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Helping India on the journey

to high performance

Three imperatives for policymakers and business leaders


India is on the march. The country that

just six decades ago was taking its first
independent steps is now striding out
in confident new directions.
The rest of the world is getting to In so many ways, India already
know an India it never knew until represents the new economic
quite recently. Over the last quarter- frontier. It is both a highly successful
century, the nation has become a vital experiment in regulated free-market
global economic and political player, economics and a laboratory for
making its voice heard in G20 debates experimenting with new tools of
and World Trade Organization sessions economic prosperity—a vibrant source
alike. of new technologies, new approaches
to consumer markets, novel ideas for
The world’s business media now devote public-private partnerships, and new
plenty of ink to India’s energetic thinking about climate change and
giants such as Tata, Reliance and access to resources.
Bharti Airtel. Business leaders around
the world are increasingly familiar In short, India has much to be
with ‘sunrise’ industry leaders such proud of. It is no exaggeration to
as Suzlon and with premier centers say that India has embarked on
of higher learning like the Indian the journey toward achieving high
Institutes of Technology and Institutes performance. (See “A word about high
of Management. And Bollywood is performance.”) iii
clearly a soaring influence in the
entertainment industry worldwide,
producing more than 100 films in
2008i in ten languages and employing
an estimated six million people.ii

This report will examine the
most pressing priorities in
each of the three infrastructure
dimensions: physical, economic
and social.

But that journey is a long and arduous What is essential is a blend of well- Organizations that have truly become
one. If the country is to deliver on planned, well-built and well-run part of the country’s social fabric
its tremendous promise, politicians, infrastructure initiatives—a blend are well-placed to contribute more
policymakers and civic and business that balances improvements in to its future economic prosperity.
leaders have much to do. India still tangible infrastructure such as road, They combine the benefits of
ranks only 49th out of the world’s rail and electrical power networks longtime experience in India with
most competitive economies—23rd with upgrades in the nation’s rich knowledge of best practices in
when compared only to other financial infrastructure and its social government and business worldwide;
emerging economies—according to infrastructure. Only if there is obvious they match a deep commitment to the
the World Economic Forum. It lags in momentum in all three directions welfare of their Indian employees and
terms of foreign direct investment, can more of India’s citizens feel the communities with a global eye toward
attracting US$42 billion in 2008 benefits—and contribute to their how those groups can better connect
compared to US$108 billion in China, country’s growth. with their overseas counterparts for
US$70 billion in Russia and US$45 the benefit of all.
billion in Braziliv. India can do much on her own, to
be sure. Few other countries have This report will examine the most
And its physical infrastructure is a the equal of its rich amalgam of pressing priorities in each of the three
deterrent to inward investment and professional skills, entrepreneurial infrastructure dimensions: physical,
a huge cost burden for organizations zest, levels of global engagement, economic and social. We invite
throughout the country. Plenty of youthful population, and a large and you to read it with a sense of what
work is needed to build and strengthen well-connected diaspora of expatriate it means for development of new
financial markets and institutions that talent. generations of talent (and leadership),
can galvanize infrastructure growth. for environmental sustainability as
And while the country has helped But to achieve full potential—to well as the sustainability of economic
bring about great improvements in truly achieve high performance as a growth—and importantly, for the
the lives of many of its least privileged nation—the nation must look outward. inclusion of a much broader swath
citizens, there are abundant social India’s policymakers and corporate of society in India’s continuing
challenges ahead. leaders can also benefit by relying success story.
on global partners that have one
foot in India and the other in
activities abroad.

