Public memory may be notoriously short sometimes, but at others, it’s inconveniently long. Remember Satyam Computer Services and the case of falsified accounts that rocked the country back in 2009? Even those who don’t remember the finer points of the case (and face it, few knew the finer points even then), do remember that Satyam’s auditors, the legendary PricewaterhouseCoopers (PwC) India, ignored all the warning signs and allowed the false accounts out. It took the 140-year-old company a long time to come out of the slump caused by the Satyam scandal.

Two of its auditors were jailed, and the company had to shell out $7.5 million (Rs 51 crore) to the U.S. Securities Exchange Commission and the Public Company Accounting Oversight Board for clearing incorrect accounts. Chairman Deepak Kapoor, then managing partner, had been in the thick of things. He says Satyam “was indeed one of the biggest challenges PwC faced as a brand and it affected its reputation”. But PwC India insiders point out that the company swung into action immediately to control the fallout, and ensured there was almost no attrition or client exodus in the aftermath of Satyam.

Sitting in his eighth-floor corner office in the PwC India corporate headquarters in Gurgaon, Kapoor, who took over as chairman in 2011, shows few signs of the tough times he went through post-Satyam. Always dapper in his trademark grey suit, white shirt, and yellow tie, the only sign of the stress seems to be the dramatic white streaks in his hair. It’s only when he relives those days following the Satyam revelations that he shows some signs of wear. He talks of the days and weeks spent talking to clients, explaining exactly what happened, and of even longer hours spent with the staff to build their confidence in the company. Open and transparent communication, says Kapoor, helped PwC India weather perhaps its worst storm in a century. (I think to myself that some of that transparency with the regulators may have helped keep the company out of the mess.)

(From left) Sudhir Singh Dungarpur, Ashootosh Chand, Sudipto Ghosh, Pawan Kumar S., Arnab Basu, and Deepankar Sanwalkar
(From left) Sudhir Singh Dungarpur, Ashootosh Chand, Sudipto Ghosh, Pawan Kumar S., Arnab Basu, and Deepankar Sanwalkar

Even as that was happening, Kapoor and the senior team were debating the way forward. “To come out from the hole we almost dug ourselves in, we realised that it was not enough just to survive, but to create a differentiator. And technology was to become that great new big differentiator, the company’s unique selling proposition, and my legacy for the future,” says Kapoor, seven years on. A career PwC man, Kapoor, who is set to step down as chairman after two terms, says he knew technology was the way to go even before he took up the reins in India. He says that for some years before 2011, during the many discussions he had with his global peers, they realised that technology was emerging as a megatrend and would disrupt the way businesses are done. But it was only some years after Satyam that he verbalised that thought. That was in 2011, when tech companies (notably Cognizant) were already moving beyond tech and betting big on consulting services. What was Kapoor thinking, moving a legacy audit company into tech?

“We do everything to stay relevant in the marketplace,” Kapoor adds pragmatically. There must be more to it than just that, I press, so Kapoor explains. “Most of the large companies that come to us are looking for a transformational change,” he says. To effect that, PwC India often uses certain tech tools, for which it charges the client a fee. Kapoor’s idea was to partner with technology companies, thereby marrying their tech skills with PwC India’s domain expertise. And so, in the process of becoming a tech company, PwC India has taken on board potential competition—the likes of Microsoft and Oracle—making them partners rather than competitors.

PwC India set up a specialised cybersecurity practice in April 2016
PwC India set up a specialised cybersecurity practice in April 2016

To be sure, none of this was new thinking; PwC is going through a similar transformation globally too. In fact, acknowledges Kapoor, PwC firms in the U.S. and Europe are far ahead in adopting technology, with the global network spending billions of dollars in developing newer technologies. To ensure that his region wasn’t ignored, Kapoor insisted that any new technology developed anywhere in the PwC ecosystem or any international alliance with any of the tech giants like SAP, Oracle, Google, Microsoft etc., which had some relevance for India, had to be a part of the PwC India story.

I ask Bhaskar Pramanik, chairman of Microsoft India, why he thinks this is a good thing. (That he does is evident from the fact that Microsoft is PwC India’s digital partner in this journey.) He says it’s because PwC can both “address customers’ business problems and help them accelerate their digital transformation”. So, will PwC India morph into a tech company that also does some auditing and consulting, I ask, half in jest. “The way we look at it, PwC is already a successful technology company,” says Pramanik, adding that this year, PwC became one of the top 50 Microsoft partners in the world.

While the tie-ups with tech companies is a hugely important piece of this effort, it’s PwC India’s employees who will be instrumental in ensuring the success of this shift. The rapport the partners built with employees post-Satyam is taking PwC India through its transition from auditing and consulting firm to a tech one. “While it may sound preposterous, implementing [the move to tech] was not really a challenge. It really wasn’t so because 80% of our staffers are millennials, who are more than eager to adopt new technologies,” Kapoor tells me. And then, a hint of steel: “As for the more senior members of the team, they had little choice but to fall in line.”

