Opinion Work of consultancy firms with government must be regulated

Carefully calibrated onboarding of expertise from the private sector would add to the quality and effectiveness of public service delivery, provided they are ring-fenced within a transparent regulatory framework

Given the traditionally conservative methods of recruiting government officials, the range of capabilities available internally is relatively narrow, and the deployment of consultants for specific tasks may be optimal for these challenges.

Elias George

December 14, 2023 09:41 AM IST First published on: Dec 14, 2023 at 07:10 AM IST

Walk through the corridors of any ministry in the Union government or state secretariats and chances are that one will encounter smart-suited young consultants haunting the premises with their standard-issue laptops, busily assisting officials in crafting policies and implementing programmes. Most marquee government projects are usually executed these days on a bedrock of consulting support, be it cleaning the river Ganga, the Swachh Bharat and Jal Jeevan Missions, corporatising the Ordnance Factory Board or assisting Uttar Pradesh in its aspiration of growing the state’s economy to $1 trillion. It has been reported that the Centre has recently engaged a global consulting firm to prepare a foundational Vision 2047 document for identifying the country’s strategic priorities. This reflects a global trend.

Recent news reports have highlighted that the ministries of the Union government have paid around Rs 5,000 million in fees to global consulting firms in the last five years and that the finance ministry has sought details of all such consulting engagements. Government consulting in India is dominated by globally integrated firms, ranging from strategy consultants like McKinsey, BCG, and Bain (they usually render advice in the higher realms of policy formulation) to what is called the Big 4, EY, PwC, KPMG and Deloitte, whose engagements span both policy advisory and programme execution support.

One of the prime worries around the unbridled use of consulting firms is around a hollowing out of government capabilities, and an excessive dependence on consultants even for routine functions. Many consulting engagements are in the form of “Programme Management Units” attached to senior officials with broad remits and roving mandates. There is a tendency to farm out even routine functions like preparing file notes and letters. Officials tend to get comfortable and overly dependent on their consulting teams, often leading to “mission creep” and repeated redeployment. It is not unknown for consulting firms to utilise these dependencies to lobby for repeat work, to stray into the realms of sensitive policy formulation, or to try and tweak upstream policy directions to obtain unfair advantages in downstream execution work.

Globally, alarms are being sounded over the proliferation of consulting firms across government. Popular books like The Big Con and When McKinsey Comes to Town suggest that the unbridled use of consultants reduces the skills and capabilities of officials, thus infantilising government. They distort the objectives of public policy and even sometimes abet governments in setting direction along amoral pathways, as seen in the recent surge of consultancy-related corruption scandals worldwide. The word, “consultocracy” has been coined in literature to describe the permeation of consultants into the very heart of government, diminishing the traditional role, functions and capabilities of public servants.

Despite these concerns, there are compelling reasons why the engagement of consultants in government makes sense. Firstly, the increasing complexity of domain expertise needed for effective programme formulation and service delivery across a variety of sectors — be it agriculture, transport, energy, or financial services — demands skills that may not be readily available within the confines of government. The recent pervasive digitisation of public service delivery, like the Direct Benefit Transfer programme, also demands specialised technical expertise on call. Given the traditionally conservative methods of recruiting government officials, the range of capabilities available internally is relatively narrow, and the deployment of consultants for specific tasks may be optimal for these challenges, especially since their engagements have end dates and do not add to the permanent institutional load of government.

Thus, while there is much to be gained by utilising consultants for furthering public objectives, these engagements needed to be pegged within a comprehensive regulatory ecosystem, encompassing aspects like fairness and transparency in their onboarding, curbs on rent-seeking behaviours, reasonable disclosure of the value that consultants add as well as clear protocols for knowledge transfer to government and internal capacity building.

The era of consulting firms assisting in public policy formulation and implementation is here to stay — expecting government officials to continually refresh the constantly evolving repertoire of skill sets needed for modern-day governance and digitised public service delivery may be unrealistic. Carefully calibrated onboarding of expertise from the private sector would add to the quality and effectiveness of public service delivery, provided they are ring-fenced within a normative and transparent regulatory framework.

The writer is an ex-IAS officer & head of Government Practice at a consulting firm