British-owned consultants have been quick to spot their advantage. As India strives to provide the standard of infrastructure that its sustained economic growth depends on, there is plenty of work to be done. The country has a total road network of 3.3M km but half of these roads are not even paved. Its 63,140km Victorian railway network is renowned for its accidents (around 300 a year) and is crying out for investment. And environmentalists have recently warned that Indian rivers are suffering deadly contamination, with sewage treatment works under-utilised and drainage systems decrepit.
Pell Frischmann director Tushar Prabhu set up the company’s Indian business just over 10 years ago. He told NCE that India’s foreign exchange reserves are now a massive $200bn (£100bn). But this was not always the case. He says the country came close to financial ruin in 1992 when reserves ran dangerously low.
But as the government started to liberalise parts of the economy, removing currency controls and lifting restrictions on foreign trade, the crisis eased. It was this upward turn that billed India as the next big thing for business, causing UK consultants to move in.
Prabhu explains that the recent history of the Indian economy is one of ups and downs particularly through the late 1990s.
“But from 2002, further liberalisation of the nation’s economy and the growth of the world economy, including an IT boom, worked in India’s favour and average growth went up an incredible 8%.”
Over this turbulent sequence of time, some British firms thrived, while others crashed and burned.
Mott MacDonald leads the way among UK firms with the most staff employed in India, largely due to its 2001 acquisition of Indian company Dalal. With no permanent expatriate staff, the workforce is entirely local and the company is seen as an Indian one.
Mott MacDonald’s international director Bill Rankin says that the majority of its Indian work has to be done with local resources and prices.
“We needed to bring an international business to India and make it function and participate in a local market,” he says.
So far so good. Two months ago, Rankin opened the firm’s seventh Indian office in Hyderabad partly because work is building up there, and partly to tap into a new resource of engineers from the local university.
“There are plenty of opportunities and we are able to be selective in choosing our projects. We want a mixture of local business and large projects”.
Another aspect of Mott MacDonald’s business in India is design centres. Hundreds of its staff work on projects outside India. In the Chennai design centre, 80% of work is for the huge market in the Gulf, while UK work counts for just 20%. Another design centre near Mumbai specialises in oil and gas projects and uses a large number of its 250 staff for work in Oman.
Consultant MWH employs 173 people across its six India offices but just 62 work on Indian projects. While they do a little work for the Middle East and some for the United States, the focus of the design centres is UK projects. Outsourcing work to India makes financial sense, but MWH operations director Andrew Cowell insists that it is not just a matter of cutting costs.
“It is cost effective but it is not a cheap option either. Huge investment is involved in setting up these offices and providing training for our staff there. Ultimately, it is a direct result of the skills shortage in the UK”.
Pell Frischmann’s Prabhu dismisses the possibility that UK firms ever went to India prospecting for cheap labour. “Engineers never think like manufacturers. It’s not about money, it’s about what projects they are doing and which skills they can use.”
Consultants are mostly impressed by the quality of engineers in India, who boast good standards of English and a high level of education. Many companies also offer exchange programmes for their Indian employees, moving them to the UK for a year in order to broaden their experience and expertise.
But recruiting engineers is never easy and India is no exception, according to Scott Wilson chairman Geoff French, whose firm has had a business in India since 1994.
“Recruitment is an issue wherever you are. We are not in India because of the staff but because it is a good market”. Taking on staff with sufficient experience is certainly a problem for resident director of WS Atkins India, Sreenivasa Murthy who is based in Bangalore. He says that for every 30 or 40 job applications he receives, he typically takes on just one or two.
“India has experienced a boom in IT and software which has seen young people flocking to jobs in technology over the past twenty years. This meant fewer people were taking more traditional courses such as engineering and many departments had to close. This is changing now but we still struggle to
recruit the skilled staff that we are looking for”.
Nevertheless, consultants are increasing their staff numbers all the time as workloads pile up. Sreenivasa Murthy suggests that the volume of work in India rivals that of the Middle East, although in the Middle East, construction is concentrated into select geographical areas. India on the other hand offers projects in rural areas as well as sophisticated cities, spread over many million square metres.
Senior consultancy leaders are careful not to prioritise one market, and put India on a par with the Middle East and China in terms of growth markets.
“It’s a question of finding the right balance” says French.
But work in India comes with a warning and Prabhu explains that cultural differences should not be underestimated by UK firms keen to establish a presence there.
“UK firms generally expect a certain level of treatment but fellow companies in India often lack that level of sophistication. Many word-class businessmen running big firms in the UK hear about India’s booming market and go out there only to have a huge clash with the Indian client. They don’t realise how trying it is to work in India. You have to have a lot of patience”.
And politics inevitably gets tied up in the obstacle course of setting up business in India.
“No infrastructure gets done quickly in India” Prabhu says. “The Indian government has a PhD in bureaucratic nonsense, which means that if you buy land for a project now, you will be waiting five years for it to happen.”
India may be a democracy, but with a coalition of 18 different parties, including the Communists’, the powers-that-be are slow to act.
“The government are very difficult people to work with. They are not customer-friendly, they are not client-friendly and they control rather than respond. And it is this pompous attitude which could hold India back”.
Though the likes of Mott MacDonald, Scott Wilson and Pell Frischmann have penetrated the market as Indian businesses, there are also those who failed. Hyder quickly retreated from India when it made losses on its Indian contracts, while Owen Williams fell out with its local Indian partner.
“To link yourself with a local firm is a risk for the long haul as business practises are so different in India. The companies that have succeeded have either embarked into India on their own or chosen an international partner. Those who rely on Indian joint ventures often come unstuck”.
So is India set to be the new Middle East or China? Consultancy leaders invariably find this question almost impossible to answer. The sheer scale of India makes generalisations dangerous, and it is hard to imagine economic demand in China and the Middle East slowing up.
What seems clear is that India comes as part and parcel of the international package that the big players are now offering clients, where global markets draw from a global pool of resources.
With demand massively outstretching supply, it is an exciting market to work in but also an intensely frustrating one, in which engineers would be well advised to handle with care.