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Indian mid-market businesses are placing greater emphasis on international expansion, as shown by Grant Thornton’s International Business Report (IBR). In Q3 2024, 63% of surveyed businesses reported generating revenue from global markets, up from 61% in Q2. Top destinations driving this growth include the United States, the United Kingdom, and the United Arab Emirates (UAE).
The USA remains the leading market for Indian companies seeking international expansion, consistently ranked as the top choice for expected revenue growth in both Q2 and Q3 2024. Meanwhile, the UK has gained prominence as a key opportunity for mid-market businesses. Although India was the top expansion market in Q2 2024, the UK emerged as the preferred destination for new market entries in Q3. This shift highlights a strategic pivot towards the UK, driven by favourable economic conditions, strong trade relations, and a business-friendly environment.
The thriving India-UK partnership is evident in the growing footprint of UK firms in India. According to Grant Thornton Bharat’s Britain Meets India 2024 research, 667 British companies now operate in India, up from 635 in 2023, contributing an impressive INR 5,082 billion in turnover and employing over 523,000 people. This robust collaboration highlights the vast opportunities emerging within the India-UK corridor.
The UAE is also gaining prominence as a gateway for Indian businesses targeting Middle Eastern markets. With its pro-business environment and prime location along key trade routes, it serves as an ideal base for regional expansion, offering Indian companies a valuable opportunity to diversify their global operations.
However, despite the positive outlook for revenue growth, the proportion of employees focused on non-domestic markets has slightly declined, from 55% in Q2 2024 to 53% in Q3. This shift suggests a more cautious approach as businesses reassess their global strategies and optimise operations amid ongoing economic uncertainties. Meanwhile, the emphasis on non-domestic suppliers and outsourcing remains strong, with the USA consistently ranked as the top priority market in both Q2 and Q3 2024.
The growing focus on international markets aligns with the strong confidence Indian businesses have in the domestic economy. Optimism among Indian mid-market businesses for Q3 2024 stands at 82%, a slight increase from 78% in Q2. In contrast, global optimism remains lower at 74% in Q3. India's growth trajectory remains positive, with GDP expected to grow by 6.5-7% in FY 2025, following a strong 8.2% growth in FY 2024. This confidence is supported by India's strengths in manufacturing, its advanced digital and IT sectors, and a large, skilled workforce. Strategic government policies, including the Production Linked Incentive (PLI) scheme, tax rationalisation under GST, and stable corporate tax rates, further enhance India's appeal as a leading investment destination.
While optimism regarding revenue growth among mid-market businesses has increased, employment expectations have seen a slight decline. In Q3 2024, 72% of respondents reported a positive hiring outlook, down from 73% in Q2. However, profitability expectations remained steady at 83% across both quarters. This discrepancy suggests that while businesses are optimistic about revenue, they remain cautious about hiring, likely due to ongoing challenges in the labour market. The availability of skilled labour remains a key concern, with 77% of respondents citing it as a constraint. As a result, many businesses may delay new hires until they can secure the necessary talent. Economic uncertainties have led companies to focus on optimising existing resources rather than expanding their workforce, providing greater flexibility to navigate fluctuating market conditions.
Mid-market businesses are demonstrating a positive sentiment towards investment, with expectations for workspace investments rising significantly from 70% in Q2 to 80% in Q3, and branding investments increasing from 74% to 79%. This focus on enhancing operational environments likely reflects a response to the shift towards hybrid work models, as improved office spaces can boost employee productivity and collaboration, both essential for driving growth. However, there has been a slight decline in investment expectations for staff skills, falling from 66% to 61%, which raises concerns given the importance of a skilled workforce for innovation and competitiveness. Companies may need to reassess their training and development initiatives to ensure they can attract and retain top talent moving forward.
Mid-market businesses face significant constraints that can impede their growth and competitiveness. Chief among these challenges is intense competition, identified by 79% of mid-market businesses as a critical issue. Transport infrastructure is a major concern for 78% of businesses as inadequate logistics can lead to delays and inflated costs. The availability of skilled labour is equally pressing, with 77% of firms struggling to find qualified talent, which calls for greater investment in training and collaborations with educational institutions. Cybersecurity is another critical challenge, acknowledged by 77% of respondents, as robust security measures to protect sensitive information are important in maintaining customer trust. Economic uncertainty also looms large, affecting 75% of mid-market firms. Fluctuating market conditions can disrupt long-term planning and investment decisions.
The fourth edition of the Britain Meets India (BMI) report highlights the leading UK companies operating in India, ranking them based on revenue, growth, and employment, showcasing the strong partnership between the two countries.
Sustainability has become a key priority for Indian mid-market firms, as they increasingly recognise the importance of integrating Environmental, Social and Governance (ESG) principles into their business strategies.
The growing optimism among mid-market businesses in India for Q3 2024 highlights a strong growth trajectory. As businesses navigate the complexities of the current market landscape, their focus on expanding into non-domestic markets, particularly the USA and the UK, coupled with increased investment in workspaces and branding, positions them for future success.
However, overcoming key challenges—such as regulatory hurdles, shortages of skilled labor, and economic uncertainty—will be vital for sustained growth. As these businesses continue to adapt to shifting market conditions, their resilience and strategic initiatives will play a critical role in driving future performance and competitiveness.
The International Business Report (IBR) is the world’s leading mid-market business survey. Launched in 1992, the IBR provides deep analysis and insight into the views and expectations of around 14,000 business leaders globally on an annual basis. The research runs quarterly, interviewing senior executives within mid-market organisations across 31 economies, from all industry sectors. It examines the economic and commercial issues affecting the growth prospects of companies globally. Questionnaires are translated into local languages and fieldwork is undertaken through a mixed methodology, including online and telephone platforms.