By Daniel Hunter
Tata Communications today revealed the findings of a unique research study into emerging markets and their impact on the global economy.
The report, conducted by independent research company Vanson Bourne, surveyed 1,600 business leaders from ten emerging and developed markets, and reveals that 83% of companies in the UK have looked to emerging markets for growth opportunities, highlighting the growing influence of developing markets in the global economy.
According to the survey, British companies expect to increase their investment in emerging markets by 34% in the next year.
87% of business leaders from both developed and emerging markets (China, India, South Africa, France, Germany, Hong Kong, Singapore, the Middle East, the USA and the UK) are actively engaging in emerging markets, despite 56% acknowledging that they associate emerging markets with political instability.
55% of Singaporean respondents, 45% of Middle Eastern and 40% of South African businesses have already set up operations in emerging markets, the only markets in the survey to have a higher figure with an established presence than those considering such a move (e.g. India, China).
51% of all respondents (including respondents from China, India, South Africa, France, Germany, Hong Kong, Singapore, the Middle East, the USA and the UK) stated that their organisation is looking at expanding into China, with 39% selecting India and 33% Brazil. 47% of UK companies are looking to China for growth while the UK is set to be the biggest investor in Poland with 19% of British respondents selecting that market.
The main driver for moving to emerging markets is the potential to capitalise on growth opportunities with 63% of business leaders, and 58% of UK respondents surveyed, selecting this as a reason. In line with the focus on growth, competitive activity is also a factor with 20% of UK respondents selecting this as their main reason for moving into emerging markets.
The survey reveals that on average respondents who are looking into, or are already operating in emerging markets; expect to increase investment in emerging markets by 36% over the next year.
UK respondents most associate emerging markets with significant opportunities for growth (66%) and cost effectiveness (47%), however just under one-third of British business leaders also cite a culture of innovation as being a characteristic of an emerging market.
“For companies to capitalise on that potential we need to see greater levels of investment in the infrastructure that is essential to support it,” Vinod Kumar, MD and CEO, Tata Communications, said.
“That will inevitably require more focus on developing talent and innovative thinking in markets that can have less educational investment in those areas. It is clear that businesses are prioritising communications and digital infrastructure as a critical part of their operations. The ability to manage those communications and to ensure reliability and security requires a level of global, and in particular, emerging market experience.”
There are significant challenges ahead of those looking to operate in emerging markets. When asked to select their single most critical challenge for organisations moving to an emerging market respondents were almost evenly split with 18% citing government regulation, 16% established competition, 14% finding skilled staff and 11% communications and digital infrastructure. UK respondents identified finding skilled staff and communications / digital infrastructure as their most critical challenges in moving into new markets.
57% of all those surveyed, and 49% of UK respondents, stated that political instability would prevent them entering an emerging market. Lack of a reliable communications infrastructure is the second most likely problem that would block UK companies from moving into an emerging market.
Talent was identified as a critical challenge by 37% of all those surveyed, with 44% of emerging market respondents stating that availability of talent is a reason they would call a market progressive. However, the kind of talent valued varies market to market with 78% of Indian respondents citing software development skills and 69% rating communications technology experience as key factors, while 52% of Middle East based respondents focus on business management and 63% of Chinese business leaders look for general education levels as an indicator.
Respondents were also asked what one factor they felt was most crucial to successfully running a global organisation. Having reliable communications amongst all branches/territories and a flexible business strategy emerged as the most important with 28% of respondents selecting them. Reliable communications is the most important factor according to business leaders in the USA, Germany and Hong Kong. 28% of business leaders in the UK cite having a flexible business strategy as the one factor most critical to successfully running a global organisation.
Communications infrastructure is the fourth most selected critical challenge for companies looking to move to emerging markets and four in ten people also stated that a lack of a reliable communications infrastructure would prevent them entering a market. This emphasises the importance of telecommunications in an increasingly connected world and demonstrates that reliable communications continue to be seen as a must-have part of any market that wishes to compete internationally.
As part of the survey, Tata Communications also asked respondents what characteristics they felt most important in a telecommunications supplier. 54% selected reliability and 34% security, with a third also choosing experience across multiple markets (both emerging and developed) as essential.
“There is a varied approach to developing and maintaining communications infrastructures depending on the individual characteristics of the market in question,” Vinod Kumar concludes.
“Reliability and security are must-haves. For a telecommunications supplier to add real value they need to have the experience of working in different environments, across multiple geographies and possess the innovation that a global mindset can bring to bear.”
Join us on