Change is the biggest challenge confronting Indian businesses between now and 2010.Change will come in the form of fresh competitors created by industry consolidation and by the entry of foreign multinationals. It will also come in the form of evolving customer needs and the increasing sophistication of a market that began opening to the world in the 1990s.

Indian organisations, like their global counterparts, have to plan to adapt strategies and business models to enable them to cope with change. Also like their global peers, Indian businesses will use information technology (IT) to develop that flexibility. Among the key attributes of the leading organisations in India in 2010 will be the following:

Adaptability
Across sectors, Indian firms rank the ability to adapt swiftly to change as the most important creator of long-term value. Business leaders expect changes in how they innovate, how they Inter-act with customers and how they manage their firms. Most importantly, many expect regularly to revisit their business models, and to make changes as demand and the competitive environment dictate.

Pervasive innovation
How they innovate will be the area of greatest change in how Indian organisations operate - 44% of Indian executives surveyed say so. Most enterprises expect technological innovation to have the single biggest impact on their business models by 2010. They also expect advances in IT to drive organisational change in the next few years.

Customer intimacy
Close behind innovation, as an area of change between now and 2010, comes interaction with the customer. IT is expected to play a central role in this area, whether through predictive applications that enable organisations to understand customer behaviour better, enhanced access to the corporate network for customers or enhanced customization capabilities.

Command of information
In terms of product and services, gaining a better understanding of customer needs will be a major challenge. Firms will use IT to better understand and service clients, to enhance innovation and to improve efficiencies across a range of business functions.

As the management of domestic firms improves, so will the ways in which they are measured evolve? Financial performance will remain the primary measure of success in 2010, but managers expect that it will increasingly be combined with an assessment based on human capital, customer satisfaction and other parameters. Corporate governance also will become more important in the next five years. Most executives expect board-level compensation to be more closely tied to performance. Overwhelmingly, they also believe that customers and markets will come to reward firms demonstrating good corporate governance with a higher regard for their brand.

Setting strategic priorities
Over the past year, India has proved to skeptics that political differences will not hamper its economic reform process. Despite a change in government, the country has stuck with the liberalisation programme that began in the 1990s, and this momentum should be sustained over the next five years.

Liberalisation's continued progress, however, will bring its own conundrums to local businesses. New rivals will enter from overseas, even as existing players consolidate and flex their muscle. Manufacturers are concerned roughly equally with both forms of competitive threat—a clear reflection of the relative openness of that sector. By contrast, financial services firms (76%) clearly see consolidation as the main danger; indeed, banking and other financial sectors in India are likely to see heightened merger-and acquisition activity over the next few years. Similarly, about three in five of surveyed executives in retailing are more worried about larger rivals than about newer ones, although this is probably because the retail sector is barely open to foreign players.

To meet the threats, be they from more powerful competitors or new arrivals to their market, the majority of Indian firms plan to focus on what they do best, building on established product lines to generate revenue growth. At the same time, a large number say that their preference will be for diversification, searching out new sources of revenue growth. In the end, a business will be judged by the long-term value it creates. India 's survey respondents pin their star on being able to react promptly to change, mindful that their economy is becoming more vibrant and globally competitive. Innovation is viewed as nearly as important, and by manufacturers as slightly more important. This is a new and encouraging phenomenon for the Indian manufacturing sector.

Measuring success
Like their counterparts in China , executives in India overwhelmingly believe that, five years from now, their performance will be judged against a combination of financial, human capital and customer satisfaction parameters.

Towards a new strategic role for IT
IT will be central to the realisation of respondents' strategic goals. Two-thirds of the Indian executives in our survey see IT more as a source of competitive advantage than its traditional role as a driver of cost efficiency. This is perhaps not surprising in tech-savvy India , but most public-sector managers as well see IT in a similar way. The specific areas in which IT is expected to make the most critical contributions to private-sector organisations are in customer service and relationship management, and in the development of their products and services. In the public sector, IT's most vital role will be to help streamline service delivery channels.

Business models: evolution or revolution?
Flexibility and rapid responses to market changes will set the winners apart in 2010. A company therefore needs a business model that can bend with the times. An overwhelming majority believe that changing the way they do business over the next five years will be more important than developing new products and services.

