April 11, 2018

Balancing Digital Investments Is Key to Driving Sustainable Growth in India’s Manufacturing Sector, Accenture Research Finds

Report names six imperatives for Indian companies to gain value from “Industry X.0”

NEW DELHI; April 11, 2018 – Manufacturing businesses in India are keen to invest in digital technologies but are struggling to derive tangible business benefits due to an imbalanced approach to digital investments, according to Reinventing Business with Industry X.0, a new report from Accenture (NYSE: ACN).

Ninety-three percent of the executives surveyed – who represent 29 manufacturing and production companies in India with an annual turnover of at least US$1 billion – want to leverage digital for growth, with 76 percent intending to use digital to create new, experience-driven revenue opportunities. However, only 31 percent plan to use digital to drive greater operational efficiencies, likely missing out on bottom-line improvements.

“There appears to be a singular focus on revenue growth, with businesses neglecting an important requirement of the digital era: the transformation of operations to unlock trapped value,” said Anindya Basu, geographic unit and country senior managing director – Accenture in India. “Businesses in India must place equal emphasis on using digital to drive efficiencies at the heart of the business and using the freed-up funds to drive strategic investments in new products, customer experiences and business models that create long-term value.”

For example, Accenture research has found that industrial equipment companies globally could reduce their total cost per employee by almost 20 percent and increase their market capitalization by nearly 25 percent if they combine innovative technologies such as autonomous robots, artificial intelligence, blockchain, big data and 3D-printing.

Indian manufacturers have been struggling to achieve globally competitive scale and productivity. While the industrial sector in India has grown 6 percent annually since 2011, to more than US$700 billion in 2016, the value addition per employee is one of the lowest in the world, at only US$6,000.

An Action Plan for Success
The Accenture report suggests that the right combination of digital technologies could help Indian industrial companies address this issue, as the technologies hold the potential to drive dramatic efficiency improvements and exponential revenue growth. Specifically, the report recommends that companies adopt a new approach that Accenture refers to as Industry X.0. It is an action plan for becoming more adept at embracing technological change and digital technologies to manage the shift from industrial manufacturing to producing and delivering digital products and services and supporting them in the field.

According to the report, Indian businesses should take six actions to derive value from Industry X.0:

“Industry X.0 will unleash a new level of energy into the manufacturing industry,” said Raghu Gullapalli, managing director - industrial, Asia Pacific, Africa, Middle East & Turkey (AAPAC), Accenture. “To harness the true potential of digital for profitable growth in the future, Indian companies need to look at immediate-term value extraction from legacy data and build a progressive roadmap for connecting their products, equipment, supply chain, people and customers. Companies that embark on this journey in a holistic manner today will emerge as the digital leaders of tomorrow.”

Read the full report: Reinventing Businesses with Industry X.0

Research Methodology
Accenture surveyed senior executives from 29 companies across 12 manufacturing and production industries in India with annual turnover in excess of US$1 billion. The companies were a part of a larger survey of more than 900 senior executives from large industrial companies across 21 different nations to understand how companies deploy digital technologies and the benefits they derive from them. The research identified a set of 10 technologies critical for Industry X.0: 3D printing, artificial intelligence, augmented/virtual reality, autonomous robots, autonomous vehicles, big data analytics, blockchain, digital twin, machine learning and mobile computing. Using both survey data and company financial data, researchers performed an Economic Value Modelling analysis to identify the technology combinations with the biggest impact on top- and bottom-line value release, as measured by market capitalization and cost-per-employee. They then identified the optimum mix of technologies by combining results from machine learning and principal component analysis.

About Accenture
Accenture (NYSE: ACN) is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 435,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

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Garima Misra Punia
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