A word about high performance
Beginning in 2003, Accenture’s research program to
determine the key ingredients of high performance
provides unprecedented insights into the characteristics
and practices that enable organizations to outperform
their peers.
Accenture defines high-performance businesses as
those that:
• Effectively balance current needs and future
• Consistently outperform peers in revenue growth,
profitability and total return to shareholders.
• Sustain their superiority across time, business cycles,
industry disruptions and changes in leadership.
We believe that a nation’s performance can be gauged by
very similar criteria, as follows:
• Effectively balance current needs and future
opportunities of its citizens.
• Consistently outperform peer nations in helping
to create an environment within which its citizens
maximize their abilities and ambitions.
• Sustain inclusive growth across time, economic cycles,
industry disruptions and changes in leadership.

Power cuts and potholes
Fixing the physical infrastructure

Lacking access to an effective mass catalyze its economic potential—high- Yet they contribute just 18.5 percent
transit system in Bangalore, the speed road and rail systems, efficient and 17 percent respectively to real
technology firm Infosys Technologies ports and logistics centers, and reliable GDP compared to the services sector’s
Ltd. used to spend $5 million a year on electricity, telecom, data, and water 64.5 percent.ix Industry and agriculture
buses, minivans, and taxis to transport delivery networks.vii are heavily dependent on good
its 18,000 employees to and from its physical infrastructure, yet in many
offices in Electronics City.v These physical infrastructure rural areas there are no roads at all.
challenges are particularly acute in And where roads do exist in India, less
That, in microcosm, is one of India’s India’s cities. than half are paved, notes the World
biggest impediments to growth. India Bank.
may be the world’s second fastest- Some experts believe that 400
growing economy, but its physical million Indians will migrate from Because three-fourths of the
infrastructure has fallen far short rural to urban areas over the next 1.1 billion population live in
of national needs—and continues 40 years—urbanization on a scale villages, growth in agriculture and
to fall short. Historically, India’s that took 1,000 years to happen in manufacturing is essential for job
infrastructure investment has averaged Europe. However, the challenges creation and to lift per-capita income
about 4 percent of GDP—half the must not be tackled in isolation—and levels. Agriculture has exceptional
country’s 8 percent-plus growth rate are not limited to urban areas.viii Not potential when seen as part of a “value
and half the GDP percentage that only do they need to be viewed in chain”; imagine the benefits if efficient
China devotes to infrastructure. India’s context of the tandem challenges of transportation and warehousing
GDP growth would be two percentage building the right financial and social systems could easily link farmers
points higher if India benefited from infrastructure, but they have to be to new food processing plants and
good roads, railways and power, notes examined in light of how they can help markets, or the gains that could be
Jagdish N. Bhagwati, a professor at broaden the country’s base of growth generated if reliable communications
Columbia University in the far beyond visible contributors such as systems were available to accelerate
IT services. the use of biotechnology to increase
If Prime Minister Manmohan Singh’s yields per hectare of land.
near-term targets of 9 to 10 percent Put simply, the industrial and
annual growth are to be reached, agricultural sectors have huge
India must now race to build the potential to drive balanced, sustainable
infrastructure ecosystem that can growth—and to “spread the wealth.”

Pressure points
• India is the world’s largest producer of fruits and the
second largest producer of vegetables, yet 25-30 percent
is wasted because there is little “cold chain” storage and
distribution infrastructure
• Economic losses from congestion and poor roads alone
could be as high as $6 billion a year
• Average turnaround time at India’s busy seaports is 85
hours—10 times longer than at Singapore or Hong Kong
• India needs to add 50 percent to its current electricity
capacity to bridge today’s potential power deficits—let
alone tomorrow’s
• Physical infrastructure constraints create supply-demand
imbalances, inducing inflationary pressures.

