 "Richard Rekhy")
Customer relationship management, data analytics and social media are completely changing how the consulting world moves, Rekhy tells Devina Joshi
How has the advisory/consulting business changed in the post-Lehman business environment?
Post-Lehman, the advisory business came under a lot of scrutiny. People wanted to move away from pure consulting advice; they started telling you, don't just advise us, tell us how it is done and bring in actual savings. Second, a big emphasis came on risk consulting. At KPMG, risk management is at the core of our consulting, whether one talks of forensic, internal audit or corporate governance. This is one area that I believe we can own.
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We have an offering called enterprise risk management. This was not doing too well in India. It was considered a structured, 'European' thing and was difficult to sell here. Clients thought: we understand our business and the risks involved, so do we really need it? Post-Lehman, this suddenly gained credence. A lot of independent audit companies, which also came under the scanner post-Lehman, started asking for it because they wanted to do their jobs differently.
What do you say to MNCs that are looking to invest in India?
MNCs see India as a story that is going make a comeback. The fundamentals have gone nowhere, but yes, the sentiment has gone very low. If you see the industries that are not doing well, note that they are mainly the capital-intensive industries. But if you look at FMCGs or pharmaceuticals, they are booming. Having said that, the negative sentiment, particularly with reference to private sector investments, has led a lot of people to question, should they wait or invest? With the elections too around the corner, it is a wait and watch game. If you ask me, India is on a 'pause' mode. It will come back but not very soon. Investments have been falling for the last two years and for India's growth to get back on track, we will need another two years. My advise to MNCs: India is the cheapest today; if you want to do an acquisition now, you won't get it cheaper. This is the right time to enter India.
What is your advice to Indian companies looking for growth, both from India and overseas?
Europe is down as a market, and a lot of companies are in a very bad shape there. Those are available for acquisition. Today, you may not have access to that market. But those companies are already established there and also have cutting-edge technology. We are advising our Indian clients to go for European companies that give them much-needed technology along with the opportunity to tap a new market. Possibly, they could bring that technology to India.
I would advise: look at markets like Africa and the West Asia for expansion, but for acquisition, look to Europe and the US.
How does the new Companies Act change the game?
It is a forward-looking legislation with some ups and downs. A lot of clarity needs to be brought into the rules. Things like the new legislation around auditor rotation have not kicked in as yet. It is a broad outline. It will be a paradigm shift for corporate India, which will have to restructure itself.
Some of the legislations like those that talk of imprisonment are very draconian. The reporting schedule has become more stringent. It is good from a governance point of view but sometimes you think, is it just too much? One could have tapered it across the spectrum of four to five years, so people could have settled down with the changes. Please appreciate that these companies need to survive in the current environment. Like I keep saying, corporate governance cannot be better than the governance of civil society. First, those societal standards need to change, else there will be a dichotomy.
Having said that, the Act makes India look good. When foreigners come to India, there is a discounting factor that comes in because of our accounting records, or the way our legislation is on our valuations. That will get evened out. We will then be on a par with global standards.
Experts are saying things will look up from the third quarter of this year. How should consulting companies prepare for a rebound in demand?
The consulting business is doing very well at the moment. New services have come to the fore, which we were not doing earlier, like data analytics or operational efficiency. The new legislations are helping our tax practice grow. Indian companies have become very large now, so there are large transformational projects that we are talking about. When things slow down, companies get time to breathe and evaluate what to do. So consultancies thrive in such times. With companies from India expanding into new markets (for instance, in Africa), we are sending our employees in those markets because demand for their skills are high there. It is also more cost-effective than getting talent from Western markets. We have also ventured into this area of managed services.
What is the biggest tech trend facing businesses: is it the rise of mobile? BYOD? Integrating cloud computing into corporate IT and the changing role of CIOs as a result of all this?
The CIO's role has changed so much that he doesn't even know it has changed. The technology has moved very fast. For instance, employees can now file their time sheets or expense reports remotely on their mobile devices, and they need not be physically present in office to do so.
Second, digital advisory is taking off. Customer relationship management, data analytics and social media are completely changing how the consulting world moves. There will be a convergence between financial services, media consumption and telecom on your mobile device. Banking reaches 30 per cent of India, whereas telecom reaches 75 per cent. Imagine the boom when the two converge.
One would think courier companies would go out of fashion but with e-commerce and shipments, their whole business has changed. The government is also trying to privatise operations. There is e-governance and e-procurement at play now. All this is good for consulting. Businesses are changing and consultancies need to spot the trends.
BEEN THERE, DONE THAT
- Rekhy has more than 28 years of experience servicing clients across sectors such as advertising, oil and gas, industrial and consumer markets, specifically in the pharmaceuticals, technology, manufacturing and retail domains
- He is regarded as a front line thinker in the areas of corporate governance, enterprise risk management, internal audit and business processes re-engineering
- He is a member of the EMA and Global Board for KPMG International
- Before joining KPMG, Rekhy held leadership positions at EY, Arthur Andersen and Ratan S Mama & Co
