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Strategy Consulting, My Ass

By BankersBall on Jan 16, 2007 in Cube Life

Essay question of the day: in 30 words or less, explain why your job can’t ever be outsourced. I know I can’t.

Although I’ve heard of equity research, journalism and other jobs being outsourced, I hadn’t heard read anything about the high falutin world of strategy consulting falling victim to this trend, that is, until I read this Forbes article.

That’s right, you McKinseys, you Bainys and BCGers of the world — your turf is under attack.

Those Indian names (Infosys, Wipro, Tata) we’ve all heard of, but suppressed, are moving into higher value work. Reports Forbes:

“Indian firms, once purely providers of cheap call-center services and payroll processing, are moving up the value ladder. They offer product design, software design, chip engineering and the kind of corporate asset-deploying advice once the sole domain of Western firms like McKinsey & Co. and Booz Allen Hamilton.”

And it seems our American hatred of math and sciences is what’s doing us in; (that and oh! our higher wages.) Says David Coler, head of technology at a firm called LXR Luxury Resorts and client of Mphasis, “We are working with people with both business and engineering degrees. It’s an extremely rare combination to find, even in the U.S., but India seems to have plenty of it.”

The good news is that the Indian firms need prestige and talent to build a client base and are drawing from the US and UK workforce and educational system to fill that need.

Infosys plans to hire 300 people in the US and UK to fill out its strategy consulting practice, while Wipro is adding 125 consultants in the next year. Tata is planning on hiring 1,000 people from the U.S. (unclear if they will be based in the U.S., however), and is recruiting at places like MIT.

11 Comment(s)

On Jan 16, 2007, anonymous said:

Bainies*
On Jan 16, 2007, anony said:

i’m sure junior bankers can easily be shipped overseas as well. good number of investment management jobs too.

unless your job requires a ton of face-time, you’re not safe.
On Jan 17, 2007, brian jurvick said:

Don’t be silly.

The stuff you and Forbes cite — chip design, call center consolidation, etc — is hardly “strategy” consulting. Let me know when Indian firms start advising F500 C-level execs on M&A, market entry, and price strategy. This is the purvue of Mckinsey, BCG, Bain, and Booz Allen and will remain so for the foreseable future, for a couple reasons:

1. You actually need to be at the client site and have relationships for strategy work. Until the State Dept starts handing out visas like candy, this won’t happen for Indian firms.
2. Being good at math does not = strategic thinking, creativity, and industry expertise. This is acquired through prestigious MBAs like Harvard and Wharton, not exactly accessible to Indian firms.

Another note: Booz Allen will never feel threatened by Indian firms b/c they have something Indian firms will NEVER have — security clearances and therefore access to the $500B defense and intelligence community. I doubt anyone at Booz Allen is losing sleep over Infosys.

So leave the call center bullsh*t to Infosys. McKinsey and the others, filled with Ivy League MBAs and relationships with CEOS, will handle the true strategy work.
On Jan 17, 2007, anonymous said:

Look, the media is just trying to scare us - again. India is moving ahead, yes. At a fast pace, yes. But where would they be if it wasn’t for us? Where would they sell their “product design, software design, chip engineering” if it wasn’t for western corporations? Indians don’t need those things, they don’t buy computers like we do, they don’t buy the same products we do. Most need food, water and a roof above their heads first. Only a very small portion of the population is improving from India’s economic advance. Improve they will, but they will never pass us, because the west is the driving force of their enconomy.
On Jan 17, 2007, jerson said:

Yea I’m sorry to bust your bubble, but the grads coming out of India with undergrad degrees have creativity, math skills and frankly, are willing to work harder than American grads.

The State Department does hand out Visa’s like candy. As far as the defense work goes, the CIA and TSA have been using Indian firms for the better part of the decade.

You might not be outsourced, the grads from India will just come here and take your job, then be sent to Harvard by McKinsey and Booz.

As far as American purchasing driving this boom? So So So So wrong, and a little Eurocentric from your tone. Most Indians have enough food, water, etc. and are OK with mild inconveniences and the existence of outright poverty. At the same time, we in America have made the very existence of a minimum wage a guranteed right.

