When political, business and NGO leaders arrived at Zurich airport on their way to the World Economic Forum in Davos two years ago, they were welcomed by large blue and white billboards, proclaiming India as “the world’s fastest-growing free market democracy.” When they checked into their hotels in the Swiss resort town, they received gift baskets containing a pashmina scarf, an Apple iPod loaded with Indian music, medicinal oils, and a CD providing economic and cultural information about India.
During the conference, guests could relax at India-themed events at most of the major hotels, enjoying Indian beer and wines, and food prepared by the famous Indian chef Hemant Oberoi. At the close of the conference, a four-hour gala dinner attended by about 650 guests featured Bollywood choreography and music presented by one of India’s most popular DJs.
It was a remarkable branding effort and an impressive indicator of the growing strength of the Indian economy, which has been expanding at an average rate of 8.8 per cent over the last four fiscal years, making it the second fastest growing major economy (after China, of course) in the world.. Throw in rising foreign exchange reserves, a booming capital market, a rapidly expanding supply of foreign direct investment, and a growing number of Indian companies confident enough to compete on the global stage, and it’s easy to see why business leaders around the world are excited about the opportunities in India.
Not surprisingly, those opportunities have attracted the attention of American and European public relations agencies. Some U.K.-based financial public relations firms have been in India for more than 20 years, having entered the market to assist with privatization efforts in the late 80s. But it is only over the last four or five years that major U.S. multinationals have established a firm foothold in the market.
In October of 2004, Edelman entered into a joint venture agreement with R&P Management Communications, led by veteran Indian public relations practitioner Roger Pereira; a little more than a year later Burson-Marsteller acquired Genesis, one of the leading firms in the Indian market, with—at the time—close to 200 employees in six wholly-owned offices.
There has been even more activity over the past 12 months. In June of last year, Fleishman-Hillard opened its first Indian office, in Mumbai; technology public relations agency Waggener Edstrom Worldwide entered into an affiliate agreement with local giant Adfactors PR; and U.S.-based healthcare specialist Chicco Agency signed an agreement with Positive Communications of New Delhi. And in November, Publicis Groupe agreed to acquire leading Indian consultancy Hanmer & Partners, which it is merging into its Manning Selvage & Lee operation, while public affairs specialist APCO Worldwide opened offices in Mumbai and New Delhi.
It’s not difficult to see what is attracting all this interest. The Associated Chambers of Commerce & Industry of India recently suggested that the Indian public relations industry is expected to double in size by the year 2010. And while local industry leaders believe the AssoCham estimate of the size of the industry to be grossly inflated—AssoCham said in a release the industry was currently worth $3 billion; our own estimate suggests the global PR business is worth only about $8 billion—its growth projection is easily within reach.
Roger Pereira, one of the founding fathers of the Indian public relations business and now head of R&PM:Edelman, points to basic economics. Foreign direct investment in India between 1991 and 2000 added up to around $16.7 billion. Last year it topped $15.7 billion, and from April to December 2007 it was close to $12.7 million.
At the same time, the services sector logged an 11.2 percent growth rate in 2006-07, with marketing services in general—and public relations in particular—growing at an even faster rate.
“In the last few years we have witnessed robust and consistent growth with international firms establishing or strengthening their presence in India,” says Ashwani Singla, chief executive officer at Genesis Burson-Marsteller. “We are also seeing greater number of local entrepreneurs looking to cash in on the growing opportunity creating a greater need for companies to differentiate themselves—to attract both clients as well as talent.”
“The PR industry in India has evolved considerably over the last few years,” adds Melissa Arulappan, vice president and director of development at Corporate Voice|Weber Shandwick in Bangalore. “Although public relations here is a relatively young industry in the true sense of the word, India has played ‘catch up’ in quick time and is today in a fairly mature stage of development. It is a very buoyant industry, much like the rest of the Indian economy, and holds tremendous promise and excitement.
“The truism that “the world cannot ignore India” holds good for the PR industry as well and all the major global PR consultancies have a presence in the country today.”
