Financial technology (fintech) has made significant strides in recent years and emerged as a game-changer in India, significantly impacting how its banking and financial industry has operated.&nbsp;This 2023 is expected to be a good year for fintech in India, with several emerging industry trends expected to present worthwhile investment opportunities.&nbsp;The Trajectory of Fintech Development in India The development of India’s fintech sector thus far can be characterized by challenges in integrating innovative technologies with traditional banking systems. However, due mainly to the ongoing efforts of the public and private sectors, the industry’s overall outlook has gradually improved year-on-year.&nbsp;Sustained interest from public and private entities alike has driven nationwide fintech innovation. Thus, the fintech trends emerging in 2023 will carry beneficial applications encompassing several areas of society relevant to the Indian government, businesses, and citizens. The benefits provided by fintech will affect the short-and long-term future of India’s banking landscape.Potential Fintech Trends in 2023 One of the foremost fintech trends for 2023 is the continued adoption of digital banking. Although the adoption of digital banking, like mobile wallets, e-money, and online payments, increased over the pandemic, further migration of other banking processes onto online channels is expected. This includes but is not limited to digital lending, personal finance management, insurance, etc.Another trend likely to gain popularity in India is the application of blockchain technology, a concept that many became familiar with due to the emergence of cryptocurrency. Blockchain technology enables the digital storage of data, like e-money or currency, onto a series of blocks or categories via cryptography– a method of protecting information using codes.&nbsp;Through blockchain, traditional banks can transform their systems and decentralize finance in India, which benefits users as blockchain transactions are more secure, faster, and efficient overall. The implications of blockchain will also affect how other industries operate, specifically in the retail sector and payments. In the coming years, blockchain should be an area of interest for the private sector.These innovations suggest that fintech will be a driving force in facilitating long-term changes in banking. Specifically, neo-banking, commonly understood as online banks without physical branches, is expected to become commonplace in India’s financial landscape. Although neobanks can exist independently outside of any physical branch, they can also collaborate with existing traditional banks. Such setups benefit micro, small, and medium enterprises (MSMEs), as neo-banking will allow for increased accessibility and quicker turnover. Neo-banking could help sustain private sector growth, especially in India’s promising start-up economy.Meanwhile, traditional banks will also seek to integrate fintech tools that help boost their productivity. For instance, artificial intelligence and machine learning can be utilized for financial functions, such as financial forecasting, automated investment, and advanced analytics that provide actionable insight into financial business decisions. However, it is essential to note that such fintech tools and systems must be used in addition to human expertise.&nbsp;Introducing these fintech innovations will also call into question the safety of digital finance. As fintech continues transforming banking in India, the government and banking institutions will invest more in relevant areas, like cybersecurity and infrastructure, to ensure the utmost security of financial services. Overall, these measures will help bring regulation to fintech, which will inevitably contribute to its long-term viability in India.

Like in other countries, financial technology is developing rapidly in India, with several industry trends expected to emerge in 2023.

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Financial Technology Trends to Look Out for in India This 2023

Noah Imson

Last April 2023, Coca-Cola India officially announced its investment into an Indian food technology (food tech) platform called Thrive, an all-in-one online food application that features delivery, pickup, table ordering, customized self-service, etc. This is a promising sign for tech start-ups in the food and beverage (F&amp;B) industry as it signifies that major F&amp;B players are recognizing and willing to invest in the potential value of start-ups.&nbsp;More importantly, such a development indicates the future direction the F&amp;B industry in India is heading toward, wherein digital transformation and smart technology are trending and quickly becoming crucial to success. In India, F&amp;B players seeking short- and long-term success can capitalize on several promising trends.Latest Food Technology Trends in India Digital transformation and technology integration in India’s F&amp;B industry is already well on its way due mainly to the efforts of stakeholders from the private sector and public sector players like government agencies.&nbsp;If appropriately implemented, several food tech trends emerging in India will benefit F&amp;B businesses and their operations. Specifically, operators can get insight into consumer preferences and purchasing behavior through data analysis powered by smart technology like AI. This data will help businesses optimize their menu items and better manage inventory, increasing efficiency and potential profit while minimizing costs. Other trends include automation enabled via machine learning (ML), which can benefit operations like food ordering, preparation, delivery, inventory management, etc.Meanwhile, with F&amp;B businesses in India leveraging technology to improve operations, integrating technology is also expected to transform consumers’ experience as characterized by personalization and transparency. Considering the high volume of data businesses will access, technology will allow consumers to tailor-make their F&amp;B experience (ex., personalized meal plans, choosing specific quality ingredients, etc.)&nbsp;India's food and beverage industry is embracing digital transformation and riding the technological wave, innovating to enhance customer experiences, optimize operations, and drive growth. With further advancements in technology expected, as well as its continued integration into F&amp;B operations, we can expect other digital disruptions.&nbsp;These innovations will likely offer further investment opportunities for businesses and consumers, ultimately benefitting India’s F&amp;B industry at large.

India’s food and beverage industry is transforming and integrating the latest smart technology, with several promising trends presented to players.

