Press Coverage

Ajay Garg, 32, is a former DSP Merrill investment banker, who quit his job along with two other colleagues to start his own consulting outfit. His MAPE Advisory focuses on the mid-market segment and has a client list that boasts of names like Dr Reddy’s, ING Vysya and Larsen & Toubro.

The boutique investment bank has completed 15 deals over the last two years, with the latest being the acquisition of Stewarts & Lloyds of India, a subsidiary of Tata Steel, by Indian Oil Tanking, a joint venture between Indian Oil Corporation and Oil Tanking Gmbh. “If you see a opportunity and can’t grab it, you’re not a investment banker,” says Garg.

Atul Khosla, 32, is a man readying himself for major action. The ex-McKinsey consultant operates from the plush Trident Hotel in Gurgaon, heading the Indian arm of American outsourcing boutique firm Everest Group, which helps clients find the right outsourcing partners.

Khosla spends most of his time shuttling between the US and India, for his seven-man team has four associates in India and three in the US, all from leading consultancies, investment banks and outsourcing suppliers, and he’s on a lookout for more.

“We see offshore leading to a discontinuity in the outsourcing space, and aspire to build a leading presence in that space in India. The country is strategically critical for all stakeholders in the outsourcing space,” he says. Abhijeet Virmani and Anurag Mehra are two ex-Andersen, ex-KPMG consultants, each with six years of consulting experience. Both quit their jobs three months ago to start their own consulting outfit, Positron.

The two partners set off building a boutique consultancy with a difference — low cost, totally hands on and shorn of the hierarchy that is the hallmark of the big ones. And they already have eight clients, including National Geographic. “What we sell is what we deliver,” says Virmani. Virmani, Garg and Khosla represent a growing breed of boutiques that are carving a niche for themselves in fields hitherto dominated by biggies.

They operate in a range of sectors including investment banking (MAPE Advisory, Avendus Advisors, Edelweiss Capital), Management Advisory (Universal Consulting, Positron), recruitment services (Spenta, Talent Trackers, Footprints), outsourcing consultancies (Everest group, neoIT), advertising (V Sunil’s A and Freddie Birdie’s Shop), Design boutiques (DC Design, Incubis, Elephant Designs), and even broking (Quantum Securities, Parag Parekh Financial Services) among scores of others. The big question is, why has there been a rise in boutiques? For one, small and medium business segments have never been given adequate attention by the biggies.

The McKinseys , Merrills and JWTs have always preferred to work with the Tatas, HLLs and Birlas of the world.

And there were few good boutiques with credible backgrounds to look after the needs of smaller companies. “The small and medium segment is underserviced and that’s a huge opportunity waiting to be tapped,” says Garg.

Secondly, there was earlier an absence of low-cost alternatives in the areas where boutiques have sprung up. In consulting and investment banking, the services of established players are very expensive.

And in these industries, there was also a sense of frustration creeping in with the style of big firms. In consulting, for example, principals often came for the pitch and then handed over the project to juniors.

The clients felt cheated, but didn’t have a choice. “The big firms oversell and under-deliver. What is sold and what is delivered are different,” says Virmani.

Thirdly, new trends and opportunities like outsourcing and ESOPs are creating new spaces, where specialist knowledge is required. So boutiques like Everest in outsourcing or TSJ media in VC industry information or ESOP Direct, which helps companies draw stock option plans for employees, have a ripe opportunity.

There were very few experts in their areas, so setting up boutiques was a great option for the knowledgeable few.

And in areas like advertising and broking, which are maturing with time, a natural corollary was segmentation of the market, which has created space for design boutiques and creative hot shops.

“Specialised and niche players are positioned to support clients for three key reasons — very deep domain knowledge, extensive deal making experience, and quality and blend of consultants,” says Khosla.

All this has created the right environment for boutiques with specialist domain skills, a personal relationship driven-approach and focus on results. “My business is driven by word-of-mouth, I have to deliver to survive,” says Sanjay Dutt, MD, Quantum Securities, a Delhi-based boutique investment firm.

And the impressive names they flaunt shows that clients find value in boutiques. The flexibility of a small set-up also allows a firm to work on a variety of assignments. Mumbai-based Universal Consulting, for example, works with biggies like Sterlite Industries and Standard Chartered, and also with dealerships of Mercedes and Honda, and even with filmstar Sunny Deol when he wanted to organise his company.

For clients, there’s a big attraction in the realistic fees, the hands-on approach and the close personal rapport a boutique advisory offers.

Says Dilsahad Master, senior vice-president, National Geographic Channel (NGC) & History Channel: “Our team and portfolio are both growing and we’re now looking to streamline our systems and processes.

Positron not only offered a lower cost option, but also brought in a refreshingly different hands-on consulting approach. They involve themselves in every aspect of the business to understand our requirements better and take ownership of results, something big consulting firms shy away from.”

Boutiques have mastered the low-cost model, and this often holds the key to their success. Both the partners in Positron, Virmani and Mehra, work with the clients directly and they have no juniors and no expensive overheads to take care of.

MAPE works with a lean 15-member team, with the three partners looking after the three branches in Mumbai, Bangalore and Chennai. Delhi-based Quantum Securities has totally incentivised the wages of the staff, so a peon earns Rs 2,000 in a bad month, and his wage goes up to Rs 12,000 when the times are good.

“It gives a sense of ownership to the employee, he feels for the firm,” says Dutt of Quantum.

Wherever the boutiques require scale, they strike alliances with like-minded firms. Positron has struck alliances with a market research agency and an IT company for making small software products to increase the effectiveness of a client.

Universal Consulting has struck alliances with other boutique firms in Italy, Malaysia, Netherlands, UK and Spain. “We are looking at working with companies who need entry strategies for India, and Indian companies who require entry strategies for these geographies,” says Jay Desai, MD, Universal Consulting, an ex-Accenture consultant. Much of the success of these boutiques can be attributed to entrepreneurs who are behind them. They’re extremely well educated, well networked executives with credible track records, who have worked with the best of firms.

The business of boutiques is very individual driven, wherein a lot depends on the flair of the individuals running the show. “In the last 10 years, the emergence of the ‘professional owner-manager’ has given impetus to this phenomena,” says Dutt.

Boutiques also tend to be very personality-driven, so a man known to be bringing fresh new ideas has a fair chance to compete for business. “It’s the ideas that drive the deals. If the idea is good the clients lets you take a shot at it, even if you are small,” says Garg.

Dutt of Quantum Securities cites similar reasons. “I don’t have to come up with the 95th report on Infosys, but I have to tell my clients about the next Infosys,” he says. So Dutt focuses on bringing to the fore mid-cap and small-cap companies, which have potential, but are small enough to pass under the radar of biggies.

As Davids, the boutiques stay from picking fights with industry Goliaths. “We don’t compete against the big three, we have to cohabit,” says Garg, referring to the reigning trio of DSP Merrill Lynch, Morgan Stanley and Kotak in investment banking.

Some have identified their niche, and stick to that sphere of operation. “We understand what mid-size clients want.

We do a lot of implementation work and that’s key for our clientele,” says Universal Consulting’s Desai, adding, “Evolutionary biology reminds us that size and abundance are inversely proportional, across species... and organisations.”