There have been three major growth drivers, according to Arulappan: liberalization and the opening up of the Indian economy to outside investors; the subsequent entry of multinational companies, which have brought with them increased demand for high quality public relations services; and the emergence of India as a strong economy and the resulting need to “sell” the India story more effectively on the world stage.
“One of the things that makes us different from the other BRIC countries is that India is a private sector driven economy,” says Ajay Khanna, chief executive of the India Brand Equity Foundation, a public-private partnership between the Indian government and some of the country’s largest corporations.. “And we have a consumption-driven economy. Car sales are up. People are now buying their own homes at a much younger age.” Demographics also appear to be working in India’s favor: more than 50 percent of its population is under the age of 25.
Not surprisingly, the growth of the consumer economy has led to increased opportunity for marketing and communications professionals.
“With the opening-up of the economy and sustained economic growth, India has witnessed a paradigm shift across the communication verticals,” says Jaideep Shergill, partner at Hanmer & Partners. “The coming of international corporations and their need to build the corporate identity over a period of time has enabled an enormous growth opportunity in the public relations domain in India.”
The influx of multinational corporations has been a major driver of the growth of public relations in India, Shergill says. “While some of them are established brands, many others are unknown amongst their target audience and markets in this country. For them to create and sustain a positive brand image… the role of public relations agencies have become more optimal and focused. At the same time, growing competition between multinationals and the Indian industries have provided an impetus to the need and growth of public relations. It has become imperative for companies to have the correct messaging and the positioning and this has presented an enormous opportunity for professional communications experts.”
As a result, the public relations business has grown not only in size, but also in sophistication. Says Shergill: “A PR agency is no longer looked at as only expert in media relations but is being seen as a unit that will provide with holistic communications solution and consult the client on various communications issues ranging from marketing communications, below-the-line activities as well as through-the-line activities.”
Singla sees additional growth drivers. The first is the rise of the Indian consumer. “Both the domestic as well as the international companies are vying to grab the attention and the share of wallet of the burgeoning ‘middle class’ and the increasing number of ‘well-to-do,’” he says. “They see public relations as a cost effective tool to grand the attention of their consumers.”
At the same time, companies are competing equally fiercely for talent. “With a huge demand-supply mismatch, there is war for talent fuelling the need to attract and retain talent,” he says. “Employer branding and employee engagement is the latest preoccupation of the CEO and are fuelling a range of employee attraction and engagement services.”
And finally, “as government evolves from its role of a player in the industrial realm to a referee and a regulator companies need to work with government even more closely to create a competitive and a transparent policy environment. Public affairs and government relations are beginning to be recognised as an important component of the public relations bouquet.” As a result, Genesis last year formed strategic alliances with sister WPP group companies BKSH & Associates and Quinn Gillespie & Associates to offer a global public affairs capability to Indian companies.
“The public relations industry has been in the process of maturing over the last five years,” says Rishi Seth, managing director of the Indian operations of Text 100, one of the first specialist firms from the west to open its own operations in India back in 1996. “Clients as well as agencies are looking to implement a campaign-based approach with specific metrics. This is new to India, versus the ad hoc media visibility tactics being executed earlier. As the Indian economy is growing and more and more sectors are realizing the benefits of public relations, the market is expanding quantitatively and qualitatively.”
Shergill, meanwhile, sees growth in environmental communications and broader corporate responsibility work, and also in a number of industry sectors—healthcare, telecommunication, information technology, aviation, consumer durables, retail and real estate, as well as public sector work.
“While the IT and ITES [information technology enabled services, the outsourcing of processes enabled by technology] sectors have been big spenders over the last decade or so, other industries like telecoms, retail, real estate, infrastructure, consumer products, travel and hospitality are also major growth sectors,” adds Arulappan. “Even traditionally old world industries like manufacturing are redefining themselves and engaging more actively in sustained PR campaigns.”
Both India-based companies and overseas multinationals appear to be using public relations more strategically, market leaders say.
