Consultancies in makeover mode

Aman Dhall, Mansi Tiwari & Ishani Duttagupta NEW DELHI 

DESPERATEtimes, they say, call for desperate measures. And who would know that better than the Big 4 consultancy firms PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG. 
    The American economic downturn has opened up new windows of opportunity for business consultancies and the ripple effect is being felt in India too. With India Inc in a restructuring mode, the Big 4 as well as other consultancies across sectors are witnessing a rejuvenated demand for help in rationalising costs and enhancing employee productivity and efficiency in tough times. And to deal with the new reality, the consultancies are actually looking at changing their conventional business model and looking for new adaptive solutions. This involves measures such as a focus on sectors such as pharma and education, which are largely seen to be recession-proof, and a move away from the crisis-hit financial sector. 
    Business consultancies across the board have confirmed to SundayETthat they have re-aligned their strategy in line with the market expectations to tackle the current state of affairs. In fact, to meet the restructuring needs of their clients, KPMG India has even trained and re-positioned its mergers & acquisitions team to handle the new task. Pharma, healthcare, FMCG, food processing and education sectors are leading the charge. 
    Internally, the consultancies are beefing up teams which were earlier low-profile such as business risk services. Earlier risk management programmes were used only to keep companies out of trouble, but today they are broader and are being used to help improve business performance and to map risk at every level, namely, strategy operations, financial reporting and compliance. “Today our job, which is a part of the advisory activity of the organisation, has become very diverse and critical,”says Inge Boets, partner & global head business risk services, E&Y. Never out of fashion 
“FROM setting up an audit committee for a company to cost reduction, which could be a matter of life and death or helping to improve the efficiency of an organisation, we are everywhere,” says Inge Boets, partner and global head business risk services, Ernst & Young. 
    Business pundits, in fact, believe that consultancies can never go out of fashion — they will only fashion themselves according to the new ground realities. “The consulting model is all about finding solutions. As things have changed, we have re-aligned our solution areas in line with the market necessity. There’s a struggle but if you can put in that extra bit of effort, results are still forthcoming,” says KPMG India chief operating officer Richard Rekhy. The consultancy has seen a manifold increase in the number of companies approaching it for restructuring their businesses that includes cost-cutting and improving profitability. Agrees Arvind Singhal, chairman of consultancy firm Technopak: “It’s not that the companies don’t require consultancies but their priorities have definitely changed. It’s no longer growth but performance improvement that the companies are looking at consultancies to guide them through.” A case in point is the outsourcing business. Initially, when financial services firms were badly hit in the Wall Street meltdown, many were ready to ring the death knell of the outsourcing business altogether. But outsourcing has in fact become a strategic decision in the tough times rather than a tactical one. Moreover, there are new areas where outsourcing is becoming necessary to cut costs. 
    “For larger companies, outsourcing is not a tap that can be shut off at will, but an integral part of critical business processes. The more value-added the service provided by the outsourcing agency, the more difficult for the customer to reverse the outsourcing decision,” feels Kaushal Sampat, chief operating officer, Dun & Bradstreet India. According to Mr Sampat, no downturn is permanent — it’s just a tough part of the business cycle and is always followed by happier times! “That’s why we are constantly communicating the message to our associates that — this too shall pass,” he says. 
    Biz consultants don’t expect any significant reduction in the trend towards outsourcing. While a slowdown may free up some internal capacity, they, however, think that outsourcing will continue to offer significant cost arbitrage and access to the right skill sets (in terms of outsourced employees) to companies. “There can be a case of prices of outsourcing contracts getting re-negotiated to reflect the prevailing tough times. That can’t be ruled out,” says Sampat. 
    And the good news, according to most consultants, is that Indian companies need not entirely sacrifice their growth aspirations and plans at the altar of the current slowdown. 
    aman.dhall@timesgroup.com 

Source: ET, Page 1, Dated: 7-Dec-08