Davos 2023: India Maturing As Professional Services Market, Says Deloitte Global CEO Joe Ucuzoglu

Joe Ucuzoglu: Well, I liked the way you ended the question around prediction. One thing that hopefully all of us have learned in the past few years is that making predictions is a fool's errand and what you see here this week in Davos is mixed sentiments.

On the one hand, there is a recognition that it is a choppier, economic environment we are in. That will probably be one of the big storylines throughout 2023, and not trying to predict exactly what that means, whether it's recession in this part of the world or that part of the world, but certainly a more complicated economic environment.

Now on the other hand, there are a lot of reasons for optimism. You see people embracing the full promise of technology, you see an alignment around the imperative of addressing climate in decarbonising the economy and so there are some really positive long-term signals, irrespective of some short-term economic worry.

Joe Ucuzoglu: Most of these issues that humanity faces are not unique to a particular geography trend. We have to find ways to get together. So, there is increased geopolitical tension and some level of decoupling.

Yes, is there some level of growing nationalism and populism in pockets of the world. Yes, but you still see here in general sentiment that humanity wants to come together. Humanity wants to coexist and find ways to work together that are productive and ultimately lifts everyone out.

Joe Ucuzoglu: There are couple of dimensions, the word I would use above all else is agility and that goes for so many dimensions. The environment that we are in, it's really hard to make predictions.

The spectrum of potential outcomes is greater than it's ever been and so we are advising clients to look at a range of scenarios, to go through the exercise of understanding what are the different ways these things might play out and ensure that they have readiness plans in place for each of them. 

N Venkatram: I think when you look at all the surveys whether that’s done by Deloitte or any of the other firms, Indian CEOs are very optimistic. I rely more on individual conversations as well and I believe that the vast majority of us truly believe that this is India’s century, that there is a lot of growth ahead of us and I think that is also confirmed by the economy survey yesterday at Davos that South Asia is the area of growth.

So therefore, what they are really looking at is to say, if you are looking at exports, if you are in technology, it is very comfortable. If you are a multinational, you are also looking at ways in which you can do more work out of India and this is not just offshoring, this is also research, development design and a host of other things.

So, I think whether it's the MNCs or whether it is the Indian companies, I think all of them are very bullish.

Joe Ucuzoglu: We are credibly bullish on India and India is core to the entirety of Deloitte’s global strategy. It is maturing as a professional services market at an accelerated pace and the needs of these organisations as they scale and as the economy grows at rates that are, frankly, far greater than the rate of the global economy as a whole.

The need for high-end professional services, like the ones we deliver, is growing significantly, and it's an incredibly important source of talent, talent that Venkat has shared.

This isn't simply about offshoring, this is about the heart of the business, high end, exceptional skills, grounded in the tech revolution that we are all experiencing, tapping into that wealth of resources to serve our clients around the world.

N Venkatram: Well, I think this is a country which produced RRR, the big R is resilience. I think India did prove that we were extremely resilient through the pandemic. We were also very responsive and across the board. I think all Indian companies did well, even during the pandemic. They took care of the people, most importantly, the care and commitment they showed the people and the very fact that most of us did zero layoffs, I think was a very, very big story.

And then, the hybrid working has come in, particularly in the technology side, there's been a huge amount of recruitment and therefore, I think the sentiment is that we will maintain a certain amount of flexibility with the workforce.

We acknowledge that hybrid working is here for some time, but we have to look at new ways in which we reenergise work, reinvent work, workforce and workplace and a lot of that thoughts is coming out of India to the world. It is also probably recognised with the fact that so many of our global CEOs are of Indian descent.

N Venkatram: I will look at it through a couple of lenses. Let me start with the easiest one, which is the amount of innovation that takes place in India and the number of unicorns we have. I think the startup revolution in India is something we can write textbooks about. It is fantastic. We have created so many unicorns, and we brought in a lot of investment into that. So, I think the investment in innovation and investment in our start-up community is going to continue.

I do certainly also think that industry and business should look at where the government wants to make an impact and go with that. So, we can also look in terms of climate-related and what we need to do and bring investments for that, we look at green hydrogen, there are so many new areas where we should be looking at doing things.

The third is because of the fragility in global supply chains, and there again, my view is, it's not a question of competing and ready to replace someone else. There's so much technology, there's EVs, batteries, the semiconductor industry and other reforms are taking place in that area. These are the areas where we will continue to invest.

The challenge is, other countries have the same plan, and they are also putting huge amounts of money into it. So, I think it's going to be a collective investment by both the government and the private sector, the fact that I think from a household perspective, we are comfortable with the savings fund, as well as enormous amount of FDI. Remember to reach $5 trillion, we need $8 trillion of capital formation. That's a lot of money.

N Venkatram: Of course, we have more than a fighting chance.