The tasks of repairing, expanding many Indian construction firms, while India has the potential to solve
and managing the country’s physical large enough now to deal with the many of its physical infrastructure
infrastructure are daunting indeed. scale of the projects they are involved challenges. The raw numbers appear
Of course, India is by no means alone with, were until recently relatively impressive; private-sector estimates
in suffering from inadequate long- small and regionally based, meaning put the federal government’s
term planning and a lack of market that they have had to rapidly scale up expenditures at close to US$ 1.7
orientation when it comes to big in terms of building execution skills, trillion over the next decade.xi It certainly
public works; the 15 percent-plus design and engineering expertise. As has the professional resources and
cost overruns conceded by the federal such, many still lack the capabilities of the bright minds and the industrial
government would not raise eyebrows the leading international players. capacity to do so. And it is a
in the U.S. or in many European second home to many of the large
nations. The good news is that the right international firms that can readily
discussions are under way. Just one draw on best practices from other
However, when financing of large example: The Remaking of Mumbai regions and municipalities where
infrastructure works is a challenge, Federation (RoMF) is emphasizing similar challenges have been faced—
such overruns place a larger burden a “planning from the beginning” and met.
on the economy than it can afford. approach that is well-placed to
Additionally, India faces some draw on best practices from globally
special challenges. Bureaucracy is successful models of inner-city
problematic; in particular there is redevelopment like those of Shanghai,
much to do on the labor front, where Hong Kong and Singapore. Proponents
employment regulations are seen state that the RoMF will work best
as some of the greatest obstacles if it is steered by a “city planning
to productivity improvements. and management company” whose
There is often a mismatch between corporate structure would have equal
government’s expectations of representation from government
participation by private investors and offices and stakeholder associations
their actual levels of involvement. And such as residents’ groups.x

Follow the money
Strengthening the financial

Accenture’s research suggests that moves money efficiently is vital term institutional investors for those
aggregate household consumption in to long-term prosperity. Not only projects, such as insurance companies
India’s rural areas could approach US will it help to support crucial and and pension funds. Ajit Gulabchand,
$250 billion by 2013—66 percent ongoing investments such as physical chairman and managing director of
larger than that in the country’s infrastructure, education and research, Hindustan Construction Company,
urban markets. but it will serve to be more attractive is a vocal proponent of the kinds of
to foreign direct investment. municipal bond funding used widely in
Yet the rural majority has poor access Europe and the U.S. to support large-
to banking services. Only 40 percent Specifically, India must develop scale infrastructure projects.xiii
of Indians own a bank account. Just the policy measures and innovative
over 5 percent of the villages in India financing methods necessary to build The government recently set up the
have a bank branch and as little as 2 a strong financial infrastructure. India Infrastructure Finance Company
percent of the entire 1.1 billion possess Further, by creating and overseeing Limited to provide long-term financial
credit cards.xii effective regulatory bodies and assistance to infrastructure projects.
efficient settlement systems/clearing This move is important: Since many
Those facts speak volumes. They houses, the nation’s policymakers and of India’s construction firms are
indicate that enormous sums are in financial experts will help stimulate highly leveraged, they continually
play—and are about to be in play—that infrastructure financing and overall need fresh capital to finance new
are not fully integrated into a national economic growth. projects. Although they are under
financial infrastructure. Although pressure to increase net worth in order
India’s economy has been able to rely Recent initiatives by the government, to enhance their creditworthiness,
on fairly high levels of household such as setting up a corporate bond the construction business tends to
saving—currently around 25 percent reporting platform for efficient price have low sales-to-net worth ratios
of GDP—there is much more the discovery, are promising moves toward (indicating how much net worth has
government can do to put India’s creating more robust corporate debt been added in relation to revenues).
money to work. markets. However, while a well-
developed bond market is necessary But some of the best potential
Put simply, India must build a robust to supplement banks as sources of for strengthening India’s financial
financial infrastructure. While it is funds for infrastructure projects, there infrastructure may come in the kinds
not as tangible as a new road or is a pressing need to develop long- of instruments and mechanisms that
a new port, a financial “grid” that

Pressure points
• Just over 5 percent of the villages in India have a
bank branch
• As little as 2 percent of India’s population possess
credit cards
• India lags in terms of foreign direct investment,
attracting US$42 billion in 2008 compared to US$108
billion in China, US$70 billion in Russia and US$45
billion in Brazil
• Since many of India’s construction firms are highly
leveraged, they continually need fresh capital to finance
new projects.

