Boutique Consulting Firms Offer More Incentives to Retain Talent
Cos like Mazars, BDO & KNAV offer more equity, hefty pay packages to partners
Mumbai: Boutique consulting firms are now busy doing what they routinely advise Corporate India to do: Designing tangible career-growth opportunities and bulge-bracket pay packages for their crucial talent who may find competing Big4 offers too tempting to resist.
The hunt for talent for partners and directors has led firms such as Paris-based Mazars to be conspicuously generous in India: The firm, which is seeking to increase its number of partners to 70 from 27, is offering equity of the global parent to some of the incoming partners. The standard practice restricts such ownership only to India entities.
“The way our structure is currently, some of our partners have equity not just in the India firm but are also partners in our global firm,” said Bharat Dhawan, Partner of Mazars India.
Mazars’ generous equity-ownership offers follow December’s unprecedented expansion by BDO, a Belgium-headquartered professional services firm that lured away about 400 executives, including 40 partners, from its competitors in the past one month. Apart from the traditional Big 4 — PwC, EY, Deloitte, and KPMG — none of the other firms have seen partner-level recruitments on BDO’s scale.
The Big4, as in most regulated global markets, dominate India’s professional services business with about 1,200 partners and more than 100,000 professionals at various steps of the career ladder. With increasing changes in the regulatory landscape and stricter corporate governance, the demand for audit and oversight professionals is increasing in the world’s fastest-expanding major economy, where the Big 4 are regular talentshoppers at marquee B-schools and finance programmes. Hence, boutique firms are taking to innovative structuring of compensation and career tracks to retain their best talent and expand the base.
“If one has to attract and retain best talent, then firms have to go the extra mile, including opening their doors for equity ownership and similar talent attraction incentives. Money is not the only motivation now, as professionals want innovative challenges and want to Managing partner, Nangia and Co be part of something different,” said Rakesh Nangia, managing partner of Nangia and Co — a New Delhi-based Indian full-service firm. Among the incentives these firms now consider are higher equity, profit sharing from either the global or domestic pools, meatier roles, swankier offices and creative designations. And the innovations are not restricted to transnational audit and advisory firms.
KNAV, a firm founded by four Indians, is not only offering some partners equity, but also is creating a structure that ensures parity between the founders and latter partners.
“No one, including the founders, can continue to hold equity forever. Our mandatory retirement age is 65, unless all other partners vote to have a partner continue after retirement,” said Nishta Sharma, managing partner of KNAV. This would mean that only talent and capability to generate revenue would become paramount in the firm.
In the next two years, recruitment programmes may become even more aggressive, as Corporate India seeks to comply with the biggest change in indirect taxation since Independence. Regulatory changes such as audit rotation and new accounting standards on the auditing side and taxation laws such as GST and GAAR on the taxation front are creating demand for professionals.
On India’s revenue leader-board for professional services, the Big 4 make up the top four positions, followed by Grant Thornton, according to most industry experts. The ranking thereafter is unclear, with every major player claiming to be among the top 10.
The Big 4 alone have total revenue of around ₹ 10,000 crore a year from their India operations. While there is no clarity around the revenues generated by other well-known firms in India, it could be as low as 50% of the revenues generated by the Big 4. “The regulatory changes in some way provide opportunity for some firms with strong knowledge base to directly compete with the Big 4. If they play their cards well, some of the smaller firms may see a huge jump in their top line in the next year or two,” a senior partner with a Big 4 firm told ET.
If one has to attract and retain best talent, then firms have to go the extra mile, including opening their doors for equity ownership and similar talent attraction incentives RAKESH NANGIA