The global consulting business, worth $250-300 billion, is dominated by the Big 4 audit firms plus McKinsey, BCG and Bain. Let’s call them the Big 7. While the balance sheets of these firms are opaque, estimates suggest that their revenue from consulting (excluding audit) in India alone is to the tune of $5-6 billion and is growing rapidly. Even though a lot of public attention is focused on the audit business, the consulting business is a factor of magnitude larger.
Interestingly, this is an industry where Indians thrive worldwide, including in the Big 7. Yet, there are no large Indian consultancies that can rival the Big 7. Here, we explore the factors that constrain the emergence of large Indian consultancies to compete globally. Quite apart from the economic case, this is also a national security issue. If all expertise is outsourced, the dependence can be weaponised. In 2023, for instance, it was reported that a Big 7 firm leaked confidential Australian government information to US companies, leading to multiple investigations.
The current framework in India has three constraints that perpetuate the dominance of the Big 7. The first set of challenges relate to government contracts that account for 40 percent of the market. We found that restrictive clauses prevent domestic firms from meeting the eligibility criteria. Excessive balance-sheet thresholds, for example, prevent domestic firms from even competing. Consider a January 2025 request for proposal worth ₹1.3 crore from the industries and mines department of a state government to hire management consultants. Its pre-qualification criteria required a consulting revenue of ₹21-50 crore over the last three years, between 200-300 consultants on the payroll, plus experience of having done at least five government projects worth over ₹5 crore (almost four times the project value). Such conditions make it very difficult for most Indian firms to qualify.
Another major issue is that the technical track record is evaluated at the firm level, and not the individual level. This benefits the incumbent Big 7 and not the individuals who worked on the projects. If the same people move to an Indian firm or start a firm of their own, their past credentials are not counted in evaluating technical expertise in bids for government contracts.
The government was aware of similar issues in the audit business. The prime minister exhorted Indian chartered accountants to build their own Big 4 firms in his July 2017 address to the Institute of Chartered Accountants of India (ICAI). Then, in April 2021, the RBI issued a circular to diversify the auditing of financial institutions. This has led to significantly higher participation by Indian firms. However, similar efforts by the government to support domestic firms in consulting have had limited success. In 2017, the central government issued a Public Procurement (Preference to Make in India) Order, giving preference to local service providers. However, the definition of ‘local content’ in the order is so loose that the Big 7 qualify simply because they hire Indian staff or have Indian proxy firms.
The second structural constraint that holds back Indian consultancies is the lack of an enabling framework for multi-disciplinary partnerships (MDPs) that can match the full-service capabilities of foreign firms. The big obstacle to MDPs comes from professional regulatory bodies such as the ICAI, the Bar Council of India and the Institute of Actuaries, which either prohibit clubbing of Indian expertise or impose prohibitory restrictions that defeat the purpose.
For instance, the ICAI technically allowed MDPs in July 2021 under Regulation 53B of the Chartered Accountants Regulations, 1988. But the conditions are so stringent that virtually no MDP has emerged. Only six notified professions are allowed to become partners in an MDP, but it specifically excludes professionals such as MBAs, insolvency practitioners, IT and cybersecurity experts. Moreover, those not registered as chartered accountants are treated as second-class citizens by insisting that the firm names should end with ‘MDP of Chartered Accountants’.
Similarly, Rule 2 of Chapter III, Part VI of the Bar Council of India Rules, 1975 mandates that “an advocate shall not enter into a partnership of any other arrangement for sharing remuneration with any person or legal practitioner who is not an advocate”.
Even the Institute of Actuaries of India prohibits a practicing actuary from partnering with other professions and punishes it as professional misconduct under Part I of the Schedule to the Actuaries Act, 2006.
The net result of this protectionism is that Indian firms end up carrying knives to a gunfight. The Big 7 have already built MDPs and multi-disciplinary track records outside India. Within India, they circumvent these restrictions through proxies that are well known in the market.
The third structural constraint is the archaic restriction on brand-building in professional services that prevents the development of Indian consulting brands. Indian laws governing various professionals (such as Advocates Act, 1961 and Chartered Accountants Act, 1949) have strict prohibitions on advertising or soliciting clients. This skews the playing field towards Big 7 because they already have established globally-recognised brands. For example, a successful audit firm in India today cannot open a consulting firm with the same name to leverage its brand. Ironically, two large foreign audit firms don’t even need proxies because they registered their names during colonial times and were grandfathered when Indian regulations on naming where introduced.
There are good reasons to set reasonable limits on advertising by professional firms since we don’t want a culture of aggressive solicitation, negative advertising and ambulance-chasing that plagues several Western countries. However, restricting chartered accountancy firms ends up perpetuating the brand dominance of the Big 7. We now need to recognise that brand-building is distinct from advertising and solicitation.
Even as India becomes the ‘office to the world’ and home to global capability centres for almost every major multinational, it is astonishing that we cannot create globally competitive consulting firms. As discussed above, this is largely due to self-imposed constraints such as restrictive public tendering clauses and outdated rules of professional bodies. It is time the nation removed those fetters so that Indians can build their own global consulting firms to rival the Big 7 at home and abroad.
(Views are personal)
Sanjeev Sanyal
Member of the Economic Advisory Council to the Prime Minister
Apurv Kumar Mishra
Consultant to EAC-PM