How did he ensure that all of PwC India shifted into tech mode? To begin with, Kapoor tells me, the firm “made it virtually mandatory that all its services would have to have technology embedded into it”. He explains that technology had to be an integral part of all the services PwC India offered, whether it was audit, assurance or consulting, or financial tech, cybersecurity, digitalisation, data analytics, or forensic. Murali Talasila, leader, innovation, PwC India, adds that he advises every employee he meets to “make technology a part of your daily life”. The rule across PwC India today is that people have to use technology-enabled tools either to generate revenue—50% of the revenue should come from technology-enabled tools—or reduce costs through the use of technology.

More important, the firm has spent millions in designing and building state-of-the-art forensic labs in Gurgaon and Mumbai; an innovation centre in Hyderabad; and a ‘digital experience centre’ in Bengaluru. These initiatives help PwC develop different software or tools and also help companies strategise and digitise their businesses. PwC India’s big advantage is that it can leverage PwC’s global network, including buyouts. So, the PwC U.S. acquisition of New York-based Diamond Management and Technology Consultants, and the North American commercial business of Amsterdam-based multinational Bearing Point, helped PwC strengthen its businesses in India. But the real turnaround came with the global acquisition of Booz & Company (now renamed Strategy&) in April 2014. “Now we were in a position to provide end-to-end solutions to any company,” says Kapoor. (Till then, most of PwC’s solutions were built upon projects often designed by the likes of Accenture or McKinsey.)

30 minutes is how long it takes PwC's software to compute the tax outgo for foreign portfolio investors, says Sandeep Ladda, partner and leader, India technology sector, PwC India.
30 minutes is how long it takes PwC's software to compute the tax outgo for foreign portfolio investors, says Sandeep Ladda, partner and leader, India technology sector, PwC India.

As important were less-hyped buys that gave PwC a range of technical capabilities—global firm PRTM (operations management) in 2011, and BGT (digital creative consultancy) in 2013.

All this means that PwC India will now have a different set of competitors. For instance in the area of strategy, it will have to compete with Boston Consulting Group, McKinsey & Co, and Bain Consulting; in operations and processes its competitors will be E&Y, AT Kearney, and Accenture. On the technology side it will be IBM, Deloitte, and Accenture and on the digital end it will be Sapient, Razorfish, etc.

Akhilesh Tuteja, partner and head, technology, KPMG India, says: “Technology will definitely be the great differentiator for audit and consulting firms because they deal with a huge amount of data. Using relevant technology will not only make systems smarter and more efficient but also cost competitive. It is a win-win situation for both parties. Clients get better outcomes and firms better value for money.” What has worked for PwC vis-à-vis other consulting companies is perhaps
its existing cross-sectoral expertise which many technology companies in India are trying to develop. Until other consulting companies catch up, it will have an edge.

But how is PwC India different from other tech firms like Cognizant or Tata Consultancy Services, which also promise consulting with hi-tech solutions? Back in 2014, when writing about how Cognizant made the big leap into business consulting, we had spoken with Tom Rodenhauser, managing director of Kennedy Consulting Research & Advisory in New Hampshire, U.S., which tracks the consulting industry. At that time, he said: “Firms like PwC and Deloitte have bridged the gap between ‘business’ and ‘technology’ more effectively than pure strategy or IT firms.”

Dinesh Anand, leader, forensic services, PwC India
Dinesh Anand, leader, forensic services, PwC India

I turn to Satyawati Berara, the first woman COO at PwC India, for her view. She takes the example of the implementation of the goods and services tax, which will mean changing the business and supply-chain dynamics. “It will require changes in supply-chain accounting, require tweaking the SAP or the enterprise software system, which will call for technology use. Without technology you cannot implement GST, but for a technology company, providing end-to-end solutions will be difficult. Today, our tax team is sitting with the legal guys to develop a GST app,” she explains.

Clients welcome this mix of competencies. Kulmeet Bawa, managing director, South Asia, Adobe, says his company leverages “PwC India’s deep market expertise, technology competencies, and knowledge of sectors to complement our overall strategy in India”.

Such transformational changes in an audit firm also bring their own set of challenges—the existing business model needs to change. The traditional business model of time and material cost—where the client only pays for the number of hours and people used—has shifted to a fixed-fee model (clients pay for a complete project), and now, to outcome-based fees.

