Forbes India 15th Anniversary Special

Private enterprises value continuity and stability: Megha Chawla

India has, over the years, established such a firm position for itself that a contrarian election outcome isn't significant enough to derail that, says the senior partner at the consultancy Bain & Company

Harichandan Arakali
Published: Jun 6, 2024 01:33:58 PM IST
Updated: Jun 6, 2024 02:19:19 PM IST

Private enterprises value continuity and stability: Megha ChawlaMegha Chawla, senior partner at consultancy Bain & Company Image: Amit Verma
On a daily basis, Megha Chawla, based in New Delhi, advises clients ranging from multinational businesses (on their India strategy) to India’s and big and small IT services players (on their global growth, talent operations, strategy, and mergers and acquisitions).

Today, India has become a non-negotiable part of the global CEO’s strategy, she says in an interview with Forbes India, discussing the prospects for the nation’s tech landscape, which is part of an economy that’s returning to coalition governance after a decade. Edited excerpts:

Q. Leaving aside the election results, give us a sense of how the way your global clients look at India as a tech investment destination has changed over the years.
If I look at the longer horizon, every three to five years has been a new phase in India's positioning and strategic importance for various global organisations. In the last three to five years, we've seen a few spikes, a few characteristics that have changed how India falls on the radar of chief executives of global boards.

Number one, India has become a non-negotiable part of the talent strategy for global 2,000 companies. One could argue wasn't that the case always? What's happened is the nature and centrality of India for the longer-term talent and capability horizon for organisations have changed completely.

Today there’s just a lot more comfort around all that's possible from an offshore location. More importantly, there is a significant demographic change and difference between India and many of the Western and more mature markets.

I recall a 2019 conversation with a German insurance company’s CEO, about internationalisation and the basis for it, which was that over the next 10 to 15 years, they had to have their core talent pool coming from India.

The third factor is the pace of emergence of new technologies. What that's led to is not just the need to access a large talent pool, but also to make sure it's a buoyant talent pool. This entails an enabling ecosystem supporting continuous ability to adapt to new emerging skill sets and technologies. India has done a far better job of that than many other countries. That's on the people side.

On the cost side, there continues to be a cost advantage. Even though India has seen wage inflation, if you do the math, we still tend to have a 60 to 65 percent advantage over, say the US or Europe. And that continues to stay irrespective of the sector you look at.

As a tech market, while today India pales in comparison to the Western markets, the potential for growth that India is showing is not something that organisations globally are taking lightly.

And finally, over the last three to five years, India as a source of tech innovation and tech manufacturing, and as an export base has seen a big uplift. Electronics is a great example of a sector that’s benefited from the production-linked incentives (PLI) plan. Semiconductors is in early days, but shows a lot of promise.

Q. To what extent would you attribute these gains to the government’s policies?
The factors I just mentioned are fundamental that remain durable differentiators for India, irrespective of the political regime. Both private enterprises and successive governments have played a role in cementing some of these advantages at global scale.

That said, some opportunities have definitely come out of the government’s initiative, including the PLI scheme, which has boosted electronics manufacturing, and the national semiconductor mission, which has tapped both India’s strategic needs and geopolitical opportunity. The government moved to both create enough dialogue to convince the private sector and executed on areas like project approvals and so on.

And over the last few years, we have seen the ease of doing business improve. We've also seen, with the national AI (artificial intelligence) mission, there is a recognition that these are technology and ecosystem shifts that can be huge in their impact and opportunity for India and what India does for the world. And I think the government has identified those. And I think we need to acknowledge that.

Also read: Keeping focus on Make in India and sunrise manufacturing sectors like semiconductors crucial for new coalition government

Q. What is your early assessment of whether, as India Inc is hoping, there will be continuity in the government's policies on all these fronts?
From a purely business and enterprise point of view, continuity and stability are something that private enterprise value. Having seen the election, I think it's again too early to tell. But our hope is that the kind of initiatives and major shifts that we have seen will ensure that they will continue to hold despite the change in the composition of the government.

To me, these are shifts that are beneficial for India and for India for the world not just near term, but on a long-term basis. They have the promise of growth, employment and relevance. Even with a coalition government, some of these initiatives are of such economic importance that I would hope that that momentum should continue.

I do want to add here that when we talk to our customers, when we talk to our clients all over the world and they're thinking about India, what's top of mind for them are some of the factors I discussed earlier—the market, the talent base, the innovation and the evolution of the talent base, the cost.

It is absolutely important for the infrastructure and the policy to be enabling. But I think India has actually over the years established a pretty firm position for itself that I don't believe an election outcome which might be contrary to what was believed would happen would be significant enough to derail that.

Clients are asking us much more about the more fundamental elements. And there is belief that India has demonstrated stability over a longer period of time and the story has held through. And many clients have that vision, a time horizon to see that there isn't any recalibration suddenly because of an election result.

Q. Since you also work with IT services companies, can you talk about any interesting sourcing strategies you've seen among your clients in the context of increasing adoption of AI?
We're seeing tremendous interest in terms of how clients are conceptualising, building their AI muscle, and hence sourcing that capability. There’s a wide variety and our clients include multi-billion-dollar complex conglomerates. They are looking at investing differentially in AI capability that can support the entire business.

Organisations that historically saw India as a back-office location are shifting to say, ‘If I’m building global AI hubs, I need India to be one of the largest hubs’. Further, as organisations look at their service providers, there is a lot of openness in looking at service providers as partners in building and scaling up AI capability.

It is new, fast changing and so significant and important that there is a recognition that this is not a solo endeavour. Partners are a crucial part of this ecosystem. So, we're seeing a wide variety of initiatives amongst organisations and it's actually a source of great excitement for us. With every conversation, the art of the possible is shifting.