give consumers more control of their Innovative financial services and

financial destiny—and more security insurance companies have been
over the long term. using microfinance institutions to
build their retail network in India’s
It is only in recent years—with the hinterlands. One of the early pioneers
development of technology and with in this area was Bajaj Allianz which
evidence from microfinance projects tied up with SKS Finance, India’s
that the poor are indeed bankable— largest microfinance firm, to sell
that there have been enhanced its policies. SKS successfully sold
opportunities for rural banking and millions of policies for Bajaj Allianz
investment. The issue has bigger within a few months.xv At the same
implications for growth than profit- time, mobile banking—using mobile
making for financial services firms. It phones—presents huge possibilities,
gets to the heart of the third element especially given the low penetration of
of the holistic approach essential to conventional banking services in
long-term, sustainable growth: the rural India.
idea of developing a sturdy social
infrastructure. (See: “All for one and Now consumer product companies
one for all: Developing an equitable are using microfinance firms as
social infrastructure.”). platforms to create vast distribution
networks. While there is vast
To that end, the government’s National potential for revenue generation for
Rural Financial Inclusion Plan has a such companies, the potential for
goal of providing access to financial underprivileged villagers to generate
services to at least 50 per cent of rural high incomes—often from services—is
households hitherto without access equally impressive. And there is a
to financial services by 2012 and the tremendous multiplier impact for
remaining 50 percent by 2015.xiv rural economies and for India’s overall
economic growth.

Plus point
Access to other financial services such as savings accounts
and life, health and crop insurance also remains limited
for the rural poor. Recognizing the latent demand
lying untapped in such markets, YES BANK initiated an
innovative rural-financing program that has benefited
more than 2,000 farmers in the state of Jammu and
Kashmir. The program extended financing of US$3.5
million for six months to bee-keeping nomadic farmers in
North India by transferring credit risk from the farmers to
the stocks of honey kept in warehouses. YES BANK enrolled
Kashmir Apiaries Exports (KAE), a large honey processor
and one of the largest exporters of honey from India, in
the scheme. KAE extended a purchase commitment at a
pre-determined price for the honey supplied by various
small farmers, providing the bank with greater credit
assurance for the commodity. xvi

All for one and one for all
Developing an equitable social

Pressure points
• Among India’s 15- to 29-year-olds, only about 2 percent
have received formal vocational training
• Less than half of female higher education graduates
join the economically active population
• More than a third of adult women in Bangladesh,
India and Pakistan are underweight, according to the
World Bank
• Climate change may mean that volumes of melt water
from Himalayan glaciers, watering much of the region,
could fall to about 30 percent of their current levels in
the next 50 years

India is home to 20 percent of the infrastructure—one that is inclusive The economic and social costs of these
world’s people, a third of whom are and diverse. It must be designed not factors could be devastating, and could
less than 15 years old. This youthful only to tamp down social unrest and be exacerbated by damage to land,
demographic is expected to add about address the more egregious societal property and communities caused by
250 million workers to the labor pool and gender inequities but to harness climate change and by the growth of
between 2005 and 2025.xvii But it the potential of engaged citizens and industry sectors other than agriculture,
is also a potential source of social leverage India’s rich cultural diversity. the industry on which so many of the
instability. poor depend.
The inescapable priority, though, is
The country’s rapid economic to avert the worst case. While India Inadequate and erratic rainfall across
development has shone a spotlight has been able to reduce its poverty large parts of the region during 2009
on the fact that large sections of the levels significantly over the last poses serious risks to grain production,
population are not included in the decade, findings from a World Bank raising fears of inflation in food prices.
India growth story. In the worst case, report suggest that India has more India’s agricultural sector contracted
India’s massive, young and growing people living on less than US$2 a this year after the worst droughts in
population will be characterized by day than sub-Saharan Africa does. nearly three decades. Government
mass illiteracy, ill health and low A large section of India’s population officials note that farm output needs
employment—with all of the unrest is still excluded from education and to grow at about 3.5 to 4 percent for
and instability that those forces imply. skills development. The Planning India to sustain high overall growth.xx
In the best case, India sits on the cusp Commission of India notes that 7.1
of an exceptional opportunity to bring million Indian children are out of There is also an optimistic way to
education, healthcare and productive school and more than half of those view the numbers. According to the
employment to a youthful workforce enrolled drop out at the elementary Planning Commission of Indiaxxi,the
whose size promises to make it level.xviii The results of the National world will have 56.5 million fewer
the major engine of India’s future Sample Survey (61st Round) show skilled workers than it needs by 2020.
workforce and economy. that among 15- to 29-year-olds, only That presents India’s business leaders
about 2 percent have received formal and policymakers with a tremendous
Either way, it is imperative that India’s vocational training. Less than half of opportunity. If India gets its education
policymakers, corporate leaders and female higher education graduates join programs and skill development
community leaders craft a viable social the economically active population.xix right, it will have a surplus of skilled

