May 22, 2023
After a Guardian article reported the outrage in Australia following revelations that a PwC executive, who was hired to develop more stringent taxation regulations for multinational companies, had instead disclosed confidential information that aided PwC’s clients in circumventing those laws – ItforChange, iSPIRT, and SITARA, brought it to the attention of the RBI.
This situation clearly exemplifies a conflict of interest, which is an inherent problem embedded in the business model of these profit-oriented entities that prioritize their own gains over client or public benefits. Consulting firms, which experienced significant growth particularly in the wake of the Reagan-Thatcherite Neoliberal reforms, are no stranger to criticism levied at them regarding conflicts of interest and a lack of transparency in their practices. Nevertheless, even the longstanding stronghold of Neoliberalism is experiencing a reevaluation of its core tenets, as emphasized in the speech delivered by Jake Sullivan, the US National Security Advisor. This speech merits an individual analysis in its own right!
Doubts have also been raised regarding the value provided by consulting firms. Mariana Mazzucato has extensively described the detrimental impact caused by consultancies in various sectors, particularly when they promote Neoliberal solutions. For instance, she highlights a pharmaceutical company that was convinced to decrease its investment in research and development in favor of artificially boosting stock value and pursuing expansive schemes, which ultimately resulted in its downfall. However, the true long-term harm lies in what she refers to as the “infantilization” of government capabilities. Once the expertise is extracted, the contracting agency becomes ensnared in an ongoing reliance on the agency to which it outsourced its know-how and data. Consultancies also engage in the practice of “lowballing,” offering their services at discounted rates to establish a dependent relationship with their clients. Mazzucato has documented numerous cases where the advice provided by consultancies conflicted with the interests of the public and even of the client involved.
In previous instances, SITARA has raised concerns with the government regarding the strong presence of the Big 4 consulting firms and major technology companies within our ecosystems. We drew attention to a report suggesting that IBM would oversee the GeM (Government e-Marketplace), and fortunately, no further development on this matter was observed. Additionally, on various occasions we highlighted when the big four consulting firms and big tech companies were awarded lucrative projects that granted them direct access to the valuable raw data generated in India. This data should ideally be processed and transformed into high-value products by domestic players. Notably, at the time Niti Aayog had reportedly been extensively outsourcing such assignments to foreign entities in India.
In the extant case, the potential scenario where foreign consulting firms gain access to national financial data – undermines national sovereignty and exposes the country to the uncertainties associated with opaque AI algorithms. To address this concern, we have proposed the development of essential expertise within the RBI (Reserve Bank of India), in collaboration with India’s abundant IT talent pool. This talent pool, currently sought after by Fortune 500 companies, often migrates due to limited domestic opportunities. Initiating a project that harnesses this local talent would yield numerous advantages, primarily safeguarding our financial data while simultaneously promoting value addition and creating quality employment opportunities in the field of AI, a technology crucial for the future.