Big 4’s management consulting arms gain muscle

Mumbai: Despite being overshadowed by their rapidly growing tech advisory businesses, the management consulting arms of Deloitte, EY, PwC and KPMG, aka the Big Four, are now registering strong growth, driven by increased demand for multifunctional expertise, strong client relationships, and a favourable price-value proposition compared with other high-end rivals in the space.

The management consulting business has been growing 25-30% for all firms in the last two years. At the Big Four, the total number of partners engaged in strategy, operations, and the top end of digital advisory — areas typically dominated by firms like McKinsey, BCG and Bain — stands close to 300, with consultant numbers at 5,500-6,000. However, the varying number of digital consultants each firm adds to management consulting complicates direct comparisons.

Collectively, these firms generate Rs 3,300-3,500 crore in revenue from pure management consulting mandates. EY leads with a Rs 1,300 crore-plus topline, as per industry estimates.

Each professional services firm slots its management consulting differently. EY houses it in EY-Parthenon. PwC has consolidated its consulting services under the One Consulting umbrella, with top-end consulting being managed by Strategy&. In Deloitte, it comes under the Advise category of its Advise, Implement, Operate model.

Having gained critical mass and cross-sectoral expertise over the years, the firms are now even beginning to cross over to high-value consulting.

“We believe that EY-Parthenon could be the third-largest management consulting practice in the domestic market in India after McKinsey and BCG,” said Anurag Gupta, managing partner, EY-Parthenon. “The clients are very clear; they don’t want paper output but solid outcomes.”

He added that in 80% of the mandates that it wins, EY-Parthenon doesn’t compete with any of the of the Big Four firms. “The volume of work we handle compared to any other Big Four is 1.5 to 2 times more,” Gupta said.

In the last decade or so, the market has also shifted, with traditional strategy firms such as McKinsey, BCG, Bain and Kearney doing more execution work while professional services firms, which previously focused on lower-value implementation and the ‘more-people-at-lower-rates-for-longer’ model, moving up the value chain, particularly in engagements that require digital and analytics capabilities. “One big theme is that digital is now all-pervasive across consulting,” said Vinodkumar Ramachandran, head of business consulting, KPMG.

The firms usually work on projects that take longer than those of strategy firms, which are typically four-six-week assignments.

“The market is also maturing, and clients today look towards us to engage over a long term, often leading multiple cycles of ‘agile sprints’ to help organisations derive tangible outcomes,” said Ashwin Jacob, partner and leader, Monitor Deloitte, South Asia. “More often than not, a significant proportion of fees are also linked to the benefits achieved.”

A key advantage for the Big Four consulting units is their ability to collaborate seamlessly with their vast technology practice as well as their transactions, tax and regulatory teams, allowing them to effectively provide a greater range of implementable advice to customers. Ramachandran said that the Big Four firms now possess the comprehensive capabilities necessary for large-scale transformations.

“Our capacity to invest and our multidisciplinary approach significantly differentiate us from competitors,” he said.

"Clients are increasingly recognising the intrinsic link between disruption and value creation," said Arnab Basu, Partner and Leader of Advisory at PwC India. "They appreciate how consulting services can integrate diverse capabilities to best support their goals, capturing tremendous opportunities in the process."

The top firms work with thousands of clients across many sectors, and that gives them a wider sales funnel. On top of that, deep partner relations allow them to snag strategy and operations projects from a variety of companies.

With proven delivery records, the firms are now engaged in a wide range of projects that include digital transformation initiatives for established companies, strategies to enhance ebitda and revenue for mid-sized businesses, the development of new business lines for conglomerates, value creation for private equity-backed companies, and the management of energy and supply chain transitions for multinational corporations. In the last five years, the transaction teams that work on M&A and private equity deals have provided a significant amount of strategy and operations mandates to the consulting teams.

EY has been the consulting leader among the Big Four firms for over a decade and a half, due to foundational work by previous consulting heads like Ram Sarvepalli and Sunil Chandramani, who invested in people and processes ahead of time, developed robust service lines, and built a strong client franchise, said people with knowledge of the matter.