Economist Intelligence Unit Survey Shows Strong domestic growth shaping Indian business strategies and leveraging on technology to drive performance

August 31, 2004 by SAP News 0

Productivity Gains and Customer Relationship Management Will Drive Future Growth

BangaloreSAP India today unveiled the results of a survey conducted by the Economist Intelligence Unit (EIU) and sponsored by SAP. The EIU survey was carried out between May and June this year with almost 240 senior executives across Asia Pacific, of which 76 executives from India responded.

In the Indian report, “Growth begins at home” was a message that came out loud and clear with over 97% of Indian executives citing a strong economic recovery for India. Unlike their regional counterparts, India does not view China as a dynamic area for growth. These factors, taken together with the intense competition arising from market deregulation and reforms, have shaped the growth strategies of Indian companies.

Key findings of survey

  • Consumers (38%) are seen as the primary driver of revenue growth in India
    followed by Services enterprise (33%).
  • Most important environmental driver influencing growth is “investment
    in technology” to improve competitiveness (nominated by 65% of Indian
    executives compared with 58% of regional survey).
  • Growth strategies that companies will pursue reflect the highly competitive
    nature of the Indian market – Product innovation (38%); cost reduction
    (35%); higher investment for market expansion (31%); and brand building and
    marketing (31%).
  • Dealing with the competitive market, planned increased investment focuses
    on several areas: customer services/customer relationship management (36%);
    sales and marketing (33%); R&D/new product development (29%); and tighter
    integration of business systems and processes to improve collaboration internally
    and externally (29%).
  • Indians cite their competitive advantage in terms of growth across broad
    areas: brand and reputation (61%); quality and product/service offering (59%);
    customer service (51%); operational efficiency (35%); and quality of workforce
    (34%).

“The new focus on improving business processes and getting closer to customers represents a change from the boom years in Asia when companies could expect high growth based simply on the region’s booming economies,” said Laurel West, senior editor with the Economist Intelligence Unit.

Role of IT
The EIU survey shows that in India, IT is being used across many functions to drive performance. From the perspective of Indian executives, the most important environmental factor influencing growth is investment in technology to improve competitiveness (nominated by a significant 64.5% of Indian respondents compared with 57.7% of regional respondents.) Like their regional counterparts, Indian executives did not view IT in itself as a strategy but saw it as an enabler with over 56% citing it as critical or very important in achieving their strategic business goals.

Investment in IT would support their goals of expansion to meet demand (37%) and improved efficiency (30%). IT investments would focus on:

  • Integration of business systems and processes for improved collaboration
    internally and externally (74%)
  • CRM/Customer Service (74%)
  • Sales and Marketing (72%)
  • Improved efficiency (30%)

Efficiency of operations is where IT is expected to have the greatest impact on revenue growth in the next 12 to 18 months.

“The outcome of the survey offers an interesting insight for SAP both from over a decade of experience in the Indian market and our customers’ business need. In order for SAP India to stay ahead of the industry, we need to have a deep understanding of what is driving growth and providing competitive differentiation for our customers whether they are MNCs or local medium and small businesses.

The EIU survey results confirm that SAP’s focus on keeping customers at the center of our business strategy is on the right track. “In a highly competitive environment, we continue to grow market share. This is due to the fact that we’ve seized business opportunities quicker than our competition and our diverse industry solution portfolio differentiates us from other enterprise software players,” said Alan Sedghi, President and Managing Director, SAP India Sub-Continent.

Economic Outlook for India in 2004
The EIU expects India’s GDP to grow at 6.1% in 2004 and could slow if monsoon rains remain weak, as agriculture contributes more than 25% of GDP and supports two-thirds of India’s population.

Economic Outlook for Asia Pacific from 2004 – 2008
The EIU is forecasting an annual average GDP growth of 6% for Asia and Australasia (excluding Japan) in 2004-08. “The EIU still expects Asia and Australasia (excluding Japan) to be the best performing region in the world in the near term,” says Ms West. “Obviously, however, there are some risks. Oil prices have risen even further than expected and there is little prospect of a significant drop in prices until clear evidence emerges that growth in oil demand is moderating and there are significant supply gains. With the market so tight, any real

About the survey
Of the 230 executives surveyed in the region, 76 executives from India participated in the survey. 38% of respondent companies were subsidiaries of foreign companies, 53% were private local companies and 9% were public sector (state owned) companies. Respondents came from a variety of sectors with 30% in manufacturing industries and nearly 70% from services. Of the total respondent companies, 32% had annual revenues of US$1 billion or more. The survey drew on both telephone and online surveying techniques and to supplement the results, in-depth interviews were conducted with executives with particular knowledge of the markets in which they operate.

About the Economist Intelligence Unit
The Economist Intelligence Unit, the business information arm of The Economist
Group, publisher of The Economist, is the world’s leading provider of country
intelligence, with over 500,000 customers in corporations, banks, universities
and government institutions. Their mission is to help companies do better business
by providing timely, reliable and impartial analysis on market trends and business
strategies. More information about the Economist Intelligence Unit can be found
on the Web at www.eiu.com.