Customers spell change
One major impetus for change will be the customer. India executives believe that fundamental shifts in consumer demand will do much to decide how they do business. This survey finding is consistent with the recent explosive growth in India 's services sector, especially in software, finance, organised retail and tourism. With a growing amiability towards trade and foreign investment - and with government agencies being held to stricter standards - there is likely to be substantial change in consumers' choices and expectations between now and 2010. Business models will need to stay in step.

Their agility also will be tested by declining margins, the availability and quality of low-cost suppliers and lower-cost rivals-particularly in retailing and manufacturing. The twin forces of globalisation and consolidation are again at work here, and will become more intrusive in the next few years. Financial services firms face an extra challenge in increased market de-regulation. India 's current efforts to bring about "rationalisation" and to reform regulatory norms and ownership rules in this sector will have a far-reaching impact on how banks, insurance companies, pension funds and asset managers do business.

Technology and information
Given the success of India's Internet-based firms and its IT services outsourcing model, it may not be surprising that 94% of Indian executives say technology will be critical to their firms' ability adapt the business model and implement strategy in the future. They are also convinced that advances in technology will remain the single largest influence on business models over the next five years.

Most firms feel that, regardless of the industry, distilling knowledge from information will be a persistent challenge. And that the production of goods and services will be driven by demand rather than supply by 2010. Together, these responses suggest that accurate, timely business information - and, by extension, the technology that enables it - will increasingly influence sales and profitability between now and 2010. This view is reflected in expectations of IT's changing role in business. Surveyed executives across industries forecast that their two common goals - expediting change and creating long-term value - will be propelled by IT. They expect IT to improve customer relationships and service; drive new product and service development; and strengthen "core" business functions. In short, they feel strongly that IT will enable fundamental changes in business models over the next five years.

Like their counterparts in China , business leaders in India have different demands for the type of information IT can provide. In China their prime concern is that IT makes information more accessible. In India this is not as important as getting the right information to them at the right time. To be sure, a significant portion of executives in retail and financial services firms focus on availability of information, but the majority in these sectors, as well as in public sector agencies, feel that what IT should improve upon most is improving the accuracy and timeliness of information that is delivered to them .

Customer relationships and innovation
How organisations interact with their customers ranks only behind innovation as the area where India executives expect to see the greatest change between now and 2010. Retailers rate this as their highest priority, and they are convinced that improving customer retention and acquisition is a key value-generator. Financial services firms also attach a high degree of importance to this factor, recognizing that loyal customers generate 5-10 times more profits in the long term than do newcomers.

What will customers care most about in 2010?
Surprisingly, it won't be price. Our survey yielded an unexpected finding for cost-conscious India . A deeper look suggests a maturing of consumer preferences, in which the quality of products and services (and, in the case of manufacturing, levels of personalisation) are becoming more important. The criteria for making a purchase are moving from price alone to the overall value proposition. The "one size fits all" approach to marketing thus is likely to give way to a higher degree of product/service segmentation.

Accordingly, given such customer expectations, Indian firms will focus on improving the quality of products and services delivered to customers in 2010. Levels of personalisation in products or services are seen as becoming the most critical factor. The Indian manufacturers are developing capacities to enhance customisation to levels equivalent to their counterparts elsewhere in the world.

How organisations will innovate?
Know thy customer may be an old maxim, but it is taking on new meaning. Retailers and financial sector firms agree that identifying customer needs and behaviour will be the biggest challenge to innovation.

As a rule, most companies gather customer information, in varying detail and volume, to be fed into the innovation process. If the data and analysis are accurate and up-to-date, the company's response is likely to be appropriate. More important than responding to developments, however, will be the ability to anticipate changes in customer demand and tailor product (and marketing) strategies accordingly. Given the value of getting closer to the customer, a majority of firms are convinced that data management and analytics tools will have the largest impact on their ability to innovate. Financial services executives are particularly keen to use these technologies.

Winning in 2010
Opportunity and challenge will come in equal measure to those doing business in India over the next five years. Change will continue to shake up the country's economic structures, forcing its private and public companies, long used to hiding behind government protectionism, to take a hard look at themselves. Only the most flexible and innovative will survive the challenges of 2010: the creation of new rivals in industry, and the new demands on human resources, corporate governance and customer satisfaction.