The very small section of the middle class population? 300 Mllion, the size of America.

Let’s not talk about the truly upper class in India, its puny. There are an estimated 200,000 workers in Mumbai making a hundred grand american a year. About 30,ooo families have net worth’s of 5 million USD and above.

Invest your money in India and stop thinking its a backwards society that will only take backend jobs. Creativity is nice and the top people in New York will keep their job. But you firsy year associates at bulges are overpaid and your jobs won’t exist in ten years.

Study some math, otherwise you are useless to Wall Street in the future.
On Jan 18, 2007, miami said:

Jurvick, you’re a stereotype of unthinking. To think you go to Wharton or Harvard to be one of 1200 sheeple to get ‘creativity’ and ’strategic thinking’ skills is galactically stupid. You’re so far inside the box you can’t even see it.

Jerson, the vast majority of Indians are living in poverty. And “American” “Eurocentric.” And you’re hilarious for thinking the Senior MDs who will keep their jobs in NYC will not want 1st-year associates from good ol’ Hahvahd or Stanford sitting right outside their door, but will prefer them in Mumbai 20 hours away instead.

10 years ago, 1st year Associates got $75-85k, now it’s triple that *with* the rise of Indian firms. Not the reverse.
Thinking math skills will save anyone but the coder geeks and Quant PhDs is similarly retarded. Year-in, year-out around 50% or more of Wall St profits are driven by sales, and I don’t see Biff and Muffy in Cos Cob buying their TBTA munis from Patel on another continent. Nor Joe Sixpack buying his Apple. Maybe you can sell research…how many inst’l firms ‘buy’ research these days, and what do they pay? Right, stick that back in your BCG box.

At least you’re more creative than Jurvick.
On Jan 18, 2007, jerson said:

What I’m saying is that the true cost of hiring first years is going to go down.

First overall sales volume will drop. I am sure of it. Cold calling is going to die and more and more people will index. (Let’s not pretend that this part of Wall Street is not unscrupulous)

The first years from Harvard and Stanford are ok in the short term. But they will become Indians who have come here (not first generation indian kids either). And the bulk of analyst work will be sent overseas.

Are you really telling me that a first year with no math skills has any right or ability to create a model and do proper forecasting. Come on, we’ve all seen what happens. A call comes in. Figures are revised.

Today’s analysts are so useless to anyone but pension funds that want to be told by people in New York that they aren’t losing their teacher’s money.

So yea, the old boys club will persist. But at some point, the new old boys will discover better and cheaper labor elsewhere.

Whether they decide not to use it as a way of keeping down an overprivelleged rebellion is one thing.

But the roles on Wall Street are going to change. To much money on the table for Corporate America to deal with.
On Jan 18, 2007, anon said:

the fortune article seems to describe tech contracting work rather than high-end consulting. (not say it’s a stretch to extrapolate one to the other.)
On Jan 23, 2007, in progress said:

Hate to burst your bubble, but top international consulting firms and PEs are already sending some of their work to China, not so much to Chinese firms, but to mixed companies that combine some experienced senior staff with cheap but smart local support staff. My firm already does a lot outsourced work from top tier firms in the West. It seems all an Ivy education teaches you is how to delegate work to others.

Do you really believe that a 3.2 gpa entry-level grad from Penn is worth more than 10 top grads from Fudan University? Or that companies haven’t thought of hiring just 1 Penn grad with a bunch of Chinese/Indian support?
On Feb 21, 2007, Boozer said:

As someone who works at Bain, this article is laughable. The projects they are describing (and yes M/B/B/B all proposed for it I’m sure) are not management consulting, but tech consulting. The firms which should be afraid are the large chop shops/accounting firms, i.e. deloitte, accenture, E&Y and others.

