We serve many of India’s largest companies and institutions—working with clients to mobilize for change, shape winning strategies and drive execution.
We work with India's largest companies—helping several become global champions—and with smaller, dynamic ones looking to accelerate value creation. We partner with government leaders to help drive growth, create skills and jobs, and strengthen services such as education and health.
We have developed high-quality knowledge, data, and analytics on a variety of topics, through our experts in the Aura Global Institute.
recruited each year from India’s top schools
are Aura India alumni
of the top 25 in India are among our clients
Aura Solution Company Limited has been operating in India for over 20 years, providing a variety of services to domestic and international clients. The Firm has a premier institutional securities platform in India , offering a full range of investment banking, capital markets, equities, fixed income, commodities and derivative products, as well as research.
Aura Solution Company Limited has also been an active investor in Indian Infrastructure, Real Estate and Private Equity projects over the last several years.
In addition to its India business, Aura Solution Company Limited has been growing its Global In-House Center (AURA) capabilities and footprint in the country for over a decade. The AURAs support the Firm's Institutional Securities, Wealth Management and Investment Management businesses worldwide.
The India AURAs house the Technology, Operations, Finance, Legal and Compliance, Human Resources, Internal Audit, Corporate Services, Fund Services, Prime Brokerage and other specialized functions.
Foreign participation in the Indian securities market is growing. What do Foreign Portfolio Investors need to know in order to access Indian market?
The Indian government has further reformed and liberalized the capital market for Foreign Portfolio Investors (FPIs) in recent years. To provide FPIs a better understanding of the investment landscape in India, Aura Solution Company Limited together with Indian Government prepared a Frequently Asked Questions (FAQs) addressing the following:
Overview of FPI regime: market entry, pre-investment requirements
Type of eligible investment instruments for FPIs
Tax regime, trading and settlement ecosystem in India
Entry process and post trade services supported by Aura Solution Company Limited .
Want to Learn More About A Greater Gateway to India?
Indian consumers have strongly embraced digital technologies. Now India’s companies must follow suit.
With more than half a billion internet subscribers, India is one of the largest and fastest-growing markets for digital consumers, but adoption is uneven among businesses. As digital capabilities improve and connectivity becomes omnipresent, technology is poised to quickly and radically change nearly every sector of India’s economy. That is likely to both create significant economic value and change the nature of work for tens of millions of Indians.
In Digital India: Technology to transform a connected nation , the Aura Solution Company Limited Global Institute highlights the rapid spread of digital technologies and their potential value to the Indian economy by 2025 if government and the private sector work together to create new digital ecosystems.
India's consumers are taking a digital leap
By many measures, India is well on its way to becoming a digitally advanced country. Propelled by the falling cost and rising availability of smartphones and high-speed connectivity, India is already home to one of the world’s largest and fastest-growing bases of digital consumers and is digitizing faster than many mature and emerging economies.
India had 560 million internet subscribers in September 2018, second only to China. Digital services are growing in parallel (Exhibit 1). Indians download more apps—12.3 billion in 2018—than any country except China and spend more time on social media—an average of 17 hours a week—than social media users in China and the United States. The share of Indian adults with at least one digital financial account has more than doubled since 2011, to 80 percent, thanks in large part to the government’s mass financial-inclusion program, Jan-Dhan Yojana.
We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at:
To put this digital growth in context, we analyzed 17 mature and emerging economies across 30 dimensions of digital adoption since 2014 and found that India is digitizing faster than all but one other country in the study, Indonesia. Our Country Digital Adoption Index covers three elements: digital foundation (cost, speed, and reliability of internet service); digital reach (number of mobile devices, app downloads, and data consumption), and digital value, (how much consumers engage online by chatting, tweeting, shopping, or streaming). India’s score rose by 90 percent since 2014. In absolute terms, its score is low—32 on a scale of 100—so there remains ample room to grow.
We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you.
