London: The Indian consulting market grew by just 4 percent to $1.5bn in 2012, reflecting the recent economic slowdown on the subcontinent, according to a report by consulting specialist research firm Source Information Services, released today.
The report says that despite this modest growth, the economic slowdown has in some ways become an important driver of demand in India's consulting market as clients seek help to both increase revenue and improve efficiency.
Interestingly, the Source report found that small and family-owned businesses are becoming increasingly important buyers of consulting services in India as a new breed of young, highly-educated business people rise in the ranks and are eager to take their businesses to the global stage.
B.J. Richards, Senior Analyst at Source and author of the report, commented, "Much as we've seen happen in the Middle East, the conservative, provincial local businesses of India are being transformed by a new generation of sophisticated, highly educated young professionals who are confidently taking the helm, steering their ships into international waters. Furthermore, they understand what consulting can do for them, and they're eager to engage. These new clients are not only providing critical new revenue but offering a refreshing change from the typical Indian consulting buyer."
The report also found that digitisation is at least as important in India as it is elsewhere, though it's happening a little differently. Specifically, there are opportunities around helping businesses make the most of mobile platforms as more Indians access the Internet on their mobiles than on computers.
Cloud computing and infrastructure services also present a big opportunity in the Indian market. These technologies and their security capabilities have been viewed with some suspicion in the past, but companies now seem to be coming around.
Neil Ramchandran, Managing Partner & CEO for Capco India said: "My personal view is that cloud computing and infrastructure services have completely overcome the fears around them a few years ago."
Financial services still dominant
From a sector perspective, financial services continues to be big business in India's consulting world, and whilst representing just under a third of all consulting revenue, and growing by 8 per cent in 2012, it was the largest growth sector. The energy and resources market also grew by 5 per cent as India explores renewable energy alternatives in order to better meet its huge domestic requirements.
As the economy is still growing, the report found that many firms are doing well. It says that smaller firms with a lot of room to grow are enjoying a time of extraordinary expansion.
Rajinder Singh of Solving Efeso commented: "We're a new entrant into this market — we've been a small market player since 2002. So our growth is not being determined by the market, it's determined by what we can take. We almost doubled last year and expect to do the same this year."
On the down side, consulting firms reported that they are struggling with the high cost of talent as India's sophisticated young professionals are putting a high price on their labour and experienced consultants to fill the senior ranks are also expensive as well as difficult to find. Two of the other market challenges identified by firms were managing increasingly demanding clients, and finding the best pricing strategies.
Despite these challenges, it seems clear that things are still going well in India's consulting market, because the report found that one of the four major concerns for consulting firms is how to successfully manage a rapid rate of growth. This suggests the outlook for consulting in India is bright.