07 INTERNATIONAL TECH HUB | BDO LLP
INDIA
be recognised as one of the top 14 advanced manufacturing and robotics ecosystems in the world. The blistering pace of technology gives India a huge opportunity in the offshore revolution. THE TALENT POOL Despite the low cost of labour, India harbours one of the most talented workforces in the world, with a high number of graduates. India’s population accounts for almost a sixth of the entire world, and over four million graduates join its largely English-speaking workforce every year. Organisational consulting firm Korn Ferry believes India will actually have a talent surplus by 2030 - with 245 million more individuals joining the workforce. In a country with a youthful median age of 31, business in India is well-placed to thrive. THE GOVERNMENT SUPPORT From a fiscal policies perspective, the Indian landscape is quite stable when compared to the larger Asian region. An aligned political ideology helps to welcome larger multinationals and smaller businesses from overseas. The business tax rate is now close to 22% for companies in India – down from a one-time 40% - which, combined with income tax of 20% makes the country a relatively tax-friendly location. Special “economic zones” have also been created to reduce the cost of operation. Since 2015, smaller businesses have had support from the government’s Startup India initiative, which provides access to tax benefits, easier compliance and IPR fast-tracking. THE INVESTOR ANGLE India has a vibrant primary stock market with over 4,000 listed companies, but high capital costs restrict the raising of funds and business listings in the country. Debt capital averages over 9%, whereas in the UK or US loans are available at rates as low as 2%. With equity capital this steep, businesses often try and raise capital from AIM, LSC, NYSC or Singapore instead. The central government and bank is working hard to expand opportunities in this area. THE COMMON MISCONCEPTIONS Far more than a back office support hub with low labour costs, India is changing. The third largest consumption economy, Indians have moved from being savers to consumers, with purchasing power rocketing. Educated and highly-skilled Indian workforces can now deliver digital services to as high a quality as anywhere in the world. Not only that, but India has one of the cheapest global rates for data – at just 25 cents for 1GB. For an eCommerce company, that’s a lot of money saved. THE ADDITIONAL BENEFITS With an approachable investment climate, clarity on foreign direct investment policies and focus on establishing infrastructure, India has a lot to offer potential investors.
With expert input from Yogesh Sharma, Deputy Managing Partner, BDO India. Yogesh leads the assurance practice and has over 20 years of experience, providing financial
statement assurance, accounting advisory and cross-border offering services in India and the United States. His extensive experience crosses many industry sectors, with a specialism in Technology and Technology- enabled services.
OVERVIEW: A TRANSFORMED MARKET WITH UNTAPPED POTENTIAL India appeals to investors because of its growing consumer power, increasingly youthful and skilled workforce, and low operation costs. Its projection to have the largest talent surplus in the world by 2030, as well as its reputation as a provider of IT and tech infrastructure services, have attracted many leading tech firms. THE TECH LANDSCAPE Subject to the impact of the current COVID-19 crisis, India’s economy has been fast growing. It’s expected to be the one of the largest consumer market by 2025, with a population of more than 1.3 billion. Over the last five or six decades, a large and aspirational consumer base has enjoyed ever-increasing purchasing power. An extensive middle-income group with a significant migration to urbanisation has created an appealing market for business. Another of its pulls as an international expansion base are its low operating costs. Work that might cost large sums in the UK can potentially be done at a fifth of the price in India, to the same standard. THE TECH BUSINESS ECOSYSTEM It’s little wonder so many international tech corporations house their “back office” manpower in India, given its low costs. HP, Cisco, Microsoft, SAP Concur and many others all have a presence in the Indian tech market – with Indian workforces providing services, developing products, and innovating in the tech and digital space. The scope is incredible, particularly for IT and the service technology sector, with over 15 million Indian workers already involved. Areas previously perceived as agricultural or manufacturing hubs are fast becoming a home for quick-growth start-up ecosystems. Within the country there are changes in hotspots on this side, Bangalore, for example, has overtaken Mumbai and New Delhi to
INDIA HAS A VIBRANT PRIMARY STOCK MARKET WITH OVER 4,000 LISTED COMPANIES
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