manpower of 47 million by that Accenture’s ongoing High Performance
year. The World Bank estimates that Business research initiative repeatedly
increasing the proportion of working- demonstrates that innovation works
age Indians who are economically best when a variety of backgrounds
active from 60 percent to 75 percent and perspectives come to the table.
would add US$3.7 trillion to the These diverse qualities in turn enable,
country’s GDP by 2020. deliver and drive high performance.

There are many encouraging efforts Savvy policymakers and corporate

under way already. One example: leaders will make it their business
the Teach for India project, formally to build workplace and community
established in 2008 as a not-for-profit programs that cherish diversity and
organization whose mission is to encourage inclusion. Many of the
create a movement of leaders who will global organizations with a longtime
work to eliminate educational inequity presence in India have deep experience
in the country.xxii The college graduates with such programs, and are more
and young professionals who join than willing to share what works and
Teach for India commit to teach full- what doesn’t. (See “Plus point.”)
time for two years in under-resourced
schools. Just one example: As part of its “Skills
to succeed” global initiative, Accenture
Companies such as Accenture, ICICI, is teaming with Oxfam in India to help
Citibank, and Mahindra & Mahindra farmers develop new skills that will
are in the forefront of supporting generate more value from local supply
Teach for India—and are attuned to chains and secure enhanced economic
the additional social benefits that the opportunities.
program provides. “Besides improving
the quality of education, Teach for
India would most importantly also
enhance the young professionals’
leadership and communications skills,”
notes Dr. Nachiket Mor, President
of the ICICI Foundation for Inclusive

India can also capitalize on its diverse

cultural heritage. While the United
States has long been held up as the
apotheosis of ethnic and cultural
blending, India’s rich cultural heritage,
stretching back over millennia, is at
least as interesting a model of how a
nation can benefit from diversity.

From an economic standpoint, India’s

textured culture is a potent engine
for economic growth. With more
linguistic and religious diversity than
many other nations, India has unusual
potential to cross-pollinate knowledge,
ideas and beliefs, and a national
mindset that readily absorbs fresh
concepts and approaches from other
cultures. In recent years, the country’s
political system has successfully
accommodated greater federalism
and social mobility while pursuing
economic liberalization under a series
of coalition governments.

Plus point
For 10 years Accenture India has worked closely with BYST,
the Indian affiliate of Youth Business InternationaI (YBI),
providing pro bono services and strategic advice.
Globally, YBI has helped more than 13,000 young people
set up their own businesses; more than 72 percent of
these young people are still successfully in business
in their third year. Each new entrepreneur creates, on
average, three new jobs. The impact is threefold:
On young people
Self employment increases self-esteem, increases
employability and helps achieve economic independence.
Young participants provide role models for other young
people who see their friends realizing their potential and
achieving self-respect and independence.
On business
YBI encourages new and existing entrepreneurs to become
involved in the local community, improves workforce skills
and encourages the development of a dynamic small
business sector.
On society
YBI reduces youth unemployment, alleviating poverty,
generating wealth and reducing youth alienation and
social conflict. Successful young entrepreneurs also create
jobs for others.