According to Arulappan: “The most significant and exciting change I have seen in the last few years is the ‘globality’ of the world we live in. Indian companies are venturing into global markets not just through selling their products and services but also through acquisitions and setting up facilities. Foreign companies, on the other hand, are increasing their investments in India and need to communicate the importance of India as a market to them. We are operating in a global world and need to respond to and communicate to a global audience and global issues; these developments have necessitated a shift in what and how we communicate.”
As a result, “PR is recognized and valued for a role that goes beyond being a mere media functionary to that of being a strategic advisor, playing a more critical role within an organization,” says Arulappan.
While many industry experts credit western multinationals with raising the level of sophistication about marketing and public relations in India, they acknowledge that the best Indian companies are becoming more sophisticated.
“Traditionally, Indian firms have used public relations as a tactical visibility generating arm through execution of media campaigns,” says Seth. “However, as the international firms have come in and started to use PR in a more organized manner in sync with global practices, the progressive Indian companies are asking for the same set of services and standards.”
Adds Madan Bahal, managing director of Adfactors Public Relations, one of the largest remaining independent firms: “The Indian companies are more astute buyers of PR. While the multinational seeks higher process orientation, the Indian companies seek superior output.”
That may be reflected in the results of a Corporate Reputation Index survey conducted last year by consultancy firm TNS India, which found that information technology companies Infosys and Tata Consultancy Services enjoyed the strongest corporate reputations in India, followed by Tata Motors, Tata Steel and Hindustan Unilever.
According to Shubranshu Das, vice president at TNS, “Corporate reputation is assuming increasing importance in today’s business, economic and social environment. As corporate behavior is increasingly under scrutiny and corporate valuations go beyond financial performance parameters, it is considered to be a measure of confidence in the organization and goes much beyond market capitalization and brand equity.”
The public relations sophistication of these companies should not come as a surprise. After all, many Indian corporations are competing effectively on the global stage.
“Indian companies are buying companies in the U.S. and Europe, they have American employees doing high-paying jobs, and we have to talk about that as part of the overall picture,” says Khanna, who cites companies such as Infosys, Mittal and Tata, all of which have made headlines with their expansion into western markets. “Our outbound investment is now equal to our inbound investment. India is now the third largest investor in the U.K.”
But if the best companies are increasingly smart about public relations, many smaller companies are still using PR primarily as a less expensive alternative to advertising. Even Seth acknowledges that the sophisticated clients he cites as “a very small minority and in sectors where Indian firms are competing directly with MNC’s like technology. A large portion of Indian companies still have old world corporate communications cells which take care of most of the in-house work using PR as a media visibility and liaison work function.”
“Most Indian companies are family run businesses,” adds Shergill, and while the most successful have brought in professionals to manage their businesses—including the public relations function—they can remain blissfully unaware of the traps they can fall into when dealing with the media.
“Some of the major Indian companies have extremely savvy spokespeople who would seek the guidance of their communications consultants before speaking to the media and stick to the briefing provided by the agency,” he says. “But most of them get swayed while giving interviews and share with media classified information…. To make them understand the consequences of off-the-cuff statements is by far the biggest challenge that the Indian agencies are facing.”
If outside observers tend to underestimate the public relations savvy of Indian companies, they may also fail to anticipate the problems faced by foreign multinationals.
It should be remembered that most western companies are relatively new to the Indian market. Before 1991, when then-prime minister Narasimha Rao initiated economic reforms designed to open up a previously closed and insular economy to more foreign investment, the country had little interest in attracting western business. So most western companies are still learning.
“Understanding the Indian consumer is a Herculean task,” says Shergill. “A product developed abroad targeted at the Indian consumer can backfire in the initial stage. The Indian market is extremely price and quality sensitive and with globalization, consumers in India are becoming increasingly aware of a product’s value propositions. Multinationals entering India have to develop products that suit the local need, as the Indian market by nature is conventional.”
At the same time, “Multinational brands are always under the scanner not only of the government but also more often of the media.”
