A first-generation firm explores reasons to make India a priority
As one of the larger architectural, interior design and planning firms (820 staff in 13 offices), we have joined our counterparts in a commitment to international practice.
As the youngest of the large U.S. firms (we were founded 30 years ago and are still a first generation firm), we were too late to build a significant practice in the more developed countries. In our strategic plan we realized that if we wanted an international practice we needed to focus on developing a client base in Asia, the Middle East and North Africa, Sub-Saharan Africa, Eastern Europe, South America, and India. Today we are building full service offices in some of these regions (including India, China and South America) and are exploring other locations.
India is one of the most obvious and one of the most challenging. There are many reasons to make India a priority:
- India has a population of over 1,235,000,000 and will eventually overtake China as the largest in the world. This population is rapidly urbanizing, which makes most major cities hot development markets.
- One of the positive legacies of the long period of the Raj is that English is the language of business and the only common language among the business elite.
- The economy has a $5 trillion GDP (purchasing power parity).
- There is a clear need for the experience of U.S. design professionals. This is particularly true in programmatically complex building types such as airports, hospitals, universities, research facilities and high- end commercial buildings and mixed use.
- Many highly talented Indian design professionals have come to the U.S. to train and/or work and are now interested in helping their U.S. employers engage in the India market. Moreover, there are many talented architects, interior designers and planners in India that can provide the core of a strong local office.
- For firms such as ours that have a growing practice in the Middle East, the availability of talented, English-speaking, hardworking staff only a few hours away by plane is an important resource.
- There are many large scale development projects, including entire new towns and cities, that require planning and design skills that do not yet exist locally.
- U.S. relations with India have improved steadily and there are many close ties between India and the U.S. today.
- On a personal note, it is one of the richest cultures and most interesting countries for an architect to visit and work. (My wife and I have taken at least one trip together in India every year since 2002 and we still have a long list of places that we want to visit.)
In our strategic plan, we identified India as a place where we thought we could be successful. Two of our India-born and trained staff volunteered to move back and open an exploratory office. Based on their pioneering efforts, a number of us began traveling to India to meet potential clients. We began to win work there and see the potential first hand. One new project, however — a commission to design a new campus for India’s major business school, the Indian School of Business — changed our commitment. We now saw that we could win the type of projects that only exist overseas today — an entire campus for a leading university. With this win under our belt, one of our Senior Principals, Aaron Schwarz (who contributed to this article), volunteered to move over to India to build a full service office. The model for this new office reflected our general strategy of building regional full service offices across the U.S. and overseas. Some offices have built up in India to create a low cost outsourcing center, but that option was not attractive to us. We committed to this new office in 2010 when we could see the Great Recession receding allowing us to return to a growth plan.
Since opening this office, we have experienced both the opportunities and the challenges of working in India. We got off to a strong start in 2011, ran into strong headwinds in 2012, and got busy again in 2013. Late in 2013 and in early 2014 India slowed sharply in anticipation of the national elections that brought in the current pro-growth government of the new prime minister Narendra Modi. Many of us expect the country to become a better place for architects and planners in the future.
That being said, many of the major firms that established offices in India have pulled back. They have found it too difficult a market for a variety of reasons:
- After years of strong growth through 2011, the growth rate began to decline sharply and there was a general loss in economic momentum that impacted the design sector. Moreover, the local currency declined in value, which made our services more expensive.
- India remains a very poor country. It has a highly educated and successful elite and a growing middle class, but the majority of the country lives in abject poverty. For example, the slums depicted in Slumdog Millionaire exist throughout Mumbai, the nation’s business capital.
- The bureaucracy and regulations are often arbitrary and stifling as are the taxes.
- Unlike in China and some other countries, much of the local design community has not welcomed us nor have many sought out our help on their projects.
- Many sectors of the economy function poorly—in particular anything provided by or controlled by the government (roads, power, etc.).
- Corruption is a major problem, but it impacts our clients and projects much more than it does us.
- The economy has slowed visibly since 2011 but many are optimistic that things will improve under the new government. Due to the slowdown some international offices ran out of work and decided to close down. Others relied on India for outsourcing to keep busy, but we have not followed that option.
- The design and construction industry is where China was twenty years ago. The fees charged by local architectural firms are typically a fraction of what we need to do work with international staff in a remote office and the quality of construction runs from uneven to awful. To be competitive, we have had to carefully build up a team in India, with carefully budgeted input from design and technical leaders in the U.S., to carry out projects within the tight fee framework that currently exists.
While the current challenges are significant, we remain optimistic about India and our prospects there. As a firm committed to having a significant international practice, we feel it is impossible to ignore what will soon be the largest country in the world. When I started commuting to China almost 20 years ago, we faced many of the same challenges. Today, our China practice is maturing into one of our strongest offices and the project opportunities we continue to have there are largely unrivaled by the typical projects we see here. I hope that 15 years from now our firm’s future leaders will feel the same about our commitment to India and its contributions to the success of Perkins Eastman.
Bradford Perkins FAIA, MRAIC, AICP is Chairman and CEO of Perkins Eastman