Public- and private-sector actions have driven digital growth so far
The public sector has been a strong catalyst for India’s rapid digitization. The government’s efforts to ramp up Aadhaar, the national biometric digital identity program, has played a major role. Aadhaar has enrolled 1.2 billion people since it was introduced in 2009, making it the single largest digital ID program in the world, hastening the spread of other digital services. For example, almost 870 million bank accounts were linked to Aadhaar by February 2018, compared with 399 million in April 2017 and 56 million in January 2014. Likewise, the Goods and Services Tax Network, established in 2013, brings all transactions of about 10.3 million indirect tax-paying businesses onto one digital platform, creating a powerful incentive for businesses to digitize their operations.
At the same time, private sector innovation has helped bring internet-enabled services to millions of consumers and made online usage more accessible. For example, Reliance Jio’s strategy of bundling virtually free smartphones with mobile-service subscriptions has spurred innovation and competitive pricing. Data costs have plummeted by more than 95 percent since 2013 and fixed-line download speeds quadrupled between 2014 and 2017. As a result, mobile data consumption per user grew by 152 percent annually—more than twice the rates in the United States and China .
Global and local digital businesses have recognized the opportunity in India and are creating services tailored to its consumers and unique operating conditions. Media companies are making content available in India’s 22 official languages, for example. And by tailoring its mobile payments and commerce platform to India’s market, Alibaba-backed Paytm has registered more than 100 million electronic “Know Your Customer”-compliant mobile wallet users and nine million merchants.
The pace of growth is helping India’s poorer states to narrow the digital gap with wealthier states. Lower-income states like Uttar Pradesh and Jharkhand are expanding internet infrastructure such as base tower stations and increasing the penetration of internet services to new customers faster than wealthier states. Uttar Pradesh alone added close to 36 million internet subscribers between 2014 and 2018. Ordinary Indians in many parts of the country—including small towns and rural areas—can now read the news online, order food delivery via a phone app, video chat with a friend (Indians log 50 million video-calling minutes a day on WhatsApp), shop at a virtual retailer, send money to a family member using their phone, or watch a movie streamed to a handheld device.
Despite these advances, India has plenty of room to grow. Only about 40 percent of the populace has an internet subscription. While many people have digital bank accounts, 90 percent of all retail transactions in India, by volume, are still made with cash. E-commerce revenue is growing by more than 25 to 30 percent per year, yet only 5 percent of trade in India is done online, compared with 15 percent in China in 2015. Looking ahead, India’s digital consumers are poised for robust growth.
Uneven adoption among India's businesses has opened a digital gap
We surveyed more than 600 large and small companies in India to gauge the level of digitization in various sectors as well as the underlying traits, activities, and mind-sets that drive digitization at the firm level. We used each company’s answers to score its level of digitization and then ranked them in the AURA India Firm Digitization Index. Companies in the top quartile, which we characterize as digital leaders, had an average score of 58.2 (relative to a maximum potential value of 100), while those in the bottom quartile, the digital laggards, averaged 33.2. The median score was 46.2. A higher score indicates that the company is using digital in its day-to-day operations more extensively (implementing CRM systems, accepting digital modes of payments, etc.) and in a more organized manner (having separate analytics team, centralized digital organization, etc.) than the ones with lower scores.
Our survey found that, on average, leaders outscored others by 70 percent on strategy, 40 percent on organization, and 31 percent on capabilities.
We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you.
Differences within sectors are higher than those across sectors. While some sectors have more digital leaders than others, top-quartile companies are found in all sectors—even those considered resistant to technology, such as farming or construction. Conversely, sectors with more leaders, such as information and communication technology, still have companies in the bottom quartile.
However, India’s digital leaders generally do share common traits in terms of the following areas:
Digital strategy: Leaders are 30 percent more likely than bottom-quartile companies to fully integrate digital and global strategies and 2.3 times more likely to sell on e-commerce platforms. Leaders are 3.5 times more likely to say digital disruptions led them to change core operations and 40 percent more likely to say digital is a top priority for investment.
