Jul 22 2015 : The Economic Times (Mumbai)
Advisory firms make big gains as NDA govt ropes them in for rolling out showcase projects

Advisory is all the rage in the corridors of power these days. Taking a leaf straight out of the Gujarat playbook, the Narendra Modi government has hired consultants for projects such as Make in India, Digital India, smart cities, Swachh Bharat and skill development. That’s meant roaring business for consultants, especially the advisory units of the Big Four –PwC, EY, Deloitte and KPMG -along with strategy firms such as McKinsey, The Boston Consulting Group (BCG) and Bain.There’s been a quantum leap in government engagements in the past few months as various programmes have been rolled out. Exact figures aren’t available, but a rough calculation by a senior consultant suggests a ballpark figure of around ` . 500 crore in fees in the year ended March. “You have to understand that the engagements started only post August. First the government invited quotes from consultants and took a mandatory 90-day period before hiring the consultants,“ he said. The Modi government took over in May last year.

In a year’s time, consultants expect that the total revenue from government engagements could . 750 crore.rise to ` It’s not just the Centre, the states too are engaging consultants for multiple development initiatives.

“There has been acceleration in our government practice, which is one of our largest practices, in the last few months and we have seen a growth of more than 30%,“ said Deepak Kapoor, chairman, PwC India. “A reason for this is the plans of the government in the areas of Digital India, Make in India and smart cities taking shape.“

Industry trackers said consultants are roped in at various stages for almost all government projects.

“As the government takes up a number of projects in various sectors like infrastructure to skill development, more consultants are being roped in at various stages,“ said Ram Sarvepalli, national lead er, advisory services, EY India, and partner, emerging markets centre, EY. “This is happening at both the state-level projects as well as those (by) the central government.“

Consulting firms say they are pleasantly surprised at the fresh outlook in government circles combined with a savvier bureaucracy .

“Not only are they more open but they know what they are looking for. They want expertise and they do their research on which firm to work with and even which partner in the firm. So competition is down to even partner level,“ said the CEO of a consulting firm.

Among the states, Andhra Pradesh has engaged EY, Rajasthan has roped in BCG and EY, Odisha is working with EY and PwC, and Madhya Pradesh is working with EY and PwC for a World Bank project.

“Most of the engagements begin with conceptualising the projects, which means doing a detailed project report on the feasibility of a project, and determining the cost of the project,“ said a consultant.

In some cases, the consultants also help the government execute the projects. While the process requires calling for requests for proposals, the advisory that helps draw up the road map usually gets the project, said a consultant.

The role of the consultants shows up clearly in the process, according to bidders. “Just read the RFPs for all the big projects where companies are required to bid, and you will realise it’s a professional job,“ said a top executive at a digital firm.

There is also some training of civil servants by the advisories. While this has not started on a large scale yet, industry trackers say this could be a huge opportunity. Consultants expect that the engagements will rise in the coming year as the government presses ahead with more growth-based projects.“We expect to see more traction in this practice in the days ahead,“ said Kapoor of PwC.

Consultants point out that the state-level engagements are over and above that of government-owned banks related to turning around assets or restructuring stressed loans.