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Emerging Technology Trends in India’s Food & Beverage Industry 

As per World Bank's latest Logistics Performance Index (LPI) 2023 rankings, India's logistics sector has significantly improved as its position climbed six, placing 38th out of 139 countries. The LPI index evaluates performance based on criteria analyzing six key areas:&nbsp; infrastructure, customs efficiency, service quality, international shipping arrangement, frequency of on-time delivery, and parcel tracking– all areas in which India has shown marked improvement.To capitalize on the recent growth and further sustain market development, parties interested in the Indian logistics industry should familiarize themselves with emerging trends.Technology-driven Logistics Solutions in IndiaThe growth achieved can be attributed largely to the rapid adoption of recent technological advancements, like artificial intelligence and robotics, to name a few. The rise of these innovations has (1) reshaped consumer demand and expectations and (2) improved the performance of businesses in India's logistics industry.&nbsp;Several technological innovations are expected to greatly enhance India's logistics sector's performance and facilitate the emergence of new investment opportunities. Here are a few tech advancements that are currently advancing logistics in India:<ul><li>Artificial Intelligence (AI) and Machine Learning (ML)&nbsp;– Once logistics firms in India become more familiar with AI and ML, models can be specifically trained to meet the needs of logistical operations. This includes but is not limited to route optimization software, tracking systems, warehouse management systems, etc.&nbsp;</li><li>Robotics and Automation&nbsp;– The rise of automation technologies will significantly transform how workers function and logistics management. Specifically, warehouse operations and last-mile delivery processes will be streamlined, increasing productivity and reducing costs.</li><li>Advanced Data Analysis&nbsp;– Like other industries across the globe, logistics firms in India are trending towards data-driven decision-making as the technology available enables data processing and provides actionable insight. AI and ML models can be trained to provide businesses with predictive analysis, given that there is access to historical and real-time data. The ability to do so will help enterprises to understand their consumers better and improve end-to-end management of logistical processes.</li></ul>Overall, these innovations serve to benefit Indian logistics businesses and consumers alike. Integrating such technology will help modernize the industry, making it more competitive against the global market in the digital age. Start-ups and companies specializing in such technology should capitalize, offer their services, and partner with logistics firms looking to transform digitally.E-commerce Logistics Growth in IndiaThe adoption of innovative tech and the digital transformation of logistics in India will also further establish the rise of a digital ecosystem within the industry. This is especially beneficial when considering industries like e-commerce, wherein rising consumer demand will translate into business opportunities for logistics players.As consumer demand increases in e-commerce, opportunities to establish partnerships between e-commerce and logistics entities will emerge. Specifically, third-party logistics (3PL) can offer their services to e-commerce companies and be their logistical providers, handling everything from warehousing and inventory to transportation and delivery.&nbsp;The emergence of cross-border e-commerce is another possible entry avenue for the logistics industry. Aside from fulfilling the same logistical needs that domestic e-commerce companies require, international counterparts will need logistics players who specialize in customs and are familiar with laws surrounding the entry of products. Logistics firms that have built a vast network with reliable contacts will likely benefit the most from cross-border e-commerce, as such connections will be more attractive to international parties.Moving forward, players in India's logistics market can also explore similar entries and partnerships in other industries with high demand for logistical services, such as construction, pharmaceuticals, or manufacturing, to name a few. Given that the operational strategy will vary per industry, logistics players should focus on leveraging innovative technologies as such tools provide flexibility in their application. Interested parties should expect trends like smart technology and cross-industry partnerships to continue beyond 2023.

India’s Logistics Industry 2023: Market Trends and Opportunities

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Key Market Trends in India’s Logistics Industry 

With the acquisition of Auctus Advisors (“Auctus”) by YCP Holdings (“YCP”), YCP gets access to India's lucrative consulting space. It is driven by the country's rapid economic growth and increasing demand for specialized expertise across various sectors. Given the importance India is gaining in the global landscape—with its relationship deepening with Western economies as well as more mature economies of Asia such as Japan and the Middle East—Auctus is expected to have significant value unlocking for YCP. Auctus brings expertise, resources, and experience to help organizations develop and implement successful strategies across a range of industries, to name a few: Aviation Ecosystems (airlines, airports, cargo, MRO, etc.), Real Estate, Technology (services and products), Consumer &amp; Media, Transportation and Logistics, Energy (utilities, renewables, etc.), Healthcare, Private Equity, and Government (policy and execution). Auctus has a leadership position in the Technology and Aviation sectors: <ul><li>In the Technology sector, Auctus helps organizations develop and implement strategies to drive growth and innovation. Auctus brings expertise in areas such as product development, market analysis, and technology scouting, helping clients identify and leverage emerging technologies to gain a competitive edge. Further, Auctus empowers organizations to create new business opportunities, develop and implement comprehensive digital strategies that align with broader organizational goals, and support digital transformation. </li><li>The Aviation industry has been a key focus for Auctus since the firm’s inception. Our consultants have deep expertise across the Airport Ecosystem: opportunity evaluation, construction, regulatory, cargo, terminal operations, fuel farm, and commercialization / non-aero (including duty free, retail, and F&amp;B). Further, we have also supported airlines across areas such as network optimization, revenue management, operational efficiency, customer experience improvement, post-acquisition turnaround, sub business strategies, and so on. </li></ul>Auctus also has strong presence in the Infrastructure, Hