they are giving the assignments to foreign consultancy firms. Undoubtedly, they are well established and have also a successful track record. But there is a missing link. Our problems are not the same as that of the developed countries. Our culture is unique. The way we run the government is complicated. Our labour laws and the attitude of the Unions towards productivity are radically different. We cannot close companies and lay off labour instantly as is normally done in developed countries. Environmental problems and many other issues also crop up.

It is therefore essential that Indian management consultancy organizations must be given due recognition, as is done by many foreign governments, in particular, in US and Europe. There should be a stipulation that no government agency should give a consultancy assignment to any foreign firm, unless they have an Indian partner. This way they complement each other and blend better.

I recommend to the state and central governments to adopt this as a national policy. It

will be in the best interests of the private sector also to follow suit.”

Organisations like The Institute of Management Consultants of India (IMCI) and Consultancy Development Centre (CDC) should take up strongly with the government to make this a national policy. We have waited too long to bring about this change in the attitude of the government. This calls for a quick decision to enable Indian consultancy organizations to stand on their own merits.

There is a large potential for Indian consultancy firms to participate in various strategic areas of National development. They can help growth by introducing innovative practices with professionalism at its best in education, health and industry. Vital problems like eradication of poverty and unemployment can be solved with a proper managerial perspective and Indian consulting firms can provide this service.

The time is just ripe for Indian consultancy firms to explore new frontiers and turn global. They have to develop a high level of competence second to none. Their prospects are indeed bright.

It is in this context, management consultancy firms have to evolve a clear-cut policy to take firm roots.

An integrated appraisal of any company, to cover every aspect of their activities the past, present and the future potential is a pressing need. Even if a company was doing well, if they were only tapping a fraction of the full potential, then the performance was certainly not so good.

By providing high quality service, with responsibility for results, will establish a trusting relationship between the consultants and the client. If called upon, consultants must take up the challenge of implementing the recommendations and monitoring progress.

To resolve a problem, to improve productivity, to turnaround a sick company, to make a good company better is the common effort of the consultant and the client. The degree of accuracy,



thoroughness and professionalism brought in by consultants will complement, accelerate and expand the client's interests. The relationship will be one of mutual trust, respect for expertise, rich and varied experience, unbiased approach and, above all, a desire to help a client grow and become prosperous.

Even the world's best companies have availed of the services of management consultancy organisations. When you call the right consultant, you are the gainer. It is not a defensive approach. It is from a position of strength. You may accept or reject the advice but you have an unbiased and objective approach to a problem.

Challenging Frontiers

1. Change in mindset

Indian consultancy organizations must get over the slow growth mould and recognize the potential for multifold growth in consultancy to take a significant share of the global business. We must think of a ten-fold growth annually.

This calls for a change in mindset, networking of organizations, encouraging individual consultants and above all, drawing up plans for the specialist areas in which we should concentrate. Organisations like IMCI and CDC can help in drawing a blueprint for this phenomenal growth.

2. Training programme for new legislators

During the past fifty years, we learnt the hard way that too only now that even the Government has to be managed. Simply because you are elected as a Member of the Parliament or the State Legislature, it does not mean that you have the ability, competence and expertise to manage complex portfolios. This is possible only through a down-to-earth experience supported by management expertise of the highest order. This is the only way we can resolve the complex problems our country is facing, such as poverty, illiteracy and unemployment.

The members of parliament must undergo a

month's residential training program on 'How to manage the government for being eligible for a ministerial berth, apart from some minimum experience as a legislator. Everyone must rise through the ranks from deputy minister to minister of state to cabinet member. This way, it gives the confidence to the ministers to manage their portfolios effectively.

The government, from being the machinery for law and order and revenue collection has become the single largest influencer of change through legislation, national programmes and by direct participation in economic activity through the public sector.

Our country has immense problems but also resources. The government by itself cannot meet the challenge of matching the two. We need a multi-pronged attack. One of the impediments is the lack of understanding of the role of political leadership in our economic development and the managerial dimension to make such development possible.

National goals have to be necessarily political decisions dictated by the elected leadership of the country. It is in the understanding of this dynamics that the professional management has failed. We have not established clear guidelines and the distinction between the goal setting and goal achieving activities of the government. We need all the professionalism at our command. Specialists must provide the expertise to make national goals a reality.

The government of India and state governments have some training programs. We believe most of them continue on the beaten track of outdated bureaucratic culture. What it calls for is a frame breaking change in the design of the program, the curriculum, and training methods. This can only be provided by bringing a managerial dimension to the management of government and not political

M.K. Raju

expediency. It is here leading management consultancy organizations can take a special assignment and provide the lead. An innovative residential training program will yield rich dividends. This is a national priority.

3. Joint Ventures-An Approach to Prosperity in Asian and African Countries.

It is in the areas of joint ventures and technical co l l abora t ions Ind ian consu l t ancy organizations can take a lead.

India must be prepared to initiate projects, provide the technology, set up the plants, train personnel, help operate the plant to the best global standards of cost, quality and service. This is a pressing need in all developing countries of Africa and Asia.

The project report includes technical know-how for indigenous manufacture, process know-how and selection of plant and equipment, design engineering and architectural drawings, plant layout and utilities including power, lighting, water, compressed air, fuels, material handling, storage, effluent disposal, safety and environment. Working capital requirements, cash flow and expected returns on investment will also be projected.

The manpower requirements for the project need to be worked out with assistance for selection and training of personnel, including managers, supervisors and skilled operators.

The consultants will take total responsibility for initiating and implementing the project, with a guaranteed performance and returns on investment.

This will be a yeoman service to the developing countries and above all contribute to their rapid development. Indian consultancy organizations are well placed to form a network with a group of consultants to take up such turnkey jobs.

The areas of special importance are auto

ancillaries, cement, paper, textiles, food processing, agricultural sector, healthcare etc.

The true concept of collaboration is not to explore how you make your business better at the expense of others but to help make other people more prosperous by your aid.

It must move towards creating consuming power, raising the living standards of the people and diminishing poverty. It must bring to the receiving country a commodity, which they need. It must assist them to manage their own affairs. It must result in an absolute renunciation of every form of exploitation.

4. Institutes of Management

This program may also include setting up institutes of management, designing the programs and curriculum, providing guest faculty to train managers in quality and quantity to meet the national needs.

This approach will accelerate the pace. In the ultimate analysis Asians and Africans will have to work and help each other to achieve Asian and African prosperity.

Indian consultancy organizations can play a pivotal role to accelerate the pace of progress in manpower development.

This is an area where the Indian consultancy organizations can make a big impact.

Special Surveys

During 1980, our company MKRC published a monograph 'The Emerging Multinationals-Indian Enterprise in the ASEAN region', by M K Raju, co-authored with Dr C K Prahalad. It was the most comprehensive study of Indian joint ventures (JV's) ever undertaken in India. It covers seven countries-Fiji, Hong Kong, Indonesia, Malaysia, Philippines, Singapore and Thailand. The project was funded by MKRC. It was an eye opener to diagnose the ills of the Indian joint ventures. The database was comprehensive and prepared from published records, balance sheets, visits to the plants, interviews with the chief executives and operating




management. This survey conclusively proved that it is the caliber of management and commitment of the Indian promoter that stood in the way of progress and contributed to the failure of a large number of joint ventures and not the policies of the Government of India or the host country. When a copy was presented to the then Finance Minister, he commented that the Government was misled all these years on the causes for the failure of Indian joint ventures and now the picture was more clear. He appreciated the contribution made by MKRC.

This survey is mentioned, as there is a tremendous scope for such surveys to throw light on many issues of national importance. It should be independent surveys and in-depth studies not by parliamentary sub-committees or bureaucratic wings. It must be done by consultants of national repute and funded by the private sector, IMCI/CDC or the Government provided they give a free hand to the consultants and not interfere with the findings. Some of the areas of special concern, which call for such in-depth studies, are listed below: -

l Poverty : What is the impact of all the government sops for the last several decades to the quality of life of the common man in India? This should be an extensive survey with pilot projects in, say, 100-village clusters in select States. The database must be authentic, highlighting the number of families, the age and educational background of each adult member and children, land owned, current employment, monthly earnings, vocations, public health and sanitation, educational facilities, agriculture etc.

This will be an eye opener. It is estimated that not even 10 paise in a rupee allocated by the government for rural upliftment goes to the villagers. It is high time this is exposed. Otherwise, politicians will get away with the gimmicks without any accountability.

l Free Power : Every single consumer can be connected to an electronic meter with remote monitoring of daily electricity consumption, which provides data about free electricity

actually consumed by each consumer. This survey will throw light on the vested interests who exploit free electricity for their own benefit at the expense of the exchequer. This depth study can only be done by recognized management consultants.

l Primary Education: Facilities provided and utilized and the number of rural children who actually benefit, the number of schools without teachers or basic amenities, and the funds allocated will be assessed. Had India taken care of every child born after independence for primary education, there would have been no illiteracy in the country today.

l Public Sector: It is easy to say that the government must have a say in the public sector. If this means that the government assumes the role of the owner and trustee of the people and if the ultimate aim is to run the public sector on an economic basis with social justice, we have to assess how far the government has succeeded with the present system and culture and in the light of our experience of so many decades, whether this calls for a policy review.

★ Should the public sector companies not enjoy autonomy and their boards take responsibil i ty for performance, including the appointment of the chief executive and members of the top management, their tenure and their compensation?

★ Should the bureaucracy not be totally de-linked from the management of the public sector?

★ Should it not be the responsibility of the chief executive and the board of directors to develop as a policy, two potential replacements for every senior position, to avoid the present malady of 'headless' public sector companies?

How can you afford to keep the chief executive position of large public sector

M.K. Raju

enterprises headless even for a day? Why doesn't the government give respect to eminent professionals whose track record makes any country proud? How can we allow bureaucratic mani-pulations and ministerial mediocrity to play with the lives of chief executives of public sector enterprises? How can organizations like AIMA, CII, FICCI, IMCI and CDC be silent spectators ? Is this not happening in several dozens of public sector enterprises day in and day out?

Is this not the right time that a in-depth study is made for reviewing the policy of selection of top management positions, current practices, the number of positions kept vacant and for how long and the role bureaucrats play in this malaise, the policy changes it calls for and the damage done to the nation's economy by this intransigence. This must not be a study done by a parliamentary sub-committee. It must be by a management consultancy organization of national repute to make an independent, and unbiased study. The survey can be funded by private agencies to provoke a national debate and force the government to de-link itself from the public sector, if it does know how to manage the public sector units to the best international standards of efficiency and customer service. This applies to public transportation also. If they cannot provide economical and prompt service to the public, government has no business to run the state transport organizations.

Sum Up

• All the above initiatives were taken up at one time or the other quite successfully but in an ad-hoc manner. The missing link is an integrated approach and networking of Indian consultants, with a multi-fold growth. We

have to bring a managerial dimension and project a true picture of the extent to which funds allocated by the government are effectively utilized, without any leaks, to improve the quality of life of the common man.

• Indian consultancy is on the threshold of a major take off. It must change its mindset and plan for a multifold growth during the next 10 to 20 years.

• The government of India must make it a national policy that any government assignments given to foreign consultants will be allowed only when they have a Indian counterpart.

• Indian consultancy organizations must take a primary role in designing meaningful training programmes for members of legislature / parliament and the Indian Administrative Service, to capture the ethos of a liberalized India and discard all outmoded colonial practices.

• Indian consultants must be actively involved in turnkey assignments to prepare project reports, provide technology, set up manufacturing plants, train personnel, operate the plants for a couple of years and hand them over to local management. This has a tremendous impact in Africa and Asia. It will generate huge business. This includes setting up Institutes of Management.

• Indian consultancy organizations must take the lead to make national surveys on such issues of national importance as poverty, free electricity, subsidized food, primary education, health care, public transportation and public sector management and not leave it to the bureaucrats and politicians to play havoc due to political exigencies.

In short, Indian consultancy must become a major player in our national economic growth and capture a significant share of the global market.



Enhancing Competitiveness in Management Consultancy

S.A. KhaderThe article is about the significant management consulting opportunities emerging in the area of infrastructure, private sector development and capacity building and enhancement of competitiveness for consultants. The author discusses role of consultants in the changing socio-economic and socio-cultural scenario due to globalization of national economies and increased exposures. Consultancy sectors should realize and recognize these aspects and prepare themselves to serve their clientele with customer and stakeholder-delight in focus and challenges of growing expectations of the people in general. In this article the author has also highlighted measurers for Indian consultants to sustain and to compete with MNCs in the changing environment.

Consulting Around the World

The growth of the management consulting industry bears a close relationship to that of the overall economy. In the 1980s, relatively high economic growth of 3.6% in Europe and the U.S.A. was followed by a 20-30% annual expansion in the consulting industry. With slower economic growth in 1990s (1-2 percent), the growth in consultancy has also come down somewhat, notching increases of 15-20 percent. The positive relationship between the growths of the management consulting industry is found in Singapore. From 1989 to 1992, the high growth of the industry (25 percent) coincided with a 7 percent growth in Gross Domestic Product (GDP). Turnover from management consulting and public relations services doubled from US$ 183 million in 1987 to reach US$ 425 million in 1991. The total turnover from information technology, public relations, management and engineering consultancy services in 1991 was almost US$ 1 billion. Expressed in relation to GDP, the total turnover of consulting services was 0.3 per cent in 1990, comparable to that in the US and Europe. Given the positive correlation between the growth of the consulting industry and economic performance,, it is evident that there is a vast potential for a greater role to be played by professional service organizations. The global market for management consulting is growing at more than 10% per annum. The global market for management consulting was estimated at more than US $ 40 billion in 1996. By

shear extrapolation even at a conservative rate, it would lead us to a staggering figure of US$ 160 Billion by 2006.

Within the Asia Pacific region significant management consulting opportunities are emerging in the area of infrastructure, private sector development and capacity building. The largest growth in consulting services is currently taking place in Asia Pacific and Latin American regions and the growth areas being Information Technology, Corporate Strategy and OD, Facilities Management & Production and Services Management. The key sectors are Banking and Financial Services, G o v e r m e n t S e r v i c e s , U t i l i t i e s a n d Telecommunications. The major trends affecting the management consultancy industry in the region are rapid growth in the Asia-Pacific, regionalization, leap frogging growth of indigenous companies, new concerns in human resource development (HRD), productivity, quality, and lean production systems. To seize emerging opportunities the consultancy firms in the Asia-Pacific are adopting certain strategies for organizational changes like mergers, alliances, franchising, consortiums etc.

Competitiveness in Consultancy

Engineering & Consulting Services in general, like the general service sector also fall across a continuum (spectrum) ranging from management consultancy at one end and Technical/Project consultancy on the other. Across the continuum, the


degree of interaction between the client personnel and the consultant undergoes a radical change, e.g. continuous interaction becomes very essential with the client or client's representatives (employees at different levels in the organization) throughout the total process of extending management consultancy, i.e. establishment of terms of reference, fact finding through structured questionnaires and interviews, idea-generation and selling as well as implementing the recommendations. On the contrary, in the technical/project consultancy, the interface between the client's personnel and the consultant is intermittent and to a smaller degree, due to the perceived superior knowledge level of the consultant-engineer.

Management consulting is an intricate process of knowledge/know-how transfer through a client-consultant relationship, where professionalism is vital to providing quality services. The broad parameters that specify the quality (expectations of the customers) in management consultancy in general include:

1. Provision of service as per schedule/time target

2. Adherence to agreed cost/fee and terms of reference

3. Degree of fulfillment of the intended need of the client.

4. Degree of participative approach adopted by associating the client person-nel during different stages of providing the services.