“MNCs should realize there is a distinct India bias in the media’s outlook,” says Bahal. “This perhaps stems from a general suspicion of anything ‘foreign.’ Also, MNCs should avoid taking India and the Indian media for granted. Equally important is not to be oversensitive to minor inaccuracies in reporting as some sections of the Indian media may not exercise the Western rigour. Another crucial aspect is too much focus on the English and business media at the expense of regional media, which is counter-productive.”
Certainly, companies need to be aware of the need to customize their marketing and public relations campaigns for the local market.
“One of the biggest mistakes that the global firms make in India is that they look to replicate international PR campaigns in India, without first analyzing the local market,” says Seth. “This often causes low resonance amongst audiences because the image that they have in the international markets is not reflected in India.” He offers an example to illustrate the point: an automobile company from the west coming to India and positioning a $25,000 car as providing value for money in India.
“Another instance could be a web 2.0 major globally thinking international messages about being the next big technology and therefore a big business opportunity will be readily accepted in India,” he says. “Indian audiences will ask for relevance to India, market size for India, commitment to the Indian market and so on before they accept this.”
Certainly, foreign multinationals need to take the time to learn how to deal with the local media, and to be aware that overseas companies may face a different level of scrutiny that their local competitors.
Says Pereira: “There is a natural tendency to celebrate Indian companies’ success, especially global success, while holding MNCs to a higher standard.”
Says Singla: “Predominantly, the Indian business media loves to report the growth story—the growing economic clout of India, the rising SENSEX [the Bombay Stock Exchange index of 30 leading stocks] , the global acquisitions by Indian corporates, the business and the businessman in assorted global rankings and of course the rags to riches story.”
“The Indian media are evolved, sensitive, probing and have huge impact in creating public opinion,” says Shergill. “They are hawk-eyed and closely follow the listed companies and multinationals. When it comes to business, the financial dailies”—the five key titles are The Economic Times, Business Standard, The Financial Express, Hindu Business Line and Mint—“can sway opinions of key constituents.”
“The attitude of the Indian media to business in general is quite positive,” says Bahal. “As for stories, the business media’s focus is on transactions, Indian companies’ initiatives abroad, and Indians who have made their mark in global markets. The mainstream and regional media are still preoccupied with politics, social issues and sports. Some of the regional dailies have very little space for business.”
But that doesn’t mean they can be ignored.
“My advice to my multinational clients would be fairly simple and straightforward,” says Singla. “First, haste makes waste. Patience is a virtue in India. Be prepared to build your business step-by-step. Second, look beyond Delhi, Mumbai and Bangalore. There is really a fortune at the bottom-of-the-pyramid. And third, there is not one India but many. Learn it, understand it and act accordingly.”
That means—among other things—taking the time to understand the India that exists beyond the larger cities.
“What is perhaps unique to our country is the challenge posed by the cultural and regional diversity of India,” says Arulappan. “Running a multi-city PR campaign is at times almost like running several multi-country programs in one. This is particularly noticeable when one is launching consumer campaigns where the cultural nuances become more defined. Even within one city, there are cultural pockets created which may call for a different strategy and approach as we have seen when launching a quick service restaurant chain in India.
“Most PR campaigns have traditionally been centered around the major metros or what are referred to as ‘tier one’ cities. However with a growing economy, tier two and tier three cities and towns are also emerging as an important market for several corporations. These new markets require a different approach and understanding—although the PR industry is beginning to respond to this challenge quite effectively.”
Many of the leading firms now operate networks that reach into dozens of cities. Adfactors, for example, now has a network of 250 people in 12 offices across the sub-continent; rival Integral itself has offices in 12 major state capitals and a network of “stringers” in 16 addition locations to offer a genuine national reach; and Hanmer & Partners employs 350 professionals across 42 cities
“The biggest mistake an MNC can make in India is to misunderstand the local culture,” Pereira says. “It is a subtle culture that does not always say what it means, or mean what it says. As a result companies often end up misreading the market opportunity—and misjudging the need to truly embed and endear in the local community. The second biggest mistake most MNCs make here is to prioritize low cost [public relations services] over quality and strategic thinking, except at the time of crises.”
The need to understand local Indian markets is one reason most multinational public relations firms have chosen to acquire local firms, and why local firms continue to flourish even after an influx of global competitors.