N Venkatram: Well, in getting the investment, I think an important part is trust. India has built a lot of trust significantly over the last few years. I don't think anybody doubts performance, the fact that they can do well, the size of the domestic market and all but they need stability.

So, when you bring investment in you have got to give people the time to work out their plans, give them stability on taxes, which we're demonstrating. Don't have anything retrospective which we have demonstrated and there will be a host of this is a long laundry list. I mean, industry will keep coming up with other things they want from the government.

I think the government is also quite positive and trying to ease business. I think the more we can demonstrate that you can trust us, you can come here for the long-term and get your returns for your shareholders, the more the money will come.

Joe Ucuzoglu: Very much so, and you have got a confluence of factors. You have a recognition that India is a hub of innovation, you have a recognition that India is a wealth of talents, that is skilled in the areas that are in highest demand.

And you do have a pretty concerted effort amongst global businesses, to look at diversifying their supply chains, to build in resilience or recognition that we are coming off of a multi-decade period of so tightly tuning these chains with tremendous benefits in terms of efficiency, in terms of bringing price points down.

But the events of the past few years have demonstrated that in some cases, these have not been calibrated to withstand shocks, whether it be a pandemic, a war in Ukraine, and a realisation that ultimately, supply chains are going to have to be rebalanced to prioritise resilience and India will absolutely be one of the beneficiaries.

Joe Ucuzoglu: Corporations want stability, they want predictability. They want to understand that they are operating in an environment where they know the rules and they're not going to change overnight.

You referenced we can't have things being imposed retroactively, they want peace and geopolitical stability and an understanding that there aren't going to be configurations that ultimately cause disruption to their own supply chains and so the more that there's a demonstration of stability and predictability, the greater you will see the confidence building in India, in the relatively long term.

N Venkatram: I think it has to be. It's not just about services, it's not just about exports, it's equally about domestic and most importantly, when you look at a weakening rupee and the rising dollar, in that sense, import substitution is also important.

So, when you look at new corridors we are opening, whether it's defence, whether it's space, a lot of this is also technology-led and a lot of the technology is also from India.

So, I think that you will find a lot of multinationals will come into India and a lot of our own domestic companies, groups in India will grow with this interface of what we call industry 4.0, an intersection of business and technology and there again, if you combine that with talent, which we spoke about earlier, the fact that you have talent and technology and the potential for trade, the three T's I think we have it. Today I am into the alphabets.

N Venkatram: It's interesting that you think of dichotomy because I look at it differently. I see the very fact that start-ups can do well in India means we have an ease of doing business. We could not have the ease of doing business, we could not have had these young people, who decided to put their own money and being able to attract a little more investment at later stages.

On the MSMEs itself, I think to your earlier point on the growth of India, and when I look at import substitution, when I look at foreign companies coming into India, they will look at their supply ecosystem. They will bring the quality parameters, or they will look at the network of suppliers around them and this is really where the MSMEs, the medium and small enterprises come in.

I think what we have to learn is that lending was very tight during the pandemic and what all bankers tell us is that now lending has eased. In addition to that, there's another very important development that we sometimes tend to discount and that is in our country, the government is spending a lot on what we call India's tack.

Whether it is UID, which I would say, created a complete financial inclusion and more recently they are looking in terms of the credit network and the distribution network. When all this comes, it will benefit the medium and small sector as well. So, I think with that combination, we are winning.

Joe Ucuzoglu: This is a special place in terms of the concentration of leaders from around the world and to be able to have aligned conversations around the most important priorities, around the pace of technology adoption.

You see the conversation around AI and all that's being fed by migration to the Cloud availability of large volumes of data, increasingly sophisticated applications picking that data, feeding AI engines, this is going to transform industries.

The conversation around climate, a lot of people were sceptical about that when the world hit some speed bumps that we would see companies retract their commitments. The opposite has happened and in part because people who have been personally impacted are seeing the consequences of climate change. They are seeing these extraordinary weather events.

They are redoubling their commitment to be part of the solution. You really don't have any parallel throughout the course of the year relative to bringing together so many leaders and influencers who have the ability to drive change and talk about these core issues all in one place. So, it's going to be a great week.

Joe Ucuzoglu: Yes, do what is all about making an impact and we find ourselves in this unique position where these issues that our clients are facing are more and more complicated.

They require multidisciplinary thinking, they require coming at these issues through different lenses, usually their strategy dimensions, their technology dimensions, their change management dimensions, there's issues around regulatory compliance and global taxation, and reporting accurately the markets and all those things have to come together.

Deloitte is uniquely positioned as the one organisation that has the ability to actually do that in an integrated, value driven process and ultimately, create outcomes for clients. So, we are very bullish relative to the role that we will play in helping clients navigate a lot of these complexities.