PwC to build a 40,000-strong consulting venture run from India
PwC US will hold 50.1% and PwC India 49.9%, but operating control — including of the US firm’s India centres — sits with the Indian firm. The entity is valued at about $2bn at launch.
PwC India will enter a joint venture with PwC US that combines the Indian firm's consulting business with the US firm's India-based acceleration centres, creating an entity with 40,000 employees at launch.
The venture would be worth about $2 billion at launch. PwC US will hold 50.1% and PwC India 49.9% — but operating control, including of the US-run acceleration centres, will rest with PwC India, chairperson Sanjeev Krishan said.
The unusual part
The ownership split and the control arrangement point in opposite directions, which is the point of the structure.
A 50.1% holder that does not exercise operating control has agreed to a jointly controlled entity rather than a subsidiary. Krishan described it as exactly that.
For PwC India, it means running an operation that includes centres the US firm built and staffed in India.
"This is PwC India being trusted to drive global growth," Krishan said, pointing to India's large and increasingly sophisticated talent pool.
What goes in
The new entity will house PwC India's consulting operations — management and technology consulting, and risk consulting — together with the US firm's acceleration centres in India.
What stays out
PwC India's audit, tax and deals businesses will remain outside the venture, as will certain government advisory work.
Keeping audit separate is the structural requirement in professional services: auditor independence rules constrain what an audit firm's affiliates may sell to audit clients, and a consulting venture with a foreign partner would complicate that.
The exclusion of government advisory work is a second boundary, and a domestic one.
Who it will serve
The entity will target global, domestic and global capability centre clients.
That third category is the one that explains the shape of the deal. India's acceleration and capability centres — offshore units run for multinational parents — have grown from back-office operations into places where substantive work is done, and PwC US's own centres are among them.
Approvals
The venture is subject to regulatory approvals, including from the Competition Commission of India.
What it signals
An arrangement in which the Indian member firm operates an entity majority-owned by the US member firm inverts the usual direction of a global professional services network, where offshore centres are run from the home market.
Whether it becomes a template within PwC's network, or remains particular to India, is not addressed in this account. Neither is the timeline for launch beyond the regulatory clearances required.
