Bain & Company has further expanded its consulting operation in India, with the opening of a new office in Bengaluru. The office will be headed by of Bain’s IT specialist Arpan Sheth. Opening an office in the south will help the firm better service its technology clients, a sector expected to continue to boom on the back of continued growth in the Indian economy as a whole.
The city of Bengaluru (Bangalore) is located in the Karnataka state in the South of India. The city has more than 8,500,000 inhabitants in the greater metropolitan area. The city hosts some of the biggest names in Indian technology, including the headquarters of Infosys and Wipro, whereby the city bears the nickname the ‘Silicon Valley of India’.
The new office expands Bain & Company’s presence in India to four, with its other consulting offices in Mumbai and the National Capital Region as well as its Bain Capability Centre in Gurgaon, New Delhi. To head the new office in Bengaluru, the consulting firm appointed Arpan Sheth as Managing Director. Sheth is also the Asia-Pacific Head for Information Technology and heads the firm’s Private Equity Practice in India. He has more than 20 years in the IT industry and joined Bain in 2003. The new office will presumably supply clients with strong technology related services. On Bain’s future in India, he reflects that confidence remains in the business climate in India. While global markets falter and turbulence in China flow from concerns of slowdowns, India remains a stable growing market into which investors’ money can be pumped, according to Sheth. The country benefits from a drop in the cost of energy on low international oil prices, and strong macroeconomic fundamentals “In that, India stands out and this is our opportunity,” comments Sheth.
Karan Singh – who recently became the MD for the firm in India – is also optimistic about the future of the country and Bain’s potential growth in the region. Concerns remain however, particularly with the slow pace of reforms in India, which has disillusioned some investors. As it stands, a number of economists remain cautious about the country’s ability to achieve its potential higher than 7% growth in the coming period without reforms. So far, Q1 of 2015-16 has not shown above 7% growth. “The growth at 7% is sub-optimal,” Singh says, adding that the Indian economy has the potential to grow at 10%. “We clearly need more reforms to propel the economy.”
Particularly a lack of clarity, according to Singh, is not creating the kind of certainties needed to provide a strong basis to kick-start an investment cycle. “Today, investments are taking place in pockets. Investors are holding off their investments for want of clarity in regulations,” he says.
Even with the uncertainties, the firm is expanding in part on the strength of the technology sector in India – which has, like the sector in the US, enjoyed strong growth in a variety of sectors. Development in the expansion of internet users, particularly through the proliferation of cheap mobile devices with inexpensive data plans, is drawing huge investors into the country’s technology sector. In particular to Web technology and e-commerce firms, with venture capitalists doubling their investment in the country in 2014 to $4 billion. “There is a fundamental shift in the economy in India. It is a long-term shift in how the consumers spend in India, how the consumers have their needs met,” explains Sheth.
Sheth expects investment in technology in the country to increase and further venture and private equity to be invested for 2015 to reach close to the investment high of 2007. Concerns flagged by investors on the possibility of a bubble in the tech industry with many overpriced valuation in start-ups, is, according to Bain, for many not a concern. They will eventually produce strong returns in the coming five to ten years. “There will be winners and losers in the next five years,” Sheth says. “Right now, we are in the middle of great company formation.”