Can Indian firms compete with McKinsey, or are cultural barriers too high?
18 December 2006
Why does conventional wisdom in the US hold that consulting firms like McKinsey have nothing to fear from Indian firms? asks Stephen Manallack
Conventional wisdom in America is that Indian firms are most unlikely to win high-end strategy and board level consulting business, at the expense of the likes of McKinsey and Bain, because the cultural barriers are way too high. But these same commentators do point to fertile areas of business growth that they see as more open for Indian competition.
And why do they think McKinsey and others have nothing to fear from Indian competition?
- First, because few Indian IT and consulting firms have succeeded in differentiating themselves in ways that McKinsey, BCG, Bain and others have spent decades doing
- Second, they say the relationship demands for dealing with chairpersons and CEO's are more dramatic and much higher than at operational levels
- Third, they feel Indian firms might have a conflict of interest anyway, unless they can structurally separate their areas of their businesses
- Fourth, the management demands of having such diverse levels of people providing advice and service from the top down are too complex for current Indian management structures and skills
Professor Ravi Aron, operations specialist at the Wharton School, part of the University of Pennsylvania points to two trends that are taking place in the American marketplace. "I think the cultural barriers are enormous for Indian companies to get into the so-called "high-end category" consulting. I think that some of the Indian companies have underestimated the barriers."
Richard J Schroth, CEO, Executive Insights, takes up the point, "At the high-end strategy consulting level, for the Indians to move into the US marketplace in particular -- or to compete against established, world-class players like McKinsey, BCG and Bain -- there are very few that have been able to differentiate themselves strongly enough to sustain any kind of presence or significant long-term growth.
"There are also some significant cultural issues coming into the US market. The presence is dramatic, and it's very different to have senior level presence in the boardroom, at the chairman level, or at the chief executive level than it is to have strong relationships at the operations level. This gap is a formidable cultural and socialisation issue that needs a lot of study," according to Schroth.