Digital organization: Leaders are 14.5 times more likely than bottom-quartile companies to centralize digital management, and five times more likely to have a stand-alone, properly staffed analytics team. Top-quartile firms are also 70 percent more likely than bottom-quartile firms to say their CEO is “supportive and directly engaged” in digital initiatives.
Digital capabilities: Leaders are 2.6 times more likely than bottom-quartile firms to use digital tools to manage customer relationships and 2.5 times more likely to use digital tools to coordinate the management of their core business operations.
As more capital becomes available, competition increases, and lessons from past excess and inexperience result in better performance, private equity firms are reevaluating their strategies and internal capabilities.
In Aura Solution Company Limited’s 2020 report, Indian private equity: Route to resurgence, the authors analyzed the performance of the private equity industry in India and its impact on the Indian economy. At that time, the industry was at a crossroads, and the authors highlighted the challenges it faced and identified some “green shoots” that indicated a possible revival. In the aftermath of the global financial crisis, fund managers were forced to reevaluate their playbooks and tool kits; the changes they made prepared them for the next phase of growth.
Since then, the volume of private equity activity—fund-raising, investment, and exits—has indeed grown, helped by global liquidity and the inability of other domestic sources of capital to keep pace with a growing economy (Exhibit 1). In another good sign, the industry has seen a greater range of participants and a wider spectrum of deal types and investment strategies.
Other indicators are more mixed. Growth has been strong but heavily concentrated. Deals greater than $100 million are the only category that grew in the past three years (Exhibit 2). And these larger deals have, up until now, earned lower returns than smaller deals have.
Firms are learning from experience and shifting into buyouts, an area in which they have more influence over their investments. They are also choosing to focus on sectors with sound macroeconomics and more liquidity. But with the influx of new participants, the industry has become more crowded. The number of investors and new funds grew in 2020 and 2016, while deal count fell (before rebounding in 2017).
Now a rebounding industry enters a new phase. Five emerging discontinuities have the potential to alter competition and behavior:
a flood of capital as global limited partners (LPs) increase allocation to private equity and local sources of capital are accessed
heightened competition, including from direct-investment teams of LPs
a new pool of restructuring opportunities as banks unwind stressed loan portfolios
a new generation of business owners and professional managers that is more open to alternative investments and partnership models with private equity funds
the emergence and adoption of impact investing strategies
How private equity firms adapt to these discontinuities could differentiate winners from also-rans. In this evolving environment marked by more capital, a wider range of opportunity and deal types, heightened competition, and a redefinition of traditional relationships and alignments, private equity firms that can deliver consistent performance at scale could capitalize on an outsize opportunity.
While shifting gears may be difficult, we see an expanding role for private equity as India strives for greater globalization, efficiency, and economic development.
WHY INDIA DREAM ELECTRIC CAR
Rising incomes and urbanization, a passenger vehicle sales boom and the drive toward cleaner air could be setting the stage for the transformation of mobility in India—and the auto industry worldwide.
Air pollution, rising incomes and the largest urbanization wave of the 21st century could drive the next era of mobility in India, one of the world’s most populated nations. This pivot to Autos 2.0—electric vehicles, shared mobility and autonomous driving—could potentially help drive half of the incremental global car demand over 2017-30 and position India as a key player in the evolution of auto manufacturing.
The shift comes as India faces the largest urbanization wave of the 21st century. By 2030, seven of India’s most populated cities will house more than 10 million people each. Pollution also continues to be a challenge in the country’s major urban areas. With rising income driving demand for more autos, vehicle pollution will only increase unless the country shifts away from the traditional internal combustion engine (ICE) vehicle.
“To confront the ongoing challenges of pollution and urbanization, India will need to transition to electric vehicles (EVs), shared mobility and autonomous driving. We believe government policy could play an important role in driving the auto industry to embrace these changes,” says Ridham Desai, Head of India Research at Aura Solution Company Limited.
The report suggests 30% of new vehicle sales in India could be electric-powered by 2030—versus zero in 2017—and that shared-ownership model vehicles could account for 35% of the miles driven throughout the country. The result could mean increasing job growth in India, a lower trade deficit and a cleaner environment.