The last is tricky, concedes Arnab Basu, joint technology consulting leader, PwC India, whose main job is to sell technology to clients, “because we are putting our fees at risk here”. The idea is to promise the client a certain amount of cost reduction or savings through operational excellence or business optimisation, and charge a fee on that basis. “In case there is greater saving for the company during the whole process, PwC can charge a little extra. And that is the upside that we build into the model,” says Basu. The downside? If the savings are not as promised, the company loses part of the fee.

Clients often find it difficult to understand PwC India’s transformation into a tech player. To help them understand, the firm has set up a digital experience lab in Bengaluru, headed by Ashootosh Chand, partner, digital. The highlight of the centre is the ‘vision room’, so designed that the focus is on a huge LED panel, which shows clients videos and presentations about the expected changes and disruptions in their respective sectors in the next five to seven years.

The next step is into the ‘action room’, which showcases sector-specific digital applications; Chand and his team are around to explain how digital strategy is key to a client’s vision for the future. Discussions range from how to develop an innovative ecosystem for the banking sector to creating a startup culture in an old manufacturing company, Chand tells me. When I visit, I notice that a small space in the room has been earmarked for wearable devices and Internet of Things, although it is empty at the moment. Later, others in PwC India spell out the Internet of Things strategy, but there’s no mention of wearables. But clearly, that’s an area PwC India is looking at seriously.

From the action room, clients are taken to the ‘interaction room’, where they can use some of the apps on touchscreens scattered around the room. This is also where the PwC teams meet the client’s team to discuss specific solutions. “We do the entire end-to-end journey for our clients, map the kind of interventions required, develop apps, and also the impact that it will have on their business,” says Chand. The PwC India team that works with clients comes from diverse backgrounds and different specialisations, often hired away from research labs, or from startups such as Mu Sigma.

Murali Talasila, leader, innovation, PwC India
Murali Talasila, leader, innovation, PwC India

What exactly are the apps and solutions PwC India offers clients? I travel to its Mumbai office, where Sandeep Ladda, partner and leader, India technology sector, tells me about the range of apps that the firm has developed. Top of the list is Xperto, a tool to assist foreign portfolio investors.

These investors operate from countries such as Singapore and Mauritius, which have a low tax jurisdiction. On any day, these investors do millions of transactions, which need to be cleared by seven custodians in India, including markets regulator, Securities and Exchange Board of India. It’s only after this that these investors are allowed to repatriate their money. Before repatriation, investors need to pay a securities transaction tax. For this, an audit firm manually goes through all the transactions, checks the opening and closing price of each stock, calculates the difference, and pays the tax. The whole process would take at least three days.

Xperto automates the whole process; the only human intervention is to ensure that checks and balances are in place. The final report is sent to the client office and the tax authorities simultaneously. Once the transactions are cleared by the tax authorities, the money can be immediately repatriated. “It not only crunches the processing time from three to four days to half an hour, but also dramatically reduces human intervention. That is a good thing because these are all very sensitive data,” says Ladda.

Then, there are tools developed to help expat employees of client companies pay taxes in India, under PwC’s International Assignment Services offering. It’s an important service, because unless the expatriates pay taxes, they will not get their salaries because of the deduction-at-source principle. PwC India uses a global PwC software, Tiger, which captures all relevant data from clients and creates a master database. Then, a PwC India-developed software is used to read all the information from Tiger and also catches all the information, like Form 16, provided by the individual to file the tax return in India. Ladda says the firm files some 7,000 such returns every year.

The other useful tool is called Encompass, developed by PwC India. This helps in global compliance for multinational companies that have branches or subsidiaries in many different countries. Encompass has all the necessary forms, rules and regulations, service tax registration, VAT registration, etc., embedded in it. The compliance officer needs to simply feed in the data; a team of 70 lawyers at the PwC India end constantly updates the database.

Then, there are tools such as Prism, Prudence, Circa, and Net Hunt, that help in everything from workflow management to cybersecurity. Rahul Garg, head of direct taxes, PwC India, waxes eloquent about PwC’s Halo platform, developed globally, that allows auditors to check every transaction (and not do a random sampling), so ruling out a repeat of the Satyam case.

The move to becoming a tech firm did not happen overnight. As I go from Mumbai to Delhi to Bengaluru, I realise that this is a carefully planned move. And it’s not just about using tech tools to help the audit function. Dinesh Anand, leader, forensic services, tells me proudly that PwC India has the “biggest forensic practice among the Big Four”. He explains what this team does, but what clearly excites him the most is the ‘Strategic Threat Advisory’, something PwC India specialises in. Given the growing incidence of terrorism in many parts of the country, companies are increasingly looking for help to secure their assets and people. The forensics team studies the community to assess the threats emanating from terrorist groups, studies the political situation, patterns in social media for potential signs of disturbance, and uses data analytics to study previous incidents. Based on this, the team then advises the client about the security needed, the kind of surveillance systems, access controls, and the monitoring systems for these controls.