India could witness offshoring wave of strategy and planning services | Mint – mint | Region & Cash

India’s evolution from cost-to-thought leadership to management consultancy is a topic I have also covered in previous columns. Today I make a prediction: Global companies will increasingly outsource their strategy skills to India, either to Indian-bred management consulting firms or to their own firms.

But can strategy be outsourced? While we understand that non-core functions can be outsourced, there is another dimension driving outsourcing: time-limited projects versus business-as-usual (BAU) activities. Activities like payroll are non-core BAU and have been outsourced for decades.

Temporary projects that are not part of the core business, such as B. IT system implementations are also regularly outsourced. Core BAU activities such as sales and service delivery are typically performed in-house as a “secret ingredient” in most companies. Strategy and planning fall into the last remaining quadrant: core projects, but time-limited projects.

The fact is, strategy has been outsourced to global management consultancies for decades. Most consulting assignments are temporary projects that require special skills. Many large organisations, including Indian conglomerates, have had continuous relationships with management consulting firms for decades. It is not uncommon for consultants in such companies to advance to partnerships, serving a single client for years and covering multiple engagements in different regions.

That is, even if the strategy is outsourced, can it be offshored? Conventional wisdom is that these are high-touch engagements that require co-location. Covid-19 has turned this conventional wisdom on its head. Even before Covid, it wasn’t uncommon to find scattered strategy teams spread across key markets. Post-Covid, virtual agile teams will be the norm. Limited travel will continue to build relationships and understand context, but the default mode will be virtual and agile. So yes, strategy can be outsourced.

But why will such an offshoring to India happen? It’s simple: no other country has as much proven consulting talent, communication skills and global business context. Almost all global consulting firms are already utilizing large India-based workforce. Our IT services industry has created a large workforce and associated systems capable of engaging and delivering globally. Our domestic economy has grown to such an extent that Indian born consulting firms now have world-class experience and credentials.

What type of clients will drive this strategy outsourcing to India? We believe there will be three types: First, given the post-Covid VUCA (Volatile, Uncertain, Complex, Ambiguous) world, the need for strategy and planning will spill over beyond large companies to medium and small sized companies. These firms cannot afford the high fees of global consulting firms and will happily work with Indian born firms once they see the opportunity. Two leading companies from the next emerging markets in Asia and specifically Africa will tap India-based consulting talent to grow both domestically and internationally.

We’re seeing this trend firsthand in the Philippines and South Africa, where pioneering entrepreneurs are harnessing Indian consulting talent. Three, global conglomerates that now partner with major consulting firms, will brush up and eliminate the middleman by working directly with India-based consulting talent. The exorbitant profit margins that major consultancies are making today by charging global rates while harnessing Indian talent will be incentive enough. We can also see such companies adding strategic capabilities to their Indian captive weapons.

Is this trend already continuing? Absolutely. We are aware of several pioneering executives from the EU and US who use India-based consultancies to access world-class talent at Indian prices. We are also seeing increasing M&A interest in Indian-born consultancies.

This interest is coming from international funds wanting consulting capacity at sustainable prices, IT firms looking to build consulting capacity at the tip of the spear, and conglomerates looking to build such capacity in their Indian arms. We expect several such transactions in the next two years: Indian consulting companies will come of age similar to Indian tech, SaaS and e-commerce startups.

So what needs to happen for this trend to gain momentum? Awareness, Pioneers and Advocates. Strategy services buyers need to be made aware that this India based option exists. More pioneering clients need to turn the conventional wisdom on its head, which still allows global management consulting firms to charge exorbitant fees. And I repeat that we need some kind of Nasscom industry association dedicated to Indian management consulting.

Abhisek Mukherjee is co-founder and director of Auctus Advisors.

Get all the business news, market news, breaking news and latest news updates on Live Mint. Download the Mint News app for daily market updates.

More less

Subscribe to something Mint newsletter

* Enter a valid email address

* Thank you for subscribing to our newsletter.

Author: Amine

Leave a Reply

Your email address will not be published.