Demographic changes could create a new era of UK-India relations

07 December 2018 Consultancy.uk

As India looks for a boost to its national employment, with a young and growing population capable of buoying its economy into the second largest in the world by 2050, UK investment presents a major opportunity, according to a new study. Businesses from the UK setting up shop there could help create a chunk of the 100 million jobs needed to harness the power of the India’s working age population by 2027.

Economists have for some time been suggesting that the emerging markets known as the E7 could grow around twice as fast as advanced economies, or the traditional G7, on average. As a result, earlier in the year, Big Four firm PwC’s World 2050 report projected China and India to be the two largest economies (by GDP) in the world by 2050.

This would constitute an eight point rise in the proportion of global wealth which India currently holds. At present, India accounts for 7% of the world’s GDP; however by 2050, PwC asserts that it could make up 15% of that figure, leapfrogging the EU, which is likely to see its share of the global economy fall to 9%. However, if that is to occur, a number of changes still need to take place.

Share of the world GDP (PPPs) from 2016 to 2050

India’s population has a large, young demography and a median age of 27.6. Contrary to the majority of Western economies as well as China and other Asian leaders, over the coming years India’s median age will continue to decrease as the population increases. This places it in a unique position which provides both challenges and opportunities. India will need to create nearly 100 million jobs by 2027 to absorb the growth in the working age population, while businesses in many leading nations are facing talent shortages thanks to ageing populations.

According to PwC, here is the crux of the matter. If India fails to provide gainful employment for its growing young population, it may well fall into jobless growth, which will majorly hamper its potential to expand as consumer power in the country stagnates. However, if India can find these jobs, the nation’s growth can accelerate dramatically and be inclusive. Meanwhile, the UK is preparing to leave the EU, further diminishing its access to labour from overseas, while a growing proportion of Britain’s workforce approaches retirement. This therefore represents a golden opportunity for UK-India business relations.

GDP in PPP terms (US$ trillions)

Moving jobs offshore has long been a way for Western companies to cut their labour costs; however PwC’s analysis suggests that migrating jobs to India for this reason alone would be a missed opportunity. According to the firm’s analysis, a major attraction to India for UK businesses is its pace of expansion and the country’s young demographics.  India’s 1.3 billion-strong population includes a large, educated workforce that’s young, skilled and progressive. India is also a world leader in high-value, high-tech industries, ranking third in the world for active ‘unicorns’  – startups valued at over $1 billion.

With the UK preparing to leave the EU, Indian firms also see opportunity for new trade deals. UK businesses have already invested £17.5 billion in India since 2000, and employ almost 800,000 people. As London remains Europe’s largest stock exchange, the UK continues to be a great source of capital to fund the growth of Indian companies. As the UK looks to bolster trade elsewhere, India’s growing economy provides an opportunity to insulate the UK’s market traders from the economic shock of Brexit.

Without concerted efforts, India risks falling into ‘jobless growth’ that will neutralise its demographic dividend

Sunil Patel, Chair of the UK India group at PwC UK, commented, “What makes the business relationship between the UK and India unique is our shared history, culture and ways of doing business which have developed over centuries. In the UK this is embodied by the ‘living bridge’, the Indian diaspora whose achievements and acumen help to cement the strong ties between the two countries… The UK’s working age population is projected to decline due to an ageing population, but India’s expanding and its educated young workforce could provide an answer for businesses looking to grow.”

Vaidison Krishnamurty, UK business group leader at PwC India, added, “Our findings are reflected by the sentiment of business leaders around the world. Our CEO survey found India is in the top five most attractive markets for deal activity, emphasising the country’s increasing international appeal. This is mirrored by Indian CEOs, with nearly half of those taking part in the survey planning a new strategic alliance, showing appetite for collaboration with international businesses.”

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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.”