From The President

Dear BCAJ Lovers,

Over the past 9 months, through these pages, I have been able
to share thoughts that have convinced many members to spare some time in writing
to the BCAS with suggestions and feedback. The mails received by me in the past
one month have brought many constructive ideas. Due to the sheer numbers, it has
not been possible to reply to each person individually. However, members may
rest assured that BCAS is taking note of the various suggestions and efforts are
being made to translate the suggestions/feedback into action. Some of the
responses are being reproduced in the journal under the title “Members Speak”.

Recent press reports said that at a campus placement
conducted by ICAI, a fresh CA was hired by a foreign company at a staggering
starting salary of Rs.70 lakhs per annum. There was also another news item which
contended that many companies now prefer MBAs over CAs.

Both these pieces of news are important and interesting for
CAs. What remuneration a person is able to command depends on the perceived
value of that person in the eyes of the payer. The value of an individual CA is
also dependent on the value of the profession at large. Over the years, there
has been raging discussion on how CAs get less remuneration than other
professionals and how one category of professionals is perceived to be scoring
over CAs. I believe that we CAs are responsible for the state of affairs that we
find ourselves in today. Have we ever paused to reflect on why one firm of CAs
gets double (or many times more) the fees for what seems to be the same
service ? Have we ever tried to analyse the reasons why one firm is able to get
higher hourly rate of fees as compared to another ? Why is that many highly
intelligent CAs earn far lesser than less qualified business persons ? Let us
ask ourselves why, despite the fact that the total number of CAs in the country
is a minuscule percentage of the total population and therefore, there is a
limited availability of CAs in India; despite the tremendous amount of client
loyalty that we enjoy and despite the fact that we have so much work that the
Govt.’s policies and laws generate for us and despite the fact that we are able
to add substantial value to our clients, why is it that most of the times, many
CAs feel that the financial returns that we get are not commensurate with the
efforts that we put in and with the value that we bring to the table for the
clients ?

This apart, there is also the fact that one firm of CAs or
one CA stands out as compared to other firms or other CAs. Most CA firms or most
practising CAs are rendering the same type of services to their clients. Yet,
there is a perceptible difference between what one CA/firm achieves in terms of
revenues, type of clients, quantum of work, quality of work, quality of staff,
etc. What is it that makes each of us different ?

Traditionally, many CAs were not accustomed to charging fees
based on the number of hours spent for an assignment. Then, spurred by the
growth of the larger firms and their system of charging by the hour, many
smaller firms too started charging fees on hourly basis. Even our Institute has
recommended a certain scale of fees for certain types of assignments based on
hourly rates.

My personal view is that hourly basis of charging is a very
inefficient way of charging. It breeds inefficiency since the focus is on the
number of hours spent and not on bringing in efficiency to reduce the number of
hours spent. Also, it does not factor in the value that a CA adds to his client.
Therefore, I humbly suggest to readers to consider the concept of value pricing.
One must charge fees based on the value that one feels he/she is adding to the
client. We need to educate our client about the value of the work that we do for
them. Unless the client is aware of what are the repercussions of a CA’s work
not being done properly, that client will never understand the value of the CA’s
efforts. For this reason, it would be a good idea for a CA to create well
thought-out presentations on important areas of one’s practice and show such
presentations to a prospective client. There are a number of websites devoted to
value pricing which may be of interest to some of you.

Another area of practice management that I feel very strongly
about is the need for CAs to network amongst each other and to build their
capacities. The ICAI has been strongly advocating the concept of mergers and
networks amongst CAs. Unfortunately, the members have been slow in adapting to
this. Considering the high costs of running a practice in terms of real estate
and salaries, the complexities of today’s ever-changing laws and the resultant
need to focus on a few (if not one) areas and specialise in the same instead of
trying to be a jack of all trades etc., there is a crying need for smaller
entities to get together and form a larger entity.

In a large metro like Mumbai, we have, for the past few
years, witnessed large-scale consolidation amongst various firms. There have
been many mergers amongst smaller firms and many “take overs” by the Big 4.
However, whenever I meet members from smaller cities (as I did recently in
Lucknow, Kanpur, etc.), I learn that CAs continue to practise there as smaller
entities. The concepts of mergers and networking have not yet become very
popular there. Merger of CA firms does involve many complex issues. However, I
believe that if a person is willing to, for a moment, let go of the attachment
to one’s own name and focus on future growth, everything else is likely to fall
in place. As the larger firms grow in strength, it will become more and more
difficult for smaller firms to cope with the increased volumes of work, complex
and frequently changing laws, shortage of good staff and growing requirement
from clients for a one-stop shop for diverse services. Those who are content
with their current quality of practice may continue with their existing size and
set-up. But circumstances beyond their control will definitely continue to
affect their functioning and, maybe, their survival. The BCAS has offered
networking and merger prospects to many of its active members. I hope that other
members too see the merit in looking beyond their own turf and joining hands
with like-minded professionals.

On other fronts, the Icelandic volcano disrupted more than
90,000 flights to/from Europe resulting in what seems to be a greater financial
impact than even the 9/11 attacks. One hopes that life will return to normal
very soon. The IPL saga has turned into a very ugly tamasha. Every day we hear
of new developments. In the context of what I had written last month, many
members have now questioned my choice of comparison of IPL with our profession.
I may only say that it was only the concept of change that I had tried to
highlight and not the concept of IPL. Let us all try to imbibe change without
the dishonesty, corruption and all other ills that seem to have got attached to
the present drama that is unfolding before our eyes.

As usual, I look forward to receiving your views and feedback
on what I have written. I hope that all of you whose children have appeared for
school/college examinations are now breathing easy and that the children will
fare very well in the exams. Do enjoy the summer holidays with your family members and have a great time.