“The number of multinational firms has increased significantly,” says Madan Bahal, managing director of Adfactors Public Relations, one of the largest remaining independent firms. “Virtually all the major network-owned consultancies have established a presence either through acquisitions or through exclusive affiliate arrangements. Even a number of mid to large size independents from the U.S., the U.K. and Asia-Pacific are exploring the Indian market.
“But the few independent local firms, with some significant size, have the advantage of knowing the local market and the media better. They also have wider servicing capability.”
“In the short term the locals will continue to hold sway due to their inherent understanding of the complex market place, nimbleness in business and aggressive pricing,” says Singla. “But once the international firms bring in the capital, gain the depth of expertise, make investments to attract the best talent and create greater opportunities for growth of their people they will become formidable competitors.” Burson-Marsteller, he says, provides a good example of how to build a business in India: the agency invested three or four years in local affiliate relationships before making an equity investment in an independent firm with strong credentials, keeping and supporting the local management team, and providing management and staff with access to world-class intellectual property and professional development tools.
Shergill, however, sees a more complex picture. Multinational firms have been effective in “introducing global best practices, strategic consultation, crisis management” and other high-end services, and have made life more difficult for established Indian firms. At the same time, there are numerous specialist firms in India “providing their clients with phenomenal communications solutions and increased brand visibility.” Those firms have so far been unaffected by the advent of the multinationals.
Moreover, public relations in India remains a very local business, and the dynamics of the Indian market vary dramatically from region to region. Says Shergill: “A local agency that knows the dynamics of these markets will have an advantage over multinational firms. More often than not, messaging of corporations is localized and in such a situation the understanding of the target audience and the medium to be used is a forte of the local firm.”
Seth agrees. He expects to see the competition from multinationals intensify. “With India becoming an important market for most of the Fortune 500 companies, no large public relations firm can afford to ignore this market,” he says. But there will still be a role for local specialists. “The multinational firms enjoy the advantage of best practices, processes and client relationships. However, local firms are better with local knowledge, relationships and local established teams. Over a period of time, the multinational firms will strengthen presence by getting local mandates from their global clients as well as Indian companies which have a global outlook. But local firms which are good in particular verticals—sectors such as infrastructure—or skills—areas like pure media relations—will continue to do well.”
But the intense competition between established local firms, expansion-minded multinationals and the next generation of Indian public relations agencies is clearly creating major challenges for consultancy managers, particularly when it comes to attracting and retaining talent. The demand currently outstrips supply to a degree that alarms many top professionals.
“Public relations is relatively a nascent industry in India even when compared to other related industries like advertising or market research,” says Seth. “Therefore, the challenge is to attract young talent to the profession and convince them that this is a long-term career option--although, with better pay scales and more visibility, the attractiveness of the industry is improving.
“The issue with recruitment is more acute, since we have a huge demand supply gap for PR professionals and people in the sector are relatively young. Job hopping is quite rapid without a long-term career view. The industry is focusing on training, providing career roadmaps and more mature management practices to retain talent.” Text 100, in fact, was named among the top 25 employers in India in a Hewitt survey last year. But Seth says, “We still have a long way to go before this issue is sorted out.”
“To identify, recruit and retain the right talent is perhaps the biggest challenge the industry is facing today,” says Shergill. “An agency will go at length to recruit the worthy talent at a salary higher than the market rate.” AssoCham estimates that the attrition rate at some agencies exceeds 40 percent and its president Venugopal Dhoot says that as many of 90 percent of entry-level professionals are looking for new opportunities within a year.
The first problem is the lack of public relations education.
“The demand-supply gap is huge, and growing,” Bahal says. “There are several public relations schools, but they impart a low level of training.”
Shergill points to a handful of exceptions: the Indian Institute of Mass Communication, Xavier Institute of Communications, Symbiosis Institute of Mass Communication and Bhartiya Vidya Bhavan. But he says: “Unfortunately most of these courses are theoretical and not practical,” he notes. As a result, agencies often hire talent with professional backgrounds ranging from IT to HR to journalism and the creative arts.”