5. The extent of development of client personnel to pursue and improve upon the system implemented/installed.

These can be accomplished by maintaining “high productivity of technical staff as well as professionalism and adhering to professional ethics. The key factors that promote professionalism is consultancy that emerged during APO Symposia on MC Skills 1990 in New Delhi, 1993 in Seoul and 2001 in Lahore are:

i. Continuous knowledge up-gradation supported by innovative approaches to

developing standardized methodologies of consulting and sound business practices' (Values and ethos of the Consulting Organization).

ii. Keeping consultants motivated to enhance their specialized knowledge and consulting skills; (Consultant Development)

iii. Commitment to involve/associate clients with the problem solving endeavors. (Client's-Maturity to tap the consultants capability)

The fig. A in the subsequent page depicts clearly these three dimensions of consulting interventions and the related interfaces outlining the above three issues concerning professionalism. The basic commitment to professionalism stems from the background values, ethos and business ethics imbibed and built in by the promoters of the consulting organization. The long-term success of the enterprise and its focus on consulting business with its self-imposed code of ethics will drive its outlook to invest in consultant development, developing proper infrastructure and knowledge management, establishing associates, joint ventures etc. to provide the services that the company is truly needs. It is well recognized by the consulting fraternity that it is easy to work with a well-informed client who understands what the consultant can do and what he cannot. The client's maturity to understand and to go along with the consultant, results in better utilization the potential of the consultant team for the benefit of the organization. It is also imperative on the part of the consultant to appraise and educate the client in the right manner to strengthen professionalism in the service.

Further it is recognized that consultant development has to be self-motivated and the skills can be sharpened more by experience and working with seniors in diverse projects. To accomplish fruitful interaction between the consultant and the client system, the consultant must have basic education and training to hone those skills, in addition to the vital personality traits of an effective change agent as outlined in fig. B. The integrated



skill attributes of a management consultant evolved by a committee constituted by Planning Commission of India on 'Consultant Education & Development' during 1992 is delineated in this structure.

i. Marketing skills to diagnose the needs of clients and sell the type of services suitable to the situation

ii. Conceptual and professional skills to be able to diagnose problem areas and apply knowledge and experience in evolving viable solutions

iii. Aptitude for interacting with diverse individuals' ability to size up situations and related personality characteristics.

In addition, management consultants should

FIG A

OUTLOOKTOWARDSCONSULTANCY

3-Ds OFPROFESSIONALISM INCONSULTING

ABILITY TOWORK WITHCONSULTANTS

CLIENT

1. METHODOLOGYOF CONSULTANCY

AND CODE OFETHICS

CO

MM

ITM

EN

T TO

OB

JEC

TIV

E P

RO

F S

ER

VIC

ES

BA

CK

GR

OU

ND

ET

HO

S &

TH

ICS

CONSULTINGORGANISATION

2. SKILLDEVELOPMENT

3. CLIENT ANDCONSULTANTSINVOLVEMENT

(PARTICIPATION/TEAMWORK)

CONSULTANTS :

BACKGROUND ANDPROFILE

MOTIVATION ANDCOMMITMENT FORACQUIRING HIGHERKNOWLEDGE/EXPERIENCE


S.A. Khader

have a national perspective and abilities to integrate broader socio-economic and cultural dimensions as well as macro-micro linkages, while tackling productivity problems, both at national and cross cultural global levels.

The socio-economic and socio-cultural scenario is undergoing a phenomenal change due to globalization of national economies; increased exposures as well as enhanced expectations for higher quality of life and commensurate awareness for better quality of goods and service by the public in general. The societies and enterprises have already gone through various movements namely the technology, management, productivity and human resource movements. Presently, it is the quality and environment and broader stakeholder satisfaction movement that have overtaken all the others, further overshadowed by fast emerging knowledge society well supported by Information Technology. Unless the service and consultancy

sectors too realize and recognize these aspects and prepare themselves to serve their clientele with customer and stakeholder satisfaction in focus, they will not be able to meet the challenges of growing expectations of the people in general. In this process, one factor that stands out is the continuous renewal of knowledge and attitudes of the human resource. The competitiveness of consultancy can be sustained continuously only through these measures.

