In early March 2025, the Trump administration launched a sweeping assault on federal consulting contracts. Spearheaded by Elon Musk and his recently formed Department of Government Efficiency (DOGE), this effort aims to dramatically reduce government spending — including spending on private consulting firms such as Deloitte, McKinsey and others that have long been fixtures in Washington’s bureaucratic landscape. As of April 2025, seven of the 10 largest consulting firms working with the U.S. government had proposed to cut their costs by $20 billion by terminating projects or limiting their scope, in response to the Trump administration’s demands for price concessions.
Musk has since distanced himself from DOGE, though it remains active and seems primed to receive a boost in funding in the next fiscal year. However, whatever the future of this initiative may hold, it already has the potential to fundamentally reshape how governments worldwide approach external expertise.
One such government could be India’s. A technophile nation where Musk has an outsized public profile, and where the upper-middle class frequently questions government spending, India is fertile ground for measures aimed at drastically reducing public sector consulting. Should it follow DOGE’s lead with similar calls to reduce these consulting contracts?
We’d argue that the answer is no: While DOGE’s aggressive approach to eliminating consulting contracts may yield efficiency gains in the American context, such wholesale measures would be counterproductive if applied to India’s unique governance landscape.
As development economist Lant Pritchett has noted, the “isomorphic mimicry” of adopting Western institutional reforms without considering local contexts often leads to implementation failure in developing countries.
In other words, the DOGE approach is what Harvard anthropologist Joseph Henrich calls “WEIRD,” i.e., Western, Educated, Industrialized, Rich and Democratic. Below, we’ll discuss why this approach should not be applied to government consulting in India without contextual affirmation.
The government efficiency crusade comes to consulting
DOGE’s primary mission is to identify and eliminate what it considers wasteful or fraudulent government expenditures. To that end, the department has targeted consulting contracts as a significant source of potential savings.
“We’re not looking to put anyone out of business,” a senior US General Services Administration official stated in the Financial Times. “But they need to be candid when analyzing their value regarding return on investment.”
This sentiment reflects a growing global debate about the proper role and value of consultants in governance, pitting efficiency advocates skeptical of these expenditures against those who see consultants as vital intermediaries in complex bureaucratic systems.
Critics of government consulting have long argued that excessive reliance on outsider expertise undermines the capacity of government agencies to develop and maintain their internal capabilities. This “infantilization” of government suggests that outsourcing core functions ultimately weakens public institutions.
In their book “The Big Con,” economists Mariana Mazzucato and Rosie Collington present a scathing critique of the consulting industry’s impact on public governance. They argue that governments have become increasingly dependent on private consultants for tasks that should be handled by civil servants, resulting in both capability erosion and financial waste — and often adding to the existing movement toward outsourcing processes, or even entire government functions, to the private sector.
This criticism is echoed by Yamini Aiyar, former president of India’s Centre for Policy Research, who has noted that government consultants are creating a new parallel bureaucracy of professionals who are not directly accountable to citizens. Similarly, long-time Indian Administrative Service officer Gulzar Natarajan has argued that the pervasive use of consultants by government agencies “simplifies responses to complex challenges,” and that these consultants operate with a significant conflict of interest, provide questionable solutions, and are never held accountable for outcomes.
The substantial financial implications of an over-reliance on outside consulting amplify these criticisms. In the UK, public spending on private consulting rose by 62% from 2019 to 2024 to £1.3 billion, provoking experts to call the expenditure “scandalous.” France has seen similar trends, with consultancy firms receiving €11 million in 2014, €103 million in 2018 and €200 million in 2022 — without accounting for IT expenditures. Following suit, Canada’s federal government spent a record $20.7 billion on consultants over the 2023-24 fiscal year.
Nobel Laureate Abhijit Banerjee has compared (23:00 onward) top consulting firms like BCG and Bain to snake oil sellers who often trivialize the careful analysis of social policy, reducing it to convenient answers that may be elicited for the right price. Banerjee’s larger point was that this undermines the efficacy of presenting evidence to the government to inform necessary actions.
The question of consultant ethics and public sector morale
Beyond financial concerns, ethical issues have plagued major consulting firms.
For instance, McKinsey settled nearly $600 million in legal disputes related to its role in the opioid epidemic in the U.S. According to court documents, the company advised pharmaceutical companies on strategies to boost opioid sales even as addiction rates soared across America. While this case was settled, it highlighted the kinds of potential ethical hazards that can emerge when profit-driven consultancies advise on matters of health and safety — common focus areas in public programs. India has seen these ethical risks first-hand: For instance, the Kerala government removed PricewaterhouseCoopers from its $520 million e-mobility project in 2020 following allegations of procedural lapses in its appointment as a consultant on the project.
The use of consultants can also impact public sector morale, as it may signal a lack of trust in the capabilities of civil servants. This can lead to reduced motivation and a decline in the quality of public services. Additionally, there is a risk of “policy capture,” where consultants may prioritize private interests over public welfare and act as a form of lobbyists, potentially undermining democratic accountability.
In India, the growing dependence on consultancies and the turnkey nature of the solutions they are entrusted with have transformed them into de facto staffing agencies that handle even routine administrative tasks previously managed by government employees, with departments often preferring these consultants due to their higher skill levels. Somdeep Sen of Roskilde University says that this dependency creates a complex challenge with no easy fix, as evidenced by the UK’s failed two-year experiment with an internal consulting division that was ultimately abandoned when government departments continued to favor private consultants over this in-house alternative.
The ‘handholding’ component of public sector consulting
One common task among consultants in developing countries is facilitating one-on-one assistance to help the public navigate the bureaucratic processes involved in accessing government programs and services — i.e., “handholding.”
None of the projects DOGE has canceled until now appear to have a significant handholding component, as they primarily focus on policy evaluation, IT services, organizational assessments and communications strategy. In a way, they mimic the experience of consulting firms in management consulting, which often addresses mergers and acquisitions, organizational restructuring, and the efficiency of specific firm functions. These projects are more technical or administrative, rather than involving direct assistance to a government policy’s beneficiaries — a group that often includes millions of people.
Yet in countries like India, helping facilitate this direct, one-on-one assistance is a key role of public sector consultants. One of the most significant barriers to the successful implementation of government schemes in the developing world is the complexity of paperwork and procedural requirements, which can discourage eligible beneficiaries from enrolling. These individuals often need individual attention and support to reap the full benefits of public programs.
With vast rural populations, profound literacy challenges and a substantial digital divide, Indian government agencies often rely on the positive nexus of consultants, NGOs and philanthropies to bridge crucial program implementation gaps. Firms consulting for the government build and mediate relationships among these three. Even though many such consulting efforts may involve low-margin work, such handholding is considered essential to the program’s success.
Evidence for handholding’s effectiveness
Multiple studies have demonstrated that handholding can significantly improve program outcomes. For instance:
- A study on India’s Food Security Program found that allowing beneficiaries to choose their agents increased collections of entitlements by 6.6%. The increase in uptake of the scheme was found to be around four times higher in agent-dense regions than otherwise — suggesting personal guidance and competition improve access.
- An experimental intervention in one of India’s malaria control programs, conducted by three NGOs in Odisha, significantly improved mosquito net usage and fever care-seeking behaviors, demonstrating the positive impact of non-state actors in public health initiatives. The study found that the success of the program depended on both population characteristics and the quality and effort of local NGOs, highlighting the crucial role of NGO-led handholding in enhancing service delivery in under-resourced areas.
- A study on a cash transfer program for poor widows and divorcees in Delhi found that only one-third of eligible women were enrolled, with lower participation among the most vulnerable. A field experiment showed that providing only information increased applications among literate women, while assistance with paperwork (basic mediation) and engagement with authorities (intensive mediation) raised application rates by 41% and 70%, respectively.
As we have stressed, outreach efforts matter to government policies and programs. For instance, India’s Pulse Polio campaign achieved 97% polio vaccination coverage by 2021 through an outreach campaign whose effectiveness far exceeded that of typical U.S. get-out-the-vote campaigns. Indeed, there is some irony in noting that the U.S. doesn’t have a handholding component in its consultancy contracts, possibly owing to high labor costs.
The benefits of handholding extend to other parts of the world, demonstrating its universal applicability in public sector schemes. In sub-Saharan Africa, research on community health workers found that providing one-on-one assistance and health education in rural areas led to increased utilization of maternal and child health services, significantly improving health outcomes.
These examples collectively underscore the necessity of human intervention in public policy implementation, especially in contexts where digital literacy, economic constraints or bureaucratic complexity act as barriers to access.
In India, consultants serve as crucial intermediaries between complex bureaucratic systems and citizens with limited literacy or digital access. Their handholding efforts — or their support in arranging such efforts among others — remain indispensable. The evidence from numerous social programs demonstrates that this personalized assistance significantly improves participation rates and outcomes, particularly among vulnerable populations.
Reforming, not eliminating, consulting services
Rather than eliminating consulting relationships, India would be better served by reforming them to enhance accountability, improve cost-effectiveness and strengthen their role in capacity building. If masses of gig workers are a matter of pride for the government leaders tasked with optimizing our labor market, there should be equal value placed on the work of enumerators and hand-holders in public consulting projects. Recognizing their vital role in improving policy effectiveness would help preserve the valuable bridge consulting firms provide towards the “transformative governance” model that the country’s current leadership prides itself on.
Earlier this month, the Indian government launched an initiative to create an ecosystem of home-grown consulting providers, including consultants focused on advancing public-sector mandates. While the main thrust of this effort involves expanding domestic capacity, preserving IP royalties and ensuring the sovereignty of sensitive data, it’s also a move toward addressing the concerns the above article has raised. To use sports jargon, it’s good to see the government playing the long game in cultivating a uniquely Indian approach to public-sector consulting, instead of simply slashing the budget for these services.
Manoshij Banerjee is an independent researcher on digital behavior and culture; and Mohammed Shahid Abdulla is an associate professor in Information Systems at IIM Kozhikode.
Photo courtesy of Images Money.
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