| Topic Name: |
Bain, India |
| Message Name: |
Sorry wrong. |
| Date Posted: |
02/17/2006 |
| In Reply To: |
I should correct myself... I think Bain set-up the Beijing office in 1993, which was the first strategy consulting presence in China. But Beijing was a small presence and remains so even today. The firm didn't invest much in China until 2004 when Shanghai opened and subsequently grew like a weed. Thus, the Partners seem to consider themselves to have played a follow-the-lead strategy in China.
The problem is that there still are very few firms in India and in China that are willing to pay M/B/B fees. In China, for example, 80% of the consulting business is still multi-nationals, not local companies, and certainly not many of the SOEs who still make-up the bulk of the Chinese economy. Strategy consulting is a high-end professional service with a market size of perhaps $12B worldwide. And running an office--with all its fixed costs--requires a critical mass of ongoing business to justify the local presence. That critical mass is acheived when enough business leaders need to know how consultants add value, how to structure an engagement with them, what to expect, and how to extract the value from the consultants' projects. That takes time to develop and can result in many strained and difficult engagements. Why not let the competitors go in, spend time & money training the market, and then make your investment when the market is of substantial enough size that you can get critical mass by stealing share?
First-mover is not much of an advantage in high-end consulting because the fixed costs of running offices are very high. If first-mover mattered so much, you'd see McKinsey with an office in Timbuktu. |
| Message: |
Bain completely missed the boat in India and will have there work cut out for them to get a share of this rapidly growing market. The issue with Bain is its absolute refusal to pay differential salaries depending on geographic location (Dallas salaries are the same as New York), which leads them to demand global pricing from their clients who are loathe to pay global fees. If they paid their local staff at local levels this issue would be minimized. I believe Bain has started to pay differential salaries in China for a few positions, but I am not sure how successful that has been.
If you do not think first-mover status isn't a big deal in consulting you have a lot to learn. Consulting, esp. Strat. Consulting is about relationships that are formed over years and cannot be easily replicated. That is why it is going to be while before Bain reaches the same scale as Mck in India / China.
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