Consulting Firms Clamp Down On Lavish Lunches, Luxe Hotels

For senior partners, travel and accommodation must be approved and planned well to avoid steep airfares and hotel rates at the last minute. In addition, entertainment bills related to meetings with clients are capped, and counter-offers to candidates are no longer allowed. “One of the plans to save up has been to look into the travel budgets. There is a discussion that all travel plans must be made a few weeks in advance to get affordable flight tickets. The hotel stays will get looked into so that even among the 5-star rated ones, one can get a cheaper deal," said a senior executive working in one of the consulting companies mentioned above. “On-the-spur client meetings have been stopped," the executive added.

Mint reported in March that demand for business and premium economy tickets has risen compared with the pandemic period and the pre-pandemic period. Travel agency Thomas Cook India saw a 50% jump in business class travel versus last year as corporate travel resumed. Overall, there is a 5-10% growth in demand for premium seats compared with the pre-pandemic year of 2019-20. The hotel sector has also seen demand outstrip supply as covid -led restrictions eased, sparking ‘revenge tourism’. The hawk-eye on employee budgets comes amid a global economic crisis, pushing consulting companies to trim their manpower costs after a year of hiring frenzy. Senior partners at one of the Big Four (KPMG, PwC, Deloitte and EY) say that counter-offers are being discouraged in candidate negotiations, and hikes are back to pre-covid levels. “When markets opened up after two years of the pandemic, we had given hikes more than 50% as counter-offers to our top talent. This year, the frenzy has stopped, we have recruited the workforce, and even the best talent will get 15-20% raise," said the Delhi-based partner who did not want to be named.

Arjun Vaidyanathan, chief operating officer of KPMG in India, said, “Looking at cost efficiency in operations is an ongoing journey and is not limited to just a few areas. Where required, costs are always reviewed and incurred in connection with business needs. We constantly look to improve efficiency, and to achieve that, we will need to incur certain costs. Therefore, it may be inappropriate to take a unidimensional view of costs, as it depends on the business environment and needs."Entertainment budgets, including client meetings and offsite budgets, have been reined in. The senior partners, Mint spoke to, however, added that there is no hiring freeze and will continue on a case-to-case basis.

EY, Deloitte and Aon did not respond to Mint’s queries.

“Our entertainment budgets are capped, and now, there are approvals needed if costs exceed a certain amount. This was not the case even last year when we could foot the bills, and the company would not blink. Now, we need some of the budgets sanctioned, especially when travelling," said another senior partner working with a consulting firm cited above.

While India units remain relatively positive on their growth trajectory, the parents and other global counterparts are going through tougher times.

According to a Wall Street Journal report, consulting majors McKinsey & Co. and Bain & Co. are delaying start dates for new B-school hires and, in some cases paying them to work for a non-profit or learn a new skill instead of starting on their job. According to reports, EY will reduce 5% of its workforce and rival KPMG is expected to slash 2% of its workforce, both in the US.