Toward tomorrow
So what will India’s require much more and time zones. India has
economic complexion look than the right kinds of many international friends
like in another 25 years? investment; they also both inside and outside
Leading researchers say demand expertise in the country. There has
India’s economy will be operational excellence and never been a better time
among the largest in the good governance. to benefit from those
world by then. friendships.
Although there is little
It’s a fair bet that India doubt that India will The answer lies in the
will have dismantled be at the heart of the right blend of longterm
many of its barriers to global economy in just a commitments to achieving
stronger growth, ridding few decades, the bigger high performance as a
itself of much of the question is whether its nation through physical,
red tape that currently place there will be stable— financial and social
entangles businesses and or sustainable. infrastructure.
deters investors. It’s also
The answer lies in the
reasonable to expect
right blend of long-term
that Indian companies
commitments to physical,
and sources of expertise
financial and social
will be in the forefront
of the next phases of the
Those commitments
‘green’ growth movement.
will require exemplary
And as the mid-century
statesmanship, holistic
approaches, India will very
rather than insular
likely be seen as a hotbed
thinking, enthusiasm
of innovation.
paired with realism,
Yet other aspects of the and commitment that
nation’s growth trajectory transcends elective
will be far harder to office terms.
control. Ensuring that
Sustainable, inclusive
economic development
economic success will also
includes all strata of
call for unprecedented
society is no quick fix.
levels of collaboration
Broadening the nation’s
among policymakers and
base of growth is a
civil servants, business
monumental task. Issues
executives, academics, and
such as income disparity
civic leaders—collaboration
and endemic poverty
that reaches across cultures

i. Habitat (CTBUH) 2010 World Conference news/2009/09/16/sks-microfinance-
bollywood/list/2008 India, bajaj-allianz-to-provide-microinsurance-
x?fileticket=gA54SCjboAE%3D&tabid=62 to-spouses-now/
ii. According to the Indian Motion
Pictures Association, about 6 million are xvi. “YES BANK bags ‘Deal of the Year’
employed with the Indian film industry, xi. “India can meet infrastructure needs Award”, April 4, 2007, http://www. on its own”, India Today, September 17,
iii. High Performance Business Research xvii. LABORSTA database, International
Program Overview, Accenture Web Labour Organisation
onid=110 xviii. “Education”, Eleventh Five Year Plan,
Planning Commission of India, http://
HPBHighlevelOverview.htm xii. “Forty percent population have
bank accounts: NABARD”, Hindustan
iv. World Investment Report 2009 fiveyr/11th/11_v2/11v2_ch1.pdf
Times, October 21, 2009, http://
v. xix. International Labour Organisation
magazine/content/07_12/b4026001.htm arunachalpradesh/Forty-per-cent-
xx. “Singh: India Targeting 10%
vi. Op. cit. v Growth,” Wall Street Journal, Oct 30,
vii. Op. cit. v
xiii. Ibid. SB125690178037418371.html
viii. “History Inspires ‘Future Cities’,”
xiv. “Financial inclusion to overcome xxi. “Skill Development and Training”,
The Times of India, 1 Nov 2009,
exclusions”, Bhanoji Rao, May 13, 2008,
The Hindu Business Line, http://www. planrel/fiveyr/11th/11_v1/11v1_ch5.pdf
articleshow/5184947.cms xxii. Teach for India,
ix. Annual Report, Reserve Bank of India,
xv. “SKS Microfinance, Bajaj Allianz to
provide microinsurance to spouses now,”
x. “Building the City of Dreams,” brochure Microfinance Focus, Sept 16, 2009,
for Council of Tall Buildings and Urban

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