Indian Global Challengers Leading Digital Revolution

Digitally influenced spending in India will increase to more than $500 billion by 2025

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BCG has named 17 Indian companies that are driving the digital revolution in emerging markets, as well as globally. India is returning as the fast-growing economy worldwide along many criteria:

GDP: IMF estimates for GDP growth at constant prices show India should grow at 7.4% in 2018. This is the world’s seventh-highest rate.

* Indian companies have an access to a heavily digital consumer base in India: The number of online shoppers in India has been growing by 45 percent p.a. (CAGR 2009–2016) which is the second-highest figure after Indonesia (66 percent).

* Digitally influenced spending in India will increase to more than $500 billion by 2025.

* Indian consumers also have the highest readiness and openness to innovation worldwide: 85 percent of survey respondents reported likeliness to ride in a self-driving car—compared to ~ 30 percent in Europe and the USA.

Meet the 2018 Indian global challengers: Disproportionally large representation of Indian global challengers (17 percent) on the 2018 list reflects the relative size of India’s national economy.

* India is the second most–represented country on the global challengers list and hosts 17 challenger companies—compared to China’s #1 as host to 25 companies on the list.

* These 17 Indian challengers have experienced tremendous revenue growth: 4 times more than S&P 500 companies and keeping margin levels high in the last 5 years.

* However, only 3 percent of unicorn companies come from India, which is still very low compared to China with 33 percent.

* Half of Indian challengers are concentrated in the industrial goods sector, TMT, and health care, which is also very representative.

Indian challengers are going digital: Nowhere is the trend toward digitization more evident than among the 17 Indian challengers who are leveraging digital technologies both to win locally and compete globally with multinationals.

Reviewing the last 5 years of the Indian challengers, BCG sees a major shift toward digital adoption. The majority of Indian global challengers—71 percent compared to the average of 100 global challengers with 59 percent—is leveraging digital capabilities to succeed, in other words, they are either digital natives or significant digital adopters. Indian challengers develop their digital capabilities in three main ways.

* They invest in internal innovation programs and R&D.
* They pursue partnerships and join digital ecosystems or establish their own.
* They acquire digital capabilities through M&A and private investments in start-up companies and technologies. All are proving to be highly productive avenues for digital development.

Godrej, Sun Pharmaceuticals, Reliance Industries, and Mahindra & Mahindra are global challengers in 2018 who achieve their leadership positions by leapfrogging their developed-market counterparts and disrupting existing business models.

Godrej Consumer Products uses advanced analytics for better sales decision-making and is building cutting-edge salesforce capabilities through technology-enabled learning. Sun Pharmaceuticals has launched a first-of-its-kind mobile application to connect doctors and patients.

Reliance Industries’ Jio built an extremely low-cost network (based in part on owned rather than rented towers); its costs are less than half its competitors’. The result is a high-quality mobile network that has gained about a 15 percent market share and carries some 1.7 billion gigabytes of data traffic every month (the highest rate in the world) at the lowest prices in the world—0.05 rupees/MB.

Mahindra is leveraging IoE (Internet of Everything) to reduce shop-floor changeover time and tracking manufacturing in real time, which makes them able to significantly improve output quality.

Mahindra Group, the parent company of Mahindra & Mahindra and Tech Mahindra, is pursuing new forms of digital engagement with customers in multiple subsidiaries. A new hotel app accounts for 35 percent of bookings at the company’s hotels and resorts.

An AI-backed advisory portal for farmers was downloaded 200,000 times in its first three months. Capitalizing on the rise of the sharing economy, the company has launched two startups: Trringo, which is known as “Uber for tractors,” and SmartShift, a platform that pools small commercial trucks for sharing.

“Going forward, we believe the Indian global challengers have an outstanding position to capitalize on their strong competitive advantage combined with a number of the defining characteristics of emerging markets,” said Sharad Verma, a BCG senior partner in New Delhi and report co-author.

“The Indian market contains one of the world’s last remaining pools of high demographic and economic growth, which the global challengers can access with efficiency and value-based productivity while developing digitally enabled workforces and leveraging collaboration in digital ecosystems.”

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