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72% Indian firms eye radical change

June 08, 2009 13:26 IST

Using the global downturn as an opportunity, seven in every 10 Indian companies are planning radical changes to their business models in the next decade, while many European businesses are still undecided on their response to the recessionary conditions.

In the Asia-pacific region, around 72 per cent of businesses in India and 66 per cent in China are planning radical changes to their business models in the next decade, said KPMG International in a report.

According to the report titled 'Never catch a falling knife', Asia-Pacific businesses including those in India, are using the global recession as an opportunity for major changes to their operations, in anticipation of emergence of new international markets, while many European businesses are still undecided on how to respond to the recession.

The report has surveyed over 850 senior business decision makers from 29 countries.

It further added, nearly 90 per cent of businesses in Japan and 84 per cent of businesses in Singapore also said they were mulling major changes in their operations in the next decade.

In a sharp contrast, companies in the Czech Republic and the Netherlands only 20 per cent are planning major changes to their businesses. Further, 25 per cent companies in Belgium, 30 per cent in Hungary and 42 per cent in the United Kingdom are planning changes to their business operations.

The highest proportion in Europe is Ireland, where 63 per cent expect radical change, KPMG said.

"Difference in approach between the European countries and those of Asia-Pacific region is marked. . .  several people we spoke to in India and China saw today's problems as nothing new and simply part of the regular process of renewal and reorganisation characterising long term economic development," a surveyor for the KPMG report said.

Indian businesses are also more optimistic than the average, with 70 per cent expecting the recovery to begin by 2010 at the latest, the survey revealed.

Further, 50 per cent of Indian businesses were planning a new wave of investment either this year or next, in anticipation of an up-turn. Interestingly, for 8 per cent of firms the recession has not even affected them at all.

Globally, just over half of the companies polled expect a recovery in 2010, with 22 per cent saying 2011 and 7 per cent saying 2012. Only a very pessimistic one per cent thought we would still be in  recession in 2014.

Further, as many as 62 per cent of Indian firms were planning to change their immediate strategy, driven by various factors -- changing customer buying habits(58 per cent), pressure on cash flow (55 per cent), currency volatility (48 per cent) and industry consolidation (35 per cent).

The report pointed out the prominence of currency volatility was indicative of India's growing but still fragile position in the global economy.

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