Research from Tata Communications reveals the importance of global connectivity in emerging market expansion

Mumbai (BSE) & New York (NYSE) – 22 March 2012 – Tata Communications, a leading provider of The New World of 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 global emerging and developed markets, and reveals that 84% of companies in emerging markets have looked to other emerging markets for growth lessons and best practice, highlighting the growing influence of developing markets in the global economy.

Emerging market survey respondents (those from China, India, South Africa and the Middle East) were asked which markets they felt offers most opportunity for rapid growth. China led the pack at 51%, India at 46% and Brazil at 26%. Russia, more usually associated alongside these markets, was listed in 8th place with just 11% of emerging market business leaders feeling it offered rapid business growth.

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 stated that their organisation is looking at expanding into China, with 39% selecting India and 33 % Brazil. 62% of US companies are looking to China for growth while the UK is set to be the biggest investor in Poland with 19% of UK respondents selecting that market.

The opportunities
The main driver for moving to emerging markets is the potential to capitalise on growth opportunities with 63% of business leaders surveyed selecting this as a reason. In line with the focus on growth, competitive activity is also a factor 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.

Vinod Kumar, MD and CEO, Tata Communications, says, “For companies to capitalise on that potential we need to see greater levels of investment in the infrastructure that is essential to support it. 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.”

The challenges
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.

57% of those surveyed stated that political instability would prevent them entering an emerging market. Lack of a reliable communications infrastructure is also a blocking factor for over one-third of those surveyed and was the fourth most selected item in the survey.

Talent
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, which 52% of Middle East based respondents focus on business management and 63% of Chinese business leaders look for general education levels as an indicator.

Communications
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.

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.

Vinod Kumar, concludes, “There is a varied approach to developing and maintaining communications infrastructures depending on the individual characteristics of the market in question. 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.”

Tata Communications – Press Release.

Advertisements