Urbanisation, growing middle class and inclusion to lift Indian prosperity

21 February 2017 Consultancy.uk

India has enjoyed rapid economic growth in recent years, pulling hundreds of millions out of abject poverty. Growth in the near term remains robust at 7.7% per annum, according to a new report. Areas of concern remain however: big Indian cities – pulling in millions of people – lack the basic infrastructure for safe and productive living, and women, who continue to be severely underrepresented in the country’s economy, face considerable barriers to inclusion. 

The Indian economy has enjoyed strong growth over the past decades. Between 1994 and 2012 the country’s poverty ratio fell from 45% of the population to 22%, while its nominal GDP jumped from around $333 billion in 1994 to $2 trillion last year. In a new report, McKinsey Global Institute (MGI), the research arm of McKinsey & Company, analyses some of the vital economic pillars of the country, as well as considers five areas in which the country may be able to find additional prosperity.

Indian GDP growth

Growing prosperity

The current rate of growth for the Indian economy remains relatively robust, particularly when compared to other emerging economies. In 2015 the country managed growth of 7.3%, with only China, at 7.5%, out ahead. Brazil and Russia both saw contractions, at -1.6% and -2% respectively, while Mexico and Turkey were able to increase only 1.1% and 1.2% respectively. 

When it comes to near-term future growth, the country has by far the most rapidly growing economy between 2016 and 2020, projected at 7.7% per year. China comes in second at 6.4% per year, while Brazil and Russia manage to pull out of recession to an average annual growth rate of 2.2% and 2.3% respectively. 

The continued growth of the economy is set to create a relative boon for the country’s middle class (those with disposable incomes of more than $31,000 per year), whose number are said to triple to around 89 million households by 2025. 

Urban centre mammoths

Urban development

Urbanisation is projected to grow in India, up from 31% in 2011 to around 41% by 2030, while in some states, such as Gujarat, Kerala, Maharashtra, and Tamil Nadu, urbanisation will reach almost 60%. By 2030 the number of people living in cities will increase to almost 600 million, and the number of cities with more than a million is also expected to hit 69.

Cities are one of the major growth engines of the Indian economy. The McKinsey report suggests that up to 77% of new growth in the country between 2012 and 2025 will be from 49 clusters of districts with metropolitan cities at their centre. Some cities, such as Mumbai and Delhi will have such sizable local economies by 2030 that they compare to large countries’ 2014 economy (Malaysia and the Philippians respectively).

The rapid development of cities in India, as well as migration to the cities by formerly rural dwellers, comes with considerable challenges however. Infrastructure is one area of dire need if Indian cities are to become safe and economically productive. Currently, city dwellers make do with 105 liters of water per capita per day, around half of the international benchmark, with similar gaps in public transportation, sewage, and sanitation. Air pollution is also dangerously high in many of the largest cities, with ten of the world’s more air polluted cities in India. Migrants may also find themselves out of luck in the big city, with around 44% (171 million) of those living in cities in 2012 below the empowerment line – representing the minimum acceptable standard of living and about 50% above the poverty line. 

According to the consulting firm, national and local government are taking an active role in the development of urban areas – given the potential benefits to their people and economies. A large number of initiatives are in the pipeline, such as the Atal Mission for Rejuvenation and Urban Transformation to transform the infrastructure of 500 towns; Pradhan Mantri Awas Yojana, which aims to build 20 million affordable homes; as well as India’s Smart Cities Mission include a number of initiatives aimed at improving infrastructure; and efforts to reduce pollution.

Gender inequality in India

Gender parity

Another area in which the firm considers potential economic benefits for the Indian economy is improved gender parity. MGI estimates that around 17% of GDP is contributed by women in India, far behind Sub-Saharan Africa at 39% and China at 41%. Many women in India spend much of their time in unpaid care work, which is 10 times that of Indian men, compared to an average of three times globally. When it comes to MGI’s gender parity score, India performs particularly poorly compared to almost all regions globally at 0.48, with North America and Oceania out ahead on 0.74 each, while China comes in at 0.61.  

According to the firm’s analysis, India is the region that would most benefit from moving towards the same level of parity of the fastest-improving country in their region, and could see an additional $700 billion added to GDP by 2025 – representing a 1.4% GDP boost on its current already strong performance and adding 68 million more women to the workforce.

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

15 April 2019 Consultancy.uk

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.

Outlook

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.”