McKinsey & Co. sees bright future for Indian economy

01 December 2014

After India’s decade of average growth, marred by bureaucratic and global economic pressures, the recent government stability, a will to push through reforms and rapid urban development are all expected to fertilise strong year on year growth over the coming decade, forecasts McKinsey & Company. “India’s fortunes have changed. If you look at the trends that are going on in the world, India is right in the centre," says Dominic Barton, CEO of McKinsey.

In the recently released research paper ‘India’s economic geography in 2025: states, clusters and cities’, global strategy consultancy McKinsey & Company reviews India’s broad economic landscape. The firm looked at both the macro and granular level for key drivers for growth in the period 2012-2025. The report reveals that in recent years India’s economy has faced a dropping momentum, mainly led by deceleration in the industrial sector.

Real growth of value

On the back of a recovering economy and effective government reform, under the leadership of Narendra Modi, India’s fortunes for the coming years are brighter, according to McKinsey. The firm analysed the the effect of the reforms and wider economic challenges, and created three scenarios that measure the potential economic development of India between 2012 and 2025. In the worst case scenario, in which reforms are held back and political instability returns, the annualised growth rate is calculated to be 5.2%. The between position, with key reforms taking place, sees growth at 6.1%. While continued political stability and will, as well as the implementation of wider reforms, may allow for a strong growth rate of 7.2% annually.

McKinsey insights India estimates

According to Dominic Barton, CEO of McKinsey, the improving outlook will have a positive effect on the country’s attractiveness to foreign multinationals. "People had given up on India. They felt India is too complicated and it was difficult to get anything done. It had dropped in the last five years on people's priority list,” he said to the Economic Times of India. “I think India has gone right back up, people are interested, obviously people are going to want to see action but I think the feeling is they will because this government seems serious," the Canadian-origin CEO adds.

High growth clusters
The report’s more granular analysis reveals the key factors that stand at the heart of India’s revival, of which urbanisation and ‘high performing clusters’ are considered as those that stand out. Calculations form the researchers forecast that just 49 such clusters (183 districts) will drive about 77% of India’s incremental GDP from 2012 to 2025.

Cluster GDP

Of the 49 clusters, 21 are likely to be more affluent and grow faster than the India average:

Clusters matrix on GDP growth and richness

The faster growth and higher per capita output of these ‘high performing’ states can be attributed to several factors, foremost amongst them being the investment in human and physical capital, higher urbanisation, relatively superior land use, and the benefits accrued from inherent structural advantages e.g., coastlines. These states have also broadly adhered to fiscal boundaries. Consequently, they are typically home to high-skill industries such as automobiles and automotive components, petrochemicals, financial services, pharmaceuticals and IT amongst others. “These complementary factors have created a virtuous growth cycle in these states,” write the consultants.

High performing states are advantaged on key parameters

The second key component to India’s growth lies in the accelerated urbanisation of regions. In 2011, India was 31% urbanised, and McKinsey estimates it will be about 38% urbanised by 2025, with some 538 million people dwelling in cities by that time. This will benefit the country’s productivity – the consultancy states that an average urban job has approximately 1.7 to 1.9 times the productivity of an average rural job.

Urban population

With these fundaments in place, Barton believes that India could find itself in a sweet spot, not only boosting the outlook of its own nation, but also providing stimulus to the wobbly world economy. “If India unleashes, it is going to help not only India but the world," says Barton. 


Project management industry adds £156 billion of value to UK economy

15 April 2019

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.


Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”