India has exceptional CAs then why no Indian firm in the Big 4 league? Here is why, explains the founder of Guru & Jana, a 500+ member firm.
Why haven't India built its own Big 4 firms yet? A question that Mr. Guru Prasad, founder of Guru & Jana Chartered Accountants, has been asking. His firm has a team size of over 500 people.
- Mr. Guru Prasad Makam is the founder and Managing Partner of Guru & Jana Chartered Accountants, a 500-member plus firm built from scratch in less than two decades.
- His firm is more than a finite member firm which he had been taking to greater heights since 2003.
- Mr. Guru believes that most Accounting Firms don’t have a succession plan which is one of the reasons why India hasn’t produced its Big 4 firms yet.
A practice built over 19 years
When we started Guru & Jana Chartered Accountants in 2003 our vision was quite simple; we would open an office, and if any client comes, we will help them. That is how we all began this journey.
The way I met with my co-founders and partners is pretty unique and interesting.
I met one of my co-founders in Suresh and Company, where we were pursuing our articleship together.
We have around 11 partners now, and I met some of them while walking down the road, waiting at the airport, standing in the queue, and in other absurd ways.
That aside, there was no definite strategy. We didn’t worry about turning it into a big organization, at least up until 2009.
That year I took a sabbatical and I went to the Indian Institute of Management (IIM) Bangalore, to attend the Advanced Management Program. A lot of people apply for it, but only a few are able to get in.
I remember the first day, there was an HR session and there were mostly executives from top-tier companies like Hewlett Packard, Honeywell, and Manipal group. I was the only Chartered Accountant there.
Somehow I managed to get selected.
When I attended their first-year class, they were talking about performance appraisal.
I was like, “Why are we talking about performance appraisal?” I was kind of confused at first but that was the first time I learned that there are some things called milestones, vision, mission, and ambition.
From that moment we started getting serious about scaling our practice.
We started building processes, talented teams, and overall a structured organisation.
And today we have grown to a team of 500 people. But this is just the beginning.
Why no Indian Firms in the Big 4 league?
It’s quite difficult to answer, really.
We at Guru & Jana are also trying to make great strides.
We had a vision “By 2020 we will be one of the top 20 firms” and for that reason, we got in touch with IIM Indore to conduct a survey.
When we looked at the Institute’s database we noticed pretty discouraging stats; a lot of the accounting firms that started in 1936 or 1940 had not scaled.
And the biggest shock was that they were all exceptional professionals. Their intelligence in taxation and accounting was outstanding.
We started wondering, “Why is there not a single Indian firm with a reasonable size?”, “Why haven’t these exemplary professionals been able to build a large firm?”.
“Why aren’t we able to build a Big 4?”
So that has been a matter of concern for us from that time onwards, and very recently we found out one of the reasons.
Most firms don’t have a succession plan.
The second biggest mistake of many Indian Firms is, that they have very limited vision.
Look at how the multinational firms are presenting themselves, they know their value very well.
For instance when an MNC firm charges like INR 10 lakh for a service, the smaller firms would charge Rs INR 40,000 for the same, even though their quality of service is more or less the same.
The smaller firms might have even more knowledge than those MNC firms, but they don’t know how to present themselves and ask for what they deserve.
That’s really alarming. How are you going to scale that way?
So positioning your firm the right way in the market is of vital importance.
How close are Indian Accounting Firms to producing the next Big 4 firms?
Till recently there were no large Indian firms, but in the last ten years more than 100 firms reached the 100 people mark, and that’s just in my known vicinity.
In Bangalore alone, there are more than 20 firms, with a team of 100-200 people and all of them are homegrown firms. Most importantly all of them are first-time entrepreneurs.
That could be really inspirational for a lot of young CAs.
Even in Ahmedabad, I met one firm that had a 900 people team.
It’s such a joy to see the entire ripple effect.
I can take pride in telling you that, “Guru & Jana, is just an average accounting firm with no implementation of artificial intelligence, no great taxation knowledge, but just doing the same thing differently than a corporate setup.
Things are changing.
I mean 10 years ago nobody even imagined building a 1000 people firm in India, but I can see at least 10 firms like that coming out of India, possibly in the next 5 years.
Having said that, matching the size of an MNC firm, could be quite difficult right now, for a 100-250 year old firm. But give them a year and they might give positive results.
Just a few years ago I went to Scotland and was discussing with a firm in Scotland called Beever and Struthers. It was one of those 170 year old firms.
I asked them “How do you guys manage the firm and how did you become successful?”
They were kind enough to show me what is their method of succession, and how they carry forward the culture, the brand, and the legacy.
And I learned one thing; If all of us invest a little more in our firm, our team, our system, and our processes, we could reach the global title, maybe not in the next 5 years. But the way things are getting consolidated, we just might.
Diversity hiring in Accounting Firms
I was speaking at a conference in Malta and they brought up this exact same question on diversity.
Honestly, I don’t think we need to go out of our way to do anything, it happens naturally at Guru and Jana.
We have 500 people in our firm and we have close to 50% women in the leadership team and the entire organization.
There are people from different economic strata, from different cultures, and from different religions in our office.
At one point we did interview some transgender candidates for our firm, inspired by a Chennai-based organization, but skillsets were the issue. Otherwise, we were very happy to get them on board.
Also, there was this #Metoo movement that happened a few years ago. We had around 150 woman employees at that time, and we are such a beautiful family, that we didn’t hear of one bad incident.
It’s been that way ever since we started this practice 19 years ago.