IT & Competitiveness

It is possible to gain competitive advantage through the use of IT. Porter and Millar identified three ways, how IT can influence the competitive advantage, viz.,

1. Change the industry structure;

2. Create competitive advantage; and

3. Spawn new businesses.

INHERENT PERSONALITY TRAITS

DRIVE/APTITUDE/INITIATIVE (QUEST FOR KNOWLEDGE INTELLIGENCE

ANALYTICAL ABILITY, INTEGRATION, ASSIMILATION AND GETTING ALONG WITH OTHERS

COMMUNICATION, EXTROVERT/GENERAL INTEREST, MATURITY

PLEASING PERSONALITY

ADMINISTRATIVE & BEHAVIOURAL SKILLS

SPECIALISED/GENERALISEDTECHNICAL SKILLS

FACT FINDING (ANALYSIS)

TO MANAGE CONSULTANTS ORGANISATION

TO DEALWITH CLIENTS

EXPERTISE ON IMPLEMENTABILITY

INTEGRATED SKILLS FOR A CONSULTANT

FIG B



Across the value chain of a company, it is possible to influence the processes by utilizing Information Technology to optimize the customer value and thus enhance competitiveness of the enterprise. According to Manzi of Lotus - "The key to productivity lies not in the computers themselves, but in, how they are used. "Use" in this instance refers to how IT fits into the overall structure of the organization and how it helps achieve organizational goals. The potential of Information Technology can be realized only when that technology is integrated into the strategic vision of the organization and when it is used to redefine job structures, processes and lines of authority". Information Technology has an all pervasive impact in the total performance of a consulting organization. Information Technology can provide an easy access to global database and also to in-house experience and expertise through better knowledge management, apart from enhancing the speed of operations in general. A consulting organization without IT integration is bound to loose its competitive edge.

Management Consultancy in India

The economic reforms in 1991 along with dilution of MRTP and FERA regulations resulted in stimulating competition in the large sectors of the industry. This led to a large demand for consulting in the field of strategy as the Indian industry was suddenly exposed to the globalization process. This brought in major international consulting firms where interventions helped in exposing industry to the realities of the globalization, and thus in changing attitudes. Consequently one sees many changes in the conglomerates, leading to mergers and acquisitions (M&A) and a focus on developing core competencies and economies of scale internationally. During the last about 10 years, a large number of foreign consultants have set up their operations in India through collaborative arrangements or otherwise. These collaborations are mostly from advanced countries and in technology intensive or specific sectors. This shows that the FDI in consultancy services alone has increased from Rs. 122 million in 1992 to Rs. 6362 million during 1998.

Almost unrestricted entry of foreign consultants in India is a matter of serious concern to the Indian consultancy companies. While it is recognized that in the market driven policy environment, the Indian consultancy companies should be prepared to face competition from foreign companies in their own domestic markets, strengthening of domestic consultancy capabilities would be in the national interest on long term basis. The Indian consultants perhaps need to adopt an approach of cooperation and competition, depending upon the situation. Majority of the Indian consultancy companies have low equity base and inadequate financial and marketing muscle compared to international consultancy companies. The committees constituted by Consultancy Development Centre (CDC) have estimated roughly that 100,000 consultants working in India spread over 25,000 consulting entities. The numbers will expand if consultancy in information technology area is included. Of the consulting entities some 80% are individual consultants. While it is not possible to disaggregate the number in terms of management, technical and other consultants, it is estimated that over 40% of the consultants are management consultants of varying types, sizes and configurations. Correspondingly, they represent highly divergent standards, specializations and practices.

