Business of Government Consulting

Updated: Jan 22 2003, 05:30am hrs
The business press in the recent past has been writing about issues pertaining to the viability of management consulting. While consulting assignments from corporates are harder to come by, there is a growing demand from government agencies for management consulting. Multilateral and bilateral funding agencies-sponsored consulting has been the icing on the cake.

Wherever government departments or agencies are obtaining funding from such funding institutions, there is usually a pre-condition that an institutional or organisational reform exercise be undertaken. It is expected that consultants with international exposure or access to international best practices facilitate these exercises. The emergence of government as an important client is changing the horizon of consulting in India.

Most management consulting assignments which originate from the government deal with policy and institutional reform along with capacity building. With the increasing shift toward private participation in provision of public goods, there is a growing demand for advice on financial structuring and related aspects. Every state government is seeking such help in some area or other, as is the central government. Hence demand is growing every day.

However, the main concern is regarding the preparedness of consulting firms in meeting this demand qualitatively and quantitatively. Most consultants have honed their skills around issues and concerns relevant to corporations in a competitive environment and understand management practice in such contexts. The demand from the government has been somewhat sudden and large, giving very little time for prior learning for the consultants and their firms. As a result it appears that much of the learning is happening on the job for most consultants. This can prove to be risky for the client system, particularly in the context of the complex task of policy and institutional reform.

To offset this, some consulting firms have been hiring retired government officials for domain knowledge. The experience with such expertise has been very mixed many of these officials have a limited perspective of the functioning of government and are unable to contribute at the required conceptual levels. Also, such expertise in many cases acts as a constraint to the much-needed out-of-the-box thinking that should go into the assignment. In many cases, consultants have transplanted models of institutional arrangements from international settings without any concern for the contextual contingencies. It is only to be expected that such reports be confined to the dustbin.

The problems are not only at the consultants end. Procurement practices followed by governments also contribute to the problems. Like any other government purchase, advice procurement also follows in some manner or the other the lowest financial bidder approach, with quality being given some weight. But in most cases it is the lowest bidder who wins. As a consequence, the business of consulting to the government is a race-to-the-bottom with all its attendant ills. In addition, there are usually many gaps in the statement of the scope of work and in the capability of the client to select the appropriate consultant. It is also not unusual to come across government clients who insist that none of the suggested changes should upset the existing situation; a situation which requires the consultant to achieve the somewhat impossible task of bringing about change while maintaining status quo. The client, as a result of such inadequacies, does not benefit from the consultants effort.

As the business of consulting to the government is large in size and significant in impact, both consultants and the client system have to work on some of the obvious loose ends. Consulting firms have to find ways of upgrading their competencies on policy analysis and institutional development while acquiring knowledge about the ways government can and should function within the legal framework. On the other hand, it is essential for government agencies to learn to hire consulting firms with clear mandates, adopt flexible hiring methods, and more importantly, benefit from consulting advice. Benefiting from advice is not a common capability.

The author is a management consultant based in Mumbai