The beauty of management consulting isn’t the size but the margins. Simply put, the pie isn’t going to change and Indian firms are not going to be able to increase their piece b/c M/B/B/B are all going to maintain their position. Hiring a consultant is an ego-booster and CEOs/division heads want to be able to say they have a McKinsey engagement team camped at HQ at their beck and call. The tech consultants (deloitte, e&y) are going to get squeezed and M/B/B/B will shrink their tech practice to accomodate but the core, high-margin strategy work will stay with the traditional players. All that will happen is the strat consultants will stay in the US, and pull in the big salaries/bonuses while the tech work will go offshore, where the money and hours nowadays frankly suck.
On Mar 16, 2008, Shankar Saikia said:

Mckinsey, Booz, BCG are awesome and will not be replaced by Infosys, WIPRO etc. I agree that tech grunt work and research grunt work will continue to be shipped to India etc. Another trend I am noticing is increasing demand for strategy consulting in places like India. That is why I relocated to India and started Highlander Systems (http://highlandersys.com) - we offer financial and management advisory services to tech companies. We are a niche provider of strategy consulting.

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On Jan 16, 2007, anonymous said:

Bainies*

On Jan 16, 2007, anony said:

i’m sure junior bankers can easily be shipped overseas as well. good number of investment management jobs too.

unless your job requires a ton of face-time, you’re not safe.

On Jan 17, 2007, brian jurvick said:

Don’t be silly.

The stuff you and Forbes cite — chip design, call center consolidation, etc — is hardly “strategy” consulting. Let me know when Indian firms start advising F500 C-level execs on M&A, market entry, and price strategy. This is the purvue of Mckinsey, BCG, Bain, and Booz Allen and will remain so for the foreseable future, for a couple reasons:

1. You actually need to be at the client site and have relationships for strategy work. Until the State Dept starts handing out visas like candy, this won’t happen for Indian firms.
2. Being good at math does not = strategic thinking, creativity, and industry expertise. This is acquired through prestigious MBAs like Harvard and Wharton, not exactly accessible to Indian firms.

Another note: Booz Allen will never feel threatened by Indian firms b/c they have something Indian firms will NEVER have — security clearances and therefore access to the $500B defense and intelligence community. I doubt anyone at Booz Allen is losing sleep over Infosys.

So leave the call center bullsh*t to Infosys. McKinsey and the others, filled with Ivy League MBAs and relationships with CEOS, will handle the true strategy work.

On Jan 17, 2007, anonymous said:

Look, the media is just trying to scare us - again. India is moving ahead, yes. At a fast pace, yes. But where would they be if it wasn’t for us? Where would they sell their “product design, software design, chip engineering” if it wasn’t for western corporations? Indians don’t need those things, they don’t buy computers like we do, they don’t buy the same products we do. Most need food, water and a roof above their heads first. Only a very small portion of the population is improving from India’s economic advance. Improve they will, but they will never pass us, because the west is the driving force of their enconomy.

On Jan 17, 2007, jerson said:

Yea I’m sorry to bust your bubble, but the grads coming out of India with undergrad degrees have creativity, math skills and frankly, are willing to work harder than American grads.

The State Department does hand out Visa’s like candy. As far as the defense work goes, the CIA and TSA have been using Indian firms for the better part of the decade.

You might not be outsourced, the grads from India will just come here and take your job, then be sent to Harvard by McKinsey and Booz.

As far as American purchasing driving this boom? So So So So wrong, and a little Eurocentric from your tone. Most Indians have enough food, water, etc. and are OK with mild inconveniences and the existence of outright poverty. At the same time, we in America have made the very existence of a minimum wage a guranteed right.

The very small section of the middle class population? 300 Mllion, the size of America.

Let’s not talk about the truly upper class in India, its puny. There are an estimated 200,000 workers in Mumbai making a hundred grand american a year. About 30,ooo families have net worth’s of 5 million USD and above.

Invest your money in India and stop thinking its a backwards society that will only take backend jobs. Creativity is nice and the top people in New York will keep their job. But you firsy year associates at bulges are overpaid and your jobs won’t exist in ten years.

Study some math, otherwise you are useless to Wall Street in the future.

On Jan 18, 2007, miami said:

Jurvick, you’re a stereotype of unthinking. To think you go to Wharton or Harvard to be one of 1200 sheeple to get ‘creativity’ and ’strategic thinking’ skills is galactically stupid. You’re so far inside the box you can’t even see it.