Consultants continuously move with the changing environment and are here to facilitate better management in all areas where demands arise. Hence the major areas of forthcoming new economy are changes (knowledge) in the corporate sectors and changes in social sectors that would determine the emerging areas for consultancy. Indian corporate houses, however, will have a large requirement for consulting in areas of :

l Customer Care Management

l Information Technology and

l Knowledge Management

A political structure mindset and leadership th

that belongs to the 19 century can hardly be counted for capturing the opportunities that circumstances


S.A. Khader

have brought before us. A nation that does not somehow accept the idea that high quality universal education is the primary task before it, is capable of missing the information revolution just as it missed the industrial revolution”. Thus, consulting in the social and education sector is bound to be in greater demand and in fact it is expanding leaps and bounds with MNC consultants flourishing through international funding institutions and through Non Governmental Organizations (NGO's).

It has been often said that India is an over-administered and under-managed country, which is why, Indian human resources can only give their best in foreign countries that provide a better environment. Improving the management of the nation will help to realize the true potential and consultants have a role in both stimulating and meeting this critical and vital need of our country in terms of providing consulting service to government and institutional framework.

A massive investment in infrastructure is in the offing in India both through the domestic savings as well as foreign direct investment. For example, an astounding amount of Rs.7660000 Million investment is anticipated during the tenth Five Year Plan. In developed economies, the share of consultancy in the total project cost goes up to 10% in infrastructure related projects and 5% in soft sectors. Considering the lower level of awareness and perception of consultancy in India, it is expected to range only between 0.5 to 3% according to a recent survey undertaken in this regard. As per the opinion survey and analysis, it is estimated that, private sector apportions about 2-3% of total investment in consulting while the central public sector sets apart 1-2% and the state public sector 0.5-1% of the total investment towards consulting services. Accordingly the overall size of consulting business in India, as a wild guesstimate, subject to the definition one adopts, would be around 10,000 crores. The exports are very limited and most of them form part of project exports. The export of consultancy services is estimated at around 200 to 250 crores. While the industrial consultancy is basically domestic, Indian business is getting highly globalized. Global consulting firms are recruiting

Indian in thousands. Hence, the growth opportunities in the consultancy are bound to be very good, considering the economic perspectives of India during the first decade of this millennium.

User Perception of Management Consultancy

Despite the continuous growth and a wide range of industries served the number of qualified management consultants is still insufficient to meet the need for professional management consultancy services in India. This seems to be the result of many potential clients' reluctance to use such services; their lack of knowledge of when to use such services, how to choose a consultant, or how to use consultancy; insufficient marketing and public relations effort by the profession itself as well as unprofessional services from some individuals and firms that harm the reputation of the entire profession. An opinion survey under taken by National Productivity Council on behalf of APO during 2003, results into this SWOT analysis of the consulting profession in India.

Strengths

Availability of skilled manpower

Cost-based advantage

Experience relevant to developing economies

Adaptive towards technology

Sector specific

Weaknesses

Weak image

Lack of international experience

Inability to arrange competitive funding

Weak consultancy associations

Industry awareness is low

No linkage between consultants and academics

No consortium approach for large overseas projects

Opportunities

Large domestic and diverse sectoral market

Rising opportunities in international markets



Technology competitiveness

Sub-contracting by larger international consultants

Threats

Entry of foreign consultants

Extremely price sensitive domestic market

Loss of manpower

Lack of support from government

Technology absorption is slow

The clients agree, 'Management consulting is more than making recommendations or giving advice. It requires working with the client on implementing solutions, solving problems, and managing change; not just discovering what management ought to do, but helping the management to do it better.' Thus the management consulting approach should change basically from providing advice to implement ing and demonstrating results. From discipline oriented, it should become integrated and holistic. The approach should be to provide total solution to enable the client to reap the benefits promised through the investment in consulting. That is how it should become 'performance consulting' through its process-approach.

Many clients feel that, “in consulting on organizational and management development, there has been insufficient adaptation of western approaches to Indian realities.” This calls for investment in local R&D, database development, and suitable adaptations of western approaches integrating with Indian ethos, values, attitudes and culture and work ethics. Most Indian consulting firms do need to adapt the 3-D model of enhancing professionalism leading to higher competencies in the consultants comparable to MNCs. Then, they will be able to effectively use the cost-based competitive advantage to their benefit.

Best Practices in Consulting Profession

A survey conducted in USA during late nineties revealed that the best practices for success

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