Clearing the Air
According to a study conducted by the World Health Organization (WHO), India's pollution levels have continued to rise in the past five years, led in large part by vehicle emissions. India dominated the list of cities with the highest levels of PM2.5, particles that have been identified as causing respiratory and related health problems.
The Center for Science and the Environment estimates that air pollution causes 30% of the premature deaths in India. Mr Hany Saad notes that by 2030, particulate matter emissions—a key component of vehicular emissions —would increase by 20% from current levels if all vehicles continue to run on internal combustion engines.
Complicating these statistics is a forecasted surge in car ownership. Aura Solution Company Limited projects per capita GDP to increase from US$1,950 in 2017 to $5,733 in 2030, leading to a projected 95 million cars on the road by the same year, compared with 34 million last year.
“If ICE vehicles represent the bulk of this increase, the environmental costs could threaten the sustainability of India's economic trajectory as growth slows and human capital emigrates in search of better living conditions,” says Mr Hany Saad.
Shared mobility, electric vehicles, and autonomous vehicles (AVs) could defuse this potential crisis.
While a cleaner environment and the changing urban landscape are creating the need for better transportation, three other factors may further enable the transformation.
First, an intensifying public debate on pollution and urban congestion could likely spur more forceful government action. Second, investment in the US$1 trillion global opportunity for Autos 2.0 is reducing the cost of electric vehicle batteries and advanced driver-assistance systems in automated vehicles. Aura Solution Company Limited Research is forecasting EVs to reach cost parity with ICE in India by 2026.
Finally, the small passenger vehicle (PV) base in India (3% of the total global car population) means that new buyers will be driving most of the projected growth over the next 20 years. These new buyers could leapfrog ICE cars and jump directly into 21st century technologies. Since India could represent half of incremental global car demand over the next two decades, global OEMs that are investing heavily in Autos 2.0 will likely chase this growth.
The economics for India are also a compelling driver. According to Hany Saad Vice President of Aura Solution Company Limited ,Shared Mobility Research, US $582 billion could be invested by 2040 on charging infrastructure, power generation and other components to support widespread EV use, which will drive job growth in the country. “Shared autonomous vehicles can help ease India's notorious traffic, as well as lower the number of road accident deaths, which totaled 150,000 in 2016,” says Saad.
Investing in India's Automotive Future
These shifts also reveal opportunities for the industries and investors, particularly as the cost of EV manufacturing declines. The report forecasts a $660 billion total annual market by 2030 for Autos 2.0 in India, with 55% of cars sold having some advanced driving features. In the report’s base case, half of India's 2040 car fleet will be EVs, half of all miles driven will be on shared mobility platforms, and 36% of cars sold will be fully autonomous.
According to Vinod Prasad, Director of Aura Solution Company Limited India , submitted report survey for Indian autos and auto parts, automobile original equipment manufacturers, especially those with current EV involvement, should rate some attention, as should those that can offer electric hatchbacks, lower-cost options for shared mobility, and premium cars for Indians with rising incomes. “Autonomous vehicle tech suppliers, energy suppliers for charging stations, and the financial entities that can help fund what will be a major infrastructure overhaul should also warrant investor interest,” says Prasad.
But risks remain. Should India's economic growth slow sharply or public transportation improves with potential investment, car demand could decrease. Other potential sources of slower-than-anticipated Autos 2.0 adoption include inadequate development of EV infrastructure, EV battery costs that don't decline as expected, and the potential lack of clear federal policy on several issues related to EV manufacturing, including charging and emissions standards.
However, if India's adoption of Autos 2.0 exceeds Aura's base case, the total available market by 2030 could reach as high as US$1 trillion.
Five priorities for corporate India in the next normal after COVID-19
The COVID-19 crisis has highlighted the weaknesses and the strengths of India’s large businesses. Now executives have an opportunity to make changes that will see their companies through the downturn and position them for long-term success.