Jerson, the vast majority of Indians are living in poverty. And “American” “Eurocentric.” And you’re hilarious for thinking the Senior MDs who will keep their jobs in NYC will not want 1st-year associates from good ol’ Hahvahd or Stanford sitting right outside their door, but will prefer them in Mumbai 20 hours away instead.

10 years ago, 1st year Associates got $75-85k, now it’s triple that *with* the rise of Indian firms. Not the reverse.
Thinking math skills will save anyone but the coder geeks and Quant PhDs is similarly retarded. Year-in, year-out around 50% or more of Wall St profits are driven by sales, and I don’t see Biff and Muffy in Cos Cob buying their TBTA munis from Patel on another continent. Nor Joe Sixpack buying his Apple. Maybe you can sell research…how many inst’l firms ‘buy’ research these days, and what do they pay? Right, stick that back in your BCG box.

At least you’re more creative than Jurvick.

On Jan 18, 2007, jerson said:

What I’m saying is that the true cost of hiring first years is going to go down.

First overall sales volume will drop. I am sure of it. Cold calling is going to die and more and more people will index. (Let’s not pretend that this part of Wall Street is not unscrupulous)

The first years from Harvard and Stanford are ok in the short term. But they will become Indians who have come here (not first generation indian kids either). And the bulk of analyst work will be sent overseas.

Are you really telling me that a first year with no math skills has any right or ability to create a model and do proper forecasting. Come on, we’ve all seen what happens. A call comes in. Figures are revised.

Today’s analysts are so useless to anyone but pension funds that want to be told by people in New York that they aren’t losing their teacher’s money.

So yea, the old boys club will persist. But at some point, the new old boys will discover better and cheaper labor elsewhere.

Whether they decide not to use it as a way of keeping down an overprivelleged rebellion is one thing.

But the roles on Wall Street are going to change. To much money on the table for Corporate America to deal with.

On Jan 18, 2007, anon said:

the fortune article seems to describe tech contracting work rather than high-end consulting. (not say it’s a stretch to extrapolate one to the other.)

On Jan 23, 2007, in progress said:

Hate to burst your bubble, but top international consulting firms and PEs are already sending some of their work to China, not so much to Chinese firms, but to mixed companies that combine some experienced senior staff with cheap but smart local support staff. My firm already does a lot outsourced work from top tier firms in the West. It seems all an Ivy education teaches you is how to delegate work to others.

Do you really believe that a 3.2 gpa entry-level grad from Penn is worth more than 10 top grads from Fudan University? Or that companies haven’t thought of hiring just 1 Penn grad with a bunch of Chinese/Indian support?

On Feb 21, 2007, Boozer said:

As someone who works at Bain, this article is laughable. The projects they are describing (and yes M/B/B/B all proposed for it I’m sure) are not management consulting, but tech consulting. The firms which should be afraid are the large chop shops/accounting firms, i.e. deloitte, accenture, E&Y and others.

The beauty of management consulting isn’t the size but the margins. Simply put, the pie isn’t going to change and Indian firms are not going to be able to increase their piece b/c M/B/B/B are all going to maintain their position. Hiring a consultant is an ego-booster and CEOs/division heads want to be able to say they have a McKinsey engagement team camped at HQ at their beck and call. The tech consultants (deloitte, e&y) are going to get squeezed and M/B/B/B will shrink their tech practice to accomodate but the core, high-margin strategy work will stay with the traditional players. All that will happen is the strat consultants will stay in the US, and pull in the big salaries/bonuses while the tech work will go offshore, where the money and hours nowadays frankly suck.

On Mar 16, 2008, Shankar Saikia said:

Mckinsey, Booz, BCG are awesome and will not be replaced by Infosys, WIPRO etc. I agree that tech grunt work and research grunt work will continue to be shipped to India etc. Another trend I am noticing is increasing demand for strategy consulting in places like India. That is why I relocated to India and started Highlander Systems (http://highlandersys.com) - we offer financial and management advisory services to tech companies. We are a niche provider of strategy consulting.