As Indian IT players compete for higher-value services in digital technologies such as data analytics, mobility, social and cloud-based deployment, they face increasing competition from management consulting firms that are also beefing up their business in those areas.
The clash comes in so-called transformational deals that come with a consulting and implementation components. IT firms have been buying up consulting talent, while management consulting firms like PricewaterhouseCoopers (PwC) and KPMG are increasingly boosting their ability to implement deals that require more than just coding skill.
“On some deals a consulting firm will just be the design partner and will partner with an IT firm to implement. But there are deals where they will look to do some of the implementation work themselves; it is competition and co-operation. There will be both,” said Sanchit Vir Gogia, head of independent advisory firm Greyhound Research.
The consulting firms are also investing heavily in this battle. PwC has been building its technology consulting team since 2008 – through acquisitions like Bearing Point, Diamond Tech Partners and recently Booz & Co. Late last year, KPMG formed a $100 million venture capital fund to invest in data analytics firms. It also lured Accenture’s analytics consulting head Amit Khanna to the firm last year.
“Our tech consulting is as good as that of any other technology service player. We focus more on transformational deals. We recently finished tech implementation work for a top private sector bank in India. Whether its Infosys or Wipro, all of them are going very deep into tech consulting.
Companies such as TCS are giving us a big fight,” Debdas Sen, leader for technology consulting at PwC India, said.
PwC’s technology consulting team just in India has over 2,000 employees with rapid growth over the last 12-18 months.
The opportunity for players in digital is immense — it was $164.1 billion (Rs 10.2 lakh crore) in 2013, according to the National Association for Software and Services Companies. That figure is expected to grow 75% to $287.3 billion (Rs 17.8 lakh crore) in 2016.
And a greater proportion of that money will be spent by chief marketing officers and other business heads, and less by chief information officers.
“We approach all problems from a business perspective. Compared to an IT company, the advantage we have is that we are able to bring in comprehensive solutions. We can bring in accounting experts and finance planners as and when needed. IT companies will find that difficult,” Akhilesh Tuteja, partner and IT practice head at KPMG said. Deloitte and Ernst & Young declined to contribute to this story.
KPMG is currently working with a large automobile company to improve dealer performance by connecting them online so that the company can monitor their performance and coordinate with them, Tuteja said.
The competition is felt not just in technology but also in the business process outsourcing space, according to experts.
“We are already witnessing management consultants increasingly competing head-on with service providers in progressive service areas where the client requirements are moving from an “as is” lift and shift of services to a “to be” roadmap of where the company expects to be in the next two-tothree years,” Phil Fersht, head of outsourcing advisory firm HfS, said in a blog post.
Habeeb Mahboob of Tech Mahindra was of the view that there is an opportunity to work with management consultants in the case of joint clients. “While we are competing with them on certain deals, we are also seeing joint propositions being taken to market.
Recently we used program management capabilities from a large audit/consulting firm to supplement our services to a large client in Australia,” said Mahboob, a managing consultant at the Mumbai-based company.
Not everyone, however, agrees that there is a blurring of lines between the IT firms and consultants. Suresh Senapathy, the finance chief of Wipro, said that India’s third largest software company does not face competition from consulting companies.
“Software services companies offer pure tech consulting while consulting companies mostly focus on management consulting. Therefore, we don’t see any overlap.”