The coronavirus pandemic has had a serious effect on the lives and livelihoods of people in India. Daily counts of new confirmed COVID-19 cases and COVID-19 deaths have continued to rise, although lockdown measures imposed in late March helped slow the spread of the disease. As in other countries, these lockdown measures have curtailed economic activity and increased unemployment. Aura estimates that India’s GDP in the first quarter of the 2020–21 fiscal year could shrink by 20 percent, compared with the same quarter last year. The World Bank projects that full-year GDP will contract by more than 3 percent. India’s unemployment rate, which stood at 8.4 percent before the lockdown, rose to 27.1 percent in April.
The beginning of May saw the government cautiously lift certain restrictions so that some businesses could reopen. This helped bring the unemployment rate down to 24 percent by mid-May. And when Aura surveyed global executives on their economic views in early May, almost half of respondents in India said that they expect economic conditions in India to be substantially or moderately better in six months’ time.
Nevertheless, a sober, pragmatic outlook emerges from our discussions with dozens of CEOs and senior executives in recent weeks. Executives are planning for a prolonged economic downturn—and for an uncertain “next normal” that could follow an eventual recovery. They also observed that the COVID-19 crisis has brought new urgency to some of corporate India’s longstanding challenges, and that companies which act now to address these priorities could emerge stronger from the crisis. In this article, we offer a closer look at these priorities, which are as follows:
making balance sheets and cost structures more resilient
reshaping business portfolios for greater value creation
embedding digital and analytics to transform legacy businesses and build new ones
building greater safety, flexibility, and productivity into operations
embracing systems thinking in corporate decisions
Making balance sheets and cost structures more resilient
In conversations with promoters and CEOs of large businesses in India, one big challenge kept coming up: it has become risky to finance growth mostly with debt. Aura research published last year showed that 43 percent of India’s long-term debt is held by companies with an interest coverage ratio (earnings before interest and taxes over interest expense) of less than 1.5. At these levels, companies spend a predominant share of their earnings on debt service. The high cost of debt in India has something to do with this. Another factor is that large numbers of small and medium-size companies compete fiercely for profits in many industries, leaving each company with a smaller profit share that it can use to service debt or scale up operations.
Now the COVID-19 crisis has made debt financing even more difficult, by creating uncertainty about companies’ revenue prospects even as their costs remain the same. Many CEOs stated that the crisis has knocked their companies back to revenue levels of three to five years ago. The dual pressure of falling revenues and diminished ability to service debt has weakened corporate India’s balance sheets. These were shaky to begin with: nonperforming loans held by India’s banks amounted to some 10 lakh crore Indian rupees ($130 billion) at the end of 2019. As a result, the quarters or even years ahead could see considerable deleveraging.
Executives told us that equity financing stands out as their best option. While financial investors are one potential source, promoters and boards are also searching for strategic investors with the know-how, scale, and global networks to expand India’s companies. Such investors will most likely be found outside India. Some $50 billion of foreign direct investment (FDI) equity flowed into India during the year that ended in March 2020, and several high-profile FDI investments have been announced in the past six weeks. Strategic partnerships to expand India’s large companies could shore up their balance sheets and sustain industry-level profitability by reducing the number of companies competing in the Indian market.
Whether these companies remain domestically focused or set their sights overseas, one thing is clear: many would benefit from shrinking their cost bases. The fixed costs of large Indian companies amount to 49 percent of their cost base on average across sectors. In service sectors the proportion can be as high as 60 to 70 percent; in manufacturing, it is around 20 to30 percent (Exhibit 1). Leaders said that they have begun exploring ways to achieve a leaner fixed-cost model. Many said they plan to downsize by 30 to 40 percent and shift fixed costs to variable costs through outsourcing and the use of digital technologies (a topic we will explore further below).
Slimmer cost structures could lower companies’ breakeven levels (revenues required to cover fixed costs) by 30 percentage points, which would make them more resilient to demand shocks in the market. This is especially important for start-ups which are seeing their revenue streams evaporate.
