• Consultants frustrated by slow pace of Modi government reforms
• Digitisation and a flurry of new bank permits is driving work in financial services ...
The Indian consulting market recorded double digit growth in 2015 - increasing 11 per cent to $1.87bn and is expected to hit the $2billion landmark in 2016. Despite this, consultants remain frustrated that growth could be even stronger if the Modi government were to act more quickly on a host of promised reforms.
These findings are published today (21st September 2016) in a new report from leading global consulting market analysts, Source Global Research (Source). The report found that digitisation and government efforts to increase foreign direct investment have contributed to accelerated globalisation of the Indian market. Domestic clients are maturing rapidly in the face of increased competition from abroad, resulting in greater consulting demand, often aimed at improving competitiveness and professionalisation. Meanwhile, a growing economy and slowly improving business climate are also attracting more foreign investment, giving firms increased opportunities to help foreign multinational corporations (MNCs) navigate the market.
Increased competition drives strong growth in financial services…
The financial services industry remains the market’s biggest buyer of consulting services by a substantial margin, growing 12.3 per cent to $586m in 2015, with digitisation and a flurry of new bank permits driving demand. Government efforts to increase competition and encourage innovation led to a higher-than-normal number of banking licenses being issued in 2015. The report says that it’s a big opportunity for consultants, as each new license presents an opportunity for lucrative work helping the new bank get on its feet.
Aashish Chandorkar, Head of Capgemini Consulting in India added:
“Banks are embracing digital technology at a rapid pace, especially in e-commerce and mobile. There’s lots of investment in that space; I think most consulting firms did a lot of work around digital in banking last year.”
B.J. Richards, Senior Editor at Source Global Research (Source) said:
“The Indian consulting market remains largely polarised between high-value strategic work on one end and low-cost technology work on the other, leaving consultants tantalised by the prospect of an as-yet unrealised demand for the many consulting projects that fall between the two. Digitisation - which is helping technology to step out of its box and spread across all service lines - is going a long way towards filling in that missing middle ground, though a growing demand for end-to-end projects is starting to contribute as well.”
Tech and strategy consulting continue to dominate…
Technology is India’s biggest consulting service line by some distance, growing 13.5 per cent to $852m in 2015. While traditional IT still generates a healthy amount of work, 2015 saw a continuation of the move away from standalone IT services to initiatives that form part of a larger transformation programme, a more sophisticated type of project that could help well-placed players move themselves closer to the high-value end of the market.
Alongside technology, strategy is India’s other blockbuster consulting service, growing 10.1 per cent to $688m in 2015. It’s clear that clients here have a lot of strategic questions on their minds at the moment, and there is plenty of work to go around. Big, multinational consulting firms are doing well helping Indian firms expand abroad, while foreign-based MNCs are eager to work with local firms to develop their India market-entry strategies.
The report also highlights that despite the rapid growth in consulting demand, prices remain stalled at very low levels, making profitability tough in India. Firms are trying a number of approaches to ease the pressure, including focusing their efforts on winning the market’s most sophisticated projects, building stronger relationships with clients, and adjusting their models to allow them to deliver quality work at prices that clients will find more palatable while protecting their own margins.
B.J. Richards from Source concluded:
“As in most markets, there is some fear that the ripple effects from global instability could be felt here, but it seems far more likely that continued economic growth and ongoing disruption - digital and otherwise - will mean good times for consultants at least through the end of next year. And if government reforms were to start moving at the pace consultants want to see, this market could quickly go from good to great.”
For more information on Source reports contact email@example.com or telephone +44 (0)20 3795 2668/ visit www.sourceglobalresearch.com.