At a time when global consulting majors like McKinsey are paring their headcount over demand concerns and over-hiring in the wake of the Covid-19 pandemic, consulting firm Alvarez & Marsal (A&M) is looking to place big bets on India with plans to treble the size of its senior team in the country threefold in the next two to three years, senior executives of the firm told Moneycontrol in an interaction.
“Initially focused on the US, we have expanded our footprint in Europe over the last 20 years, and we've built a solid foundation in Asia. Now, we're looking to accelerate this journey,” said Himanshu Bajaj, managing director and co-country leader, A&M.
“We've added around 15 managing directors in Southeast Asia and Australia in the last 1 year, making it to a total count of now 60-plus MDs in that region. Our plan is to expand in India, aiming to grow our senior team to 3x its current size in the next two years and to grow the business to 4 to 5x its current size in the next five years,” he added.
Currently, A&M’s senior team in India comprises 20 MDs.
Bajaj added that as part of the growth plans for India, the consulting firm is also building A&M’s global capability centre (GCC) in India. “Though we started a bit late, around 10 months ago, it gives us the opportunity to scale rapidly by leveraging learnings from our global network,” said Bajaj.
Outlining the reasons behind A&M’s plans to push for growth in India in the current scenario in the consulting business, Vikram Utamsingh, MD and co-country leader, said that the firm has always pursued a strategy of seizing opportunities when others hesitate, adding that A&M believes it is the perfect time to invest in India.
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“A&M thrives in challenging times. It's when we attract top talent from other firms. At a time when most consulting firms in India have stagnated or declined, we're reaching out to high performers, offering them a chance to be part of a fast-growing organisation. We aim for 40 percent growth annually in India and 20 percent globally over the next five years,” said Utamsingh.
From stress management to performance improvement
The consulting firm, renowned for having worked on bankruptcy and restructuring cases like Lehman Brothers in the US and Essar Steel and IL&FS in India, has developed a reputation for being a turnaround specialist.
However, its Indian leadership stressed that this is only a small part of its revenues and that future growth in India will be driven by other services.
“It's essential to recognise that turnaround, restructuring and stress management constitute about 20 percent of our revenues as of today, they aren't the primary focus of our business. The cornerstone of our operations lies in corporate performance improvement, which constitutes the majority of our work. Whether it's partnering with private equity-owned companies or corporates, our approach centres on driving tangible improvements in operational efficiency. We leverage our expertise in restructuring to swiftly diagnose issues, implement solutions and deliver measurable results,” said Utamsingh.
Corporate performance improvement now comprises over 50 percent of A&M’s business in India and is seeing rapid growth.
“Our client engagements include various initiatives such as strategy, M&A transactions and operational efficiency. Our target market includes mid-sized firms and large conglomerates such as the Tata Group, Aditya Birla Group and Vedanta Group, among others,” said Utamsingh.
Private equity focus
Private equity, in particular, is a big focus area for A&M, as it looks to grow its business in India.
“We specialise in working with stressed/distressed companies, leveraging our objective expertise to drive operational improvements and enhance cash flow, benefiting all stakeholders involved. This same ethos extends seamlessly into our partnerships with the private equity sector,” said Nikhil Shah, MD (lead, financial advisory and special situations) at A&M.
“Recognising their emphasis on value generation within a short investment horizon, typically three to five years, we have tailored our strategies to meet their needs. We offer comprehensive pre-acquisition services, covering financial, tax, commercial, operational and ESG (environmental, social, and governance) aspects, among others,” said Shah, adding that post-investment, A&M works with PE funds to execute planned value creation initiatives over the initial 12 to 18 months, focusing on revenue enhancement, working capital optimisation and efficiency improvements across the supply chain and operations.
Sector expertise
A&M is looking to beef up its capabilities in sectors such as healthcare and lifesciences, consumer, and financial services, where it currently has a strong presence, while also adding capabilities in emerging opportunities such as energy transition and green hydrogen.
“Our focus is on scaling up across these sectors. We aim to expand our financial services division substantially, enhance our healthcare and lifesciences practice, broaden our consumer portfolio and further strengthen our presence in energy and resources. Additionally, we recognise the potential for growth in infrastructure, particularly in areas such as airports and airlines, where our expertise in restructuring has proven invaluable. With the addition of new resources, we're actively engaging in mobility and emerging sectors,” said Bajaj.
On the growing interest in green hydrogen in India, Bajaj commented that despite significant interest, a key consideration remains the timing of widespread adoption.
“The pivotal question revolves around the timeline for substantial scalability, whether it's a near-term prospect or a longer-term trajectory spanning four to five years. This timing discourse underscores the importance of anticipating when end users will embrace hydrogen solutions and the respective roles of stakeholders in facilitating this transition,” said Bajaj.
India GCC
While many global firms have established large so-called global capability centres in India to leverage the massive technology talent in the country, A&M has done so only very recently. To be sure, while it has started late, the consulting firm has aggressive growth plans for its India GCC.
“The rationale behind our expansion is straightforward. Not only does it offer a compelling cost advantage, bolstering the firm's overall profitability, but it also provides access to India's rich talent pool, facilitating global growth. Moreover, by establishing centres of excellence in key areas like digitalisation and procurement, we're tapping into the expertise readily available in the Indian market,” said Bajaj.
“Looking ahead, our ambition is to further scale our team to 1,500 individuals over the next four to five years, with room for even greater expansion. Each passing quarter presents an opportunity to reassess our plans and consider further acceleration,” he added.
Artificial intelligence and impact on consulting
Recent strides in artificial intelligence capabilities led by platforms such as ChatGPT have raised questions on the impact of such technologies on knowledge industries such as consulting.
A&M believes that AI will complement its capabilities rather than replacing its fundamental business model.
“Amidst these technological advancements, we recognise that our core business remains rooted in change management. Whether navigating distressed situations or fostering growth in healthy organisations, effective change management ultimately revolves around understanding and engaging with human behaviour,” said Shah.
“While technology can facilitate our processes, the intrinsic nature of human behaviour necessitates personalised approaches and ongoing support to drive meaningful change. As such, while we view technology as an invaluable tool to enhance our capabilities and deliver greater value to clients, we understand that it complements rather than replaces our fundamental business model,” he added.
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