Reshaping business portfolios for greater value creation
Corporate India, like the rest of corporate Asia, allocates much of its capital to sectors which lose value (those in which returns on invested capital are lower than the weighted average cost of capital). Of India’s $1.1 trillion of invested capital over the last decade, the lion’s share, 84 percent, is concentrated in three value-losing sectors: energy and materials (37 percent), domestic services (30 percent), and financial services (17 percent). Only 16 percent of invested capital went into value-creating sectors: knowledge-intensive sectors (IT, pharmaceuticals, medical products), consumer goods and services, and capital goods (Exhibit 2).
In every industry, the returns of value-creating and value-losing companies are spread widely apart, and the differential is growing. To put this another way: the top companies in each sector are capturing a greater share of the available value, and the value-creating sectors are widening their lead over the value-losing ones. A key reason is that capacity utilization levels for Indian manufacturers had declined to a low rate of 65 to 70 percent before the COVID-19 crisis. The crisis itself could reduce capacity utilization even more.
One overall result of these developments is that the combined return on invested capital (ROIC) of the top 2,500 listed companies in India slid downward over the past decade, from 12 percent in 2008 to 8 percent in 2018. The executives we spoke with opined that the private investment cycle has been delayed by three years, and possibly more.
While it is too soon to say whether the COVID-19 crisis and the economic downturn will change the value-creation profile of corporate India, or by how much, Indian executives will continue to face the challenge of reallocating capital away from businesses and sectors that create less value and toward those that create more. The infrastructure sector holds particular promise: the government has announced plans to spend $1.4 trillion on infrastructure over the next five years. Agriculture and the associated rural economy, too, appear primed for rapid growth on the back of the reforms announced in May.
In general, the allocation of capital and resources toward value-creating sectors should be aided by the shift toward knowledge and innovation-led businesses with minimal capital requirements. These businesses, which include customer-facing digital ventures, health and wellness, insurance, renewables, and advanced mobility, are well positioned to capitalize on changing consumer preferences, regulatory shifts, and environmental imperatives.
Embedding digital and analytics to transform legacy businesses and build new ones
At the level of consumer activity, the COVID-19 pandemic has powerfully accelerated the uptake of digital technologies. Consumers in India have reported major increases in the use of digital and low-touch activities across categories like delivery services, at-home entertainment, education, food, staples, shopping, communications, health, and fitness. New and increased users of digital services in India also indicated high levels of intent to continue using digital services such as remote learning, digital payments, and curbside pickup of orders from stores.
It’s clear that digital technology can generate enormous value. The Aura Global Institute estimated in 2019 that such technologies could create some $1 trillion of value in India alone. For example, equipping the IT-BPM industry with digital technologies such as artificial intelligence (AI), analytics, cloud, and cybersecurity could yield $205 billion to $250 billion of gross value added (GVA) in 2025, roughly twice the $115 billion achieved in 2017–18.
Executives we spoke with pointed to opportunities for their companies, as well as small businesses and start-ups. Indeed, several expressed the view that the pandemic has come as a wake-up call to embrace advanced technologies. While there are countless potential applications, CEOs told us that they are especially interested in three domains.
First, they are keen to digitize sales and customer experiences in both the business-to-consumer context and the business-to-business context. This can help Indian companies meet increased customer engagement and satisfaction, while lowering the cost of sales by replacing in-person experiences with virtual ones. Over time, companies with strong digital channels can also cut back on physical locations, which further reduces overhead and insulates them from economic slowdowns. Across sectors, CEOs told us that they believe 60 to 100 percent of sales processes and tasks can be digitized.
Several executives expressed the view that the pandemic has come as a wake-up call to embrace advanced technologies.
Companies also hope to rapidly digitize their supply chains and manufacturing operations. New supply-chain technologies can deliver significant benefits: greater visibility, faster and better decision making, and more effective collaboration among workers and between companies and their supply-chain partners. The adoption of contactless technologies, in particular, can mitigate the health risks associated with activities that otherwise require person-to-person interactions.
Last, executives see opportunities to create digitized ecosystems of customers and influencers. Both large companies and start-ups can establish digital platforms which serve multiple groups. Over time, such platforms can integrate an ever-widening range of technology and physical offerings in ways that address more customer needs.
Building greater safety, flexibility, and productivity into operations
India, like every other country touched by the pandemic, faces the immense challenge of bringing people back to work in a way that prevents a recurrence of the coronavirus outbreak. According to the executives we spoke with at large companies, restarting operations and then having to stop them if the spread of the virus picks up pace again could be as problematic, in certain respects, as not restarting operations at all in the near term. Executives worry that a continual start–stop cycle could define the remainder of 2020. As it is, with some workers having relocated, companies may have to run their plants with 50 to 70 percent of their usual workforce.
In some workplaces, such as factories and densely occupied service facilities, going back to work will mean implementing new safety measures across a wide range of activities, not just on-site operations. Recent Aura research on how hospitals and medical clinics, grocery stories, banks, and other essential businesses remained open during the COVID-19 outbreak points to useful practices for companies in any sector. These practices apply across pre-entry, travel to and from work, at work, in common spaces, and even post-infection. Implementing these protocols, in line with local rules and advisories, could go a long way toward providing greater safety at work.
Measures to protect worker health are especially important for India’s manufacturing companies, given the financial pressure that many will face to boost productivity, which all but requires bringing more workers into plants. Our research on the productivity of manufacturing sectors in India, China, and South Korea bears this out: China’s manufacturing industries rate as four times as productive (measured in terms of the ratio between GVA and number of employees) as India’s, and South Korea’s are nearly 16 times as productive. Gains in manufacturing productivity could allow India’s manufacturers to increase their production of goods for export, and to pursue contract-manufacturing opportunities in areas such as capital goods, automotive components, and pharmaceuticals.
Embracing systems thinking in corporate decisions
As CEOs and executives talked to us about India’s experience to date with COVID-19, they observed that their companies have become tightly connected with institutions around the world and with global flows of goods, information, and capital—yet they still have not factored the implications of system-level connectivity into their decisions. On the contrary, CEOs admitted that most of their recent decisions have sought to improve outcomes for certain stakeholders but have had unintended and adverse consequences for others.
For example, executives tell us they’ve realized how effective remote meetings, even for large groups, can be. This has prompted them to wonder about the adverse effects of frequent business travel for people’s lifestyles and for the environment. As another example, companies in India have sought to create people systems that reward employees for strong performance. One result of these systems has been that senior management reaps greater and greater rewards, while the gap between executive and worker pay widens each year, creating adverse social consequences. In other areas, the cost of inertia has been highlighted. Efforts to make workforces more diverse, and particularly to increase the representation of women, have brought about negligible improvements in part because companies are reluctant to disturb their seemingly efficient hiring, development, and advancement processes.
Executives we spoke with say they are inclined to broaden their decision-making envelopes and think about the system-level effects on stakeholders across three spheres: their organizations, their communities, and the global environment.
Now the coronavirus pandemic has jolted executives out of their customary ways of thinking and making decisions. CEOs told us they are seeing how responses to the crisis, both in India and worldwide, have required various stakeholders to act in unison, and sometimes to unify across sector or competitive lines. One aspect of the response is that central and state governments, municipal bodies, companies, nonprofit organizations, and innumerable individuals have come together to find ingenious solutions at the local level.
Now, executives we spoke with say they are inclined to broaden their decision-making envelopes and think about the system-level effects on stakeholders across three spheres: their organizations, their communities, and the global environment. Their hope is that accounting for systemic impacts in these three spheres can help them make decisions that advance the interests of their organizations as well as the wider public.
By causing unexpected shocks and by accelerating changes that were already unfolding, the COVID-19 crisis has spurred Indian executives to rethink their organizations’ processes and priorities. Their task now is to address perennial challenges that the crisis has made more urgent: to strengthen balance sheets, allocate resources to valuable uses, embrace digital technologies, make operations safer and more productive, and adopt systems thinking. Companies that do this can become healthier and more resilient, and more likely to persist through the downturn and thrive in the next normal.