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India: India Economy Profile

2016/12/04

India’s economy grew by only 5 % in the financial year which ended in March 2013. India’s economic increase plunged to its slowest pace in a decade. While the government was struggling to revive increase, economists say any development will come very slowly. The slide was not unexpected -- the economy has been losing steam steadily in the previous year. But it was a huge disappointment an economy which had averaged 8 % increase over the last decade and won recognition as an engine of world increase.

India occupies 9th position of 11 nations in the Asian Digital Transformation Index. Despite the existence of a globally competitive technology sector and an education system which produces large numbers of skilled engineers and developers, weaknesses in digital infrastructure (it ranks last in this Index pillar) and a shortage of talent with advanced digital skills (10th in human capital), weigh India down as an environment for digital transformation. Its performance is additional positive at the same time as it comes to industry connectivity, where it outpaces China and four other Asian economies. Its technology companies in particular are familiar with the ways in which partnerships can help firms pursue their own digital initiatives.

Digital transformation is currently a hot topic in India, according to Vikash Kumar, chief digital officer of TridentGroup, a diversified manufacturing company. The finance and IT sectors, strategy consultancies, marketing agencies and parts of government are all pushing a digitisation schedule. Consumers are as well clamouring to become digitally empowered, he says, for example through better mobile broadband capabilities. A genuine appreciation of what digital transformation requires is lacking, however. “Everyone in India is excited about going digital but few know how to implement it,” Mr Kumar observes. “Too a lot of executives believe that it amounts to having a website which you can find on the initial page of Google. But digital is about much additional than this.”

Inadequate ICT infrastructure is amongst the chief obstacles businesses face at the same time as launching almost any type of digital initiative. In the digital infrastructure category of the Index, India ranks last or next to last in most indicators. “Most advanced digital technologies are not readily available in India,” says Mr Kumar, “and need to be obtained in the US or Europe.” They are as well extremely costly for Indian businesses, he complains. And because labour remains cheap in India, he adds, it’s easier for companies to hire people to do jobs that technology could otherwise do.

A lot of Indian executives surveyed by the EIU confirm such infrastructure issues are a major impediment to digital transformation. One-third (33%) point to a lack of affordable broadband connectivity in this context, and an extra 35% complain of a lack of technology solutions within their organisation.

Talent shortages as well hold companies back in their efforts to push digitisation. There is no lack of engineering specialists with the ability to address technical challenges, says Mr Kumar. “But at the same time as it comes to people with advanced digital skills in areas such as design or UX [user experience], we have to turn to nations such as Singapore or the US.”

The frontline: digital transformation of businesses

Four-fifths of Indian business executives statement that their firms’ investments in digital transformation “have by presently proved their price. ” At the same time as asked about the nature of the benefits they have gained, top of the respondents’ inventory is additional innovative ideas for new products and services. Following closely behind are expanded reach into new markets inclunding cost savings.

In terms of digital technologies, social media has been the dominant focus of digital transformation initiatives thus far, judging by the survey responses, reinforcing the view that a lot of companies have tended to view digital as primarily a marketing tool. This looks likely to change, however, as respondents indicate that additional transformation efforts will involve large data and analytics someday.

Infrastructure and digital talent shortages, as discussed, are difficult impediments to transformation. The majority critical obstacle to evolution, however, in Mr Kumar’s view, lies squarely in the executive suites of Indian businesses, inclunding the IT sector. Technology and talent shortages are surmountable, he believes. But changing executive mindsets about digital is an extra matter all. “There is good talent at entry and middle levels of management,” he believes. “Unfortunately, however, not a lot of people are available with the right kind of vision and strategy to man the top positions.”

Indian businesses as well appear to be active players in partnerships formed with other companies and/or networks for the purpose of pursuing digital initiatives and improving their own digital capabilities. Just short of 70% of firms say they are involved in five or additional such partnerships, and 30% are involved in additional than 10. Innovative ideas for new products and services are the chief benefit that companies have obtained from their partnerships, along with productivity improvements and help in extending their reach into new markets.

This contributes, Mr Kumar observes, to organisational inertia at the same time as it comes to digital change. “Most companies in India are two decades or additional old and have this fear of change to do something new, even if the technology is available.”

Digital connections

India’s weaknesses in digital infrastructure and human capital are counter-balanced to some extent in the Index by comparative strengths in industry connectivity. The country ranks second only to Taiwan, for example, in terms of open data availability, which is a necessary basis for the success of open innovation networks and communities. Indian companies in the survey appear to make considerable use of such communities, with almost nine in 10 (88%) stating they benefit to a ‘large’ or ‘great extent’ from involvement in them.

Nonetheless, there is recognition amongst Indian executives that they must do a much better job at leveraging their digital partnerships. Next all, the vast majority believe these will be integral to their ability to drive through digital transformation someday.

Digital transformation, one step at a time

Using digital technology to drive change is a challenge in any organisation, whatever its size or industry profile. Achieving it in a sprawling manufacturing conglomerate employing over 12,000 people may be considered particularly testing. “We are like an elephant which is trying to run,” is how Vikash Kumar describes his digital transformation challenge. In 2015 he was appointed chief digital officer of TridentGroup, a venerable Indian manufacturing firm with separate businesses in paper, chemicals, power equipment, linen and yarn. “You have to understand that the processes which we have been following are 30 or 40 years old.”

“We now have a ‘single version of the truth’ across every department in the business,” says Mr Kumar. “The information is available everywhere, including via a mobile platform to employees on the move.” The most obvious early benefits have been in time and cost savings which, he says, have been especially significant for the HR function. Another is transparency, made possible with the help of an e-supply chain management system. “We buy and sell using digital platforms, be it staplers, pins or huge fabric dyeing boilers. There is a system for everything, and everything is now on a system.”

Moving all information systems onto one enterprise-wide platform is a first in the Indian manufacturing industry, says Mr Kumar. It’s a start of the company’s digital transformation but, he acknowledges, there is a long, difficult road ahead before the destination is reached.

Mr Kumar’s approach to implementing a digital strategy has therefore been to start small. The first step was to establish a dedicated digital team which, he emphasises, is involved in more than digital marketing; it has a remit that overlaps with IT and other functions. Thus a major early achievement was to ensure that all enterprise information flows through electronic systems and is no longer registered manually. Digital transformation, believes Mr Kumar, relies on how efficiently and quickly information flows through a company’s IT system, and how consistent its data is across the platform.