Adds Bahal: “We are in indeed recruiting from other professions which include media, financial research and various industry sectors.”
Meanwhile, agencies are increasingly facing competition from corporate public relations departments looking to attract the best talent.
“Companies are hiring people to staff corporate communications positions in the belief that they can absorb the role of giving strategic direction internally and task PR firms only for execution,” says Pereira. “Unfortunately, this is a makeshift solution and robs companies of the opportunity to benefit from an external perspective and counsel. But in the process, the role of communications has become more tactical and output-driven instead of outcome-driven.”
That’s the other big challenge facing the Indian public relations business as it continues to mature: while the top tier firms compete for top talent, a growing number of less sophisticated agencies are willing to offer tactical PR services—usually restricted to media relation—at a lower cost.
Shergill also warns of “increasing mediocrity” in the industry, a problem he attributes to the growing popularity of public relations as a career choice and the low—almost non-existent—barriers to entry. Even in the most developed markets, the reputation of public relations has been tarnished as the nomenclature has been usurped by publicists to bestow greater respectability on their work. In developing markets such as India, clients may not always understand the difference between the ability to write press releases and pitch the media and the ability to deliver true public relations counsel—particularly if the former is offered at a steep discount.
Arulappan puts the shortage of quality talent at the top of the list of challenges facing the Indian PR industry, but cites two others: the lack of an effective and impactful evaluation tool to measure PR campaigns (a problem by no means unique to India) and a tendency to rely in the absence of such a tool on “media relations and ink on paper to evaluate impact “
Singla agrees. “The severe shortage of talent is leading to above average compensation being paid to below average talent,” he warns. At the same time, the professional education infrastructure is very weak and needs to be strengthened and there is a lack of investment in talent development.”
These factors “will adversely impact ability of the industry to move up the value chain,” he says, warning that as a result, public relations firms “could stay predominantly as providers of media relations services. If we don’t move up the value chain we cannot address long term issues of competitive compensation, investment in infrastructure and training. The industry will need to learn quickly from its western cousins and perhaps also look at avoiding some of the mistakes they made and look to do things differently in India.”
“There is no accepted minimum standard of quality and as a result quantity and mediocrity have become predominant,” is how Pereira sums up the state of the industry.
That may sound pretty bleak, but most professionals—even Pereira—are optimistic about the long-term future of the Indian public relations business.
Indeed, Pereira says he expects the industry to grow “exponentially, barring a major global economic crisis. Every global company has India on its radar. Every global company believes India is at the tipping point and so they want to be in early and they want to be successful. Without a successful public relations program in place, this is impossible.”
Others are similarly enthusiastic, while acknowledging the challenges.
“I see continued growth opportunities emerging from traditional avenue like crisis and issues, corporate social responsibility and new sources like healthcare, public advocacy, investor relations,” says Singla. “However, for the industry to be able to harness such opportunities and truly become valued and respected it will need to address issues related to depth of knowledge and quality of service.”
Adds Shergill: “The Indian public relations industry is poised towards healthy growth in the coming years. The next couple of years will witness the entry of more multinational agencies, more consolidation of agencies and the takeover of established local consultancies by multinational agencies. What we do need to take into consideration is that the growth of the industry is directly proportional to retaining talent. We need to formulate a method to train and retain resources for the benefit of the industry.”
And Text 100’s Roshi Seth speaks for most industry observers when he says: “We see tremendous opportunity in the Indian public relations market in India. On the one hand we have a vast majority of potential users of public relations just about beginning to realize its benefit and investing in it in a meaningful manner. At the other end of the spectrum are sophisticated practitioners, who want to elevate to the next level of public relations, be it leveraging peer to peer media, focusing on methodology of PR to gauge its effectiveness or influencer relations for environment management. Added to this is the fact that India is one of the fastest growing economies. Therefore, from a market stand point the growth opportunity is fantastic.
“The challenge will continue to be finding good people to support this growth. The industry really needs to look at a long-term sustainable solution to attracting and retaining talent.”