India’s Still Rising
Geo Focus: India’s Still Rising Growth may be slowing but the country’s economy remains a winner for consultancies
By Jacqueline Durett
Though experts call it a “global downturn” the current economy isn’t hitting India nearly as hard as it’s hitting other markets. India’s economy was expected to grow at about 5.5 percent in 2009 less than originally projected but still quite healthy. India’s economy had grown at or above 9 percent second only to China among the major economies.
“In light of the global economic crisis India is faring reasonably well. While the stock market is down and car and home sales have plummeted most other sectors of the economy are strong” explains Gunjan Bagla author of Doing Business in 21st Century India.
“The slowdown is not as severe” says G. Raghavan country head TCS India Business of IT giant Tata Consulting Services which has more than 6000 consultants in India. “Maybe it could if the trend continues for some time.”
How has the country managed to stay strong? “India is a country of innovation. There’s a large amount of opportunity” Raghavan says adding that many industries are just starting to open up.
Bagla agrees. “Only a fifth of India’s economy depends on exports. The country remains a very attractive market for foreign entrants and participants in virtually any sector.”
And that sector includes management consulting of course. “Much of the leapfrogging in India has been facilitated by good advice from consultants who have enabled Indian companies to [build] world class skills in manufacturing marketing and IT services” Bagla says.
“I think that you’ve seen great growth in India for us but also for many over the last few years” says Alan Herrick president and CEO of IT consultancy Sapient which was named the fourth best company to work for in India in 2007. “I think obviously you’re in a less than certain environment now so I think that’s put some caution into the market but I still think you’ve got a rich rich talent pool in India that I think is going to do well for the long run.”
Sapient launched operations in India in 1999 with the idea that the company could tap into that talent pool. “We started to build it in 1999 and 2000 on that basis” Herrick says. “And then obviously the markets changed and your efficiency and costs became much more important. And as we edged into 2001 it became a much bigger idea for us than just acquiring additional talent but actually becoming a central focus for the company.”
TCS also has had a lot of success in India. The firm is in growth mode having just acquired Citigroup’s offshoring business. But Raghavan says he sees a few key challenges to growth in India including the fact that many Indian companies are very IT savvy but have a ways to go in learning how to market themselves. Also he says many firms need to take a longterm view in terms of key employees and think of them as partners rather than with the company for a specific project. “I think that [concept] has already begun to grow” he says “but it needs to gain momentum. It will bring more predictability to business performance.”
Indias Still RisingInfrastructure while improving continues to be an issue. “A lot changed in India infrastructure wise to support [its] success” Herrick says adding however that the firm must provide transportation to all its 4000 employees every day. In addition he says wage inflation has seen double-digit growth in recent years though that has dropped off in the current economy.
India’s culture has nuances foreigners may find unique—and a big challenge to retention. “Now this is unheard of in the United States … there was such a limited supply of talent because there was such good growth rates by the companies that [someone] would actually accept three jobs and might go to one job in the morning and if he doesn’t like it just take the second job by the afternoon” Though this trend also has been stymied by the economy it’s a phenomenon that occurred until recently Herrick says.
The company also faces a retention issue with women who often relocate once they marry. “We are accommodating we let people take some time off to make sure they have an adjustment period to the family and then come back and work. We are culturally sensitive to that. Work from home—that’s a very popular theme in India. It’s a win-win for us and in India as well” says Karandeep Singh a managing director at Sapient who is based in India.
Political unrest is also something India is facing—attacks late in November in Mumbai confirmed that. “I think obviously what happened in Mumbai and some of the things right after that was unfortunate but seeing the government’s response to it the kind of focus it created on the heightened security at the airports [and] the hotels [that now] I think business is as usual” Singh says. “People are coming to offices. I think there is no overt concern about security.”
And the Mumbai attacks don’t seem to have derailed the India growth plans of U.S. companies. Less than a month after the attacks PricewaterhouseCoopers finalized a deal to acquire all shares of ECS Limited a Bangalore-based provider of operations and HR consulting services to Indian and global clients. The acquisition will add five partners and more than 100 consultants pushing the number of PwC employees in India to more than 5000. PwC has offices in Ahmedabad Bangalore Bhubaneshwar Chennai Gurgaon Hyderabad Kolkata Mumbai New Delhi and Pune and in 2007 was named the “India Tax Firm of the Year” by International Tax Review magazine.
For their parts both Raghavan of TCS and Sapient’s Herrick say they will continue with their growth plans as well. TCS in early January announced the launch of its development center TCS Kalinga Park in Bhubaneswar Orissa. As for Sapient Herrick says “I think we’re positioned well for the long run and I think we’re in good shape.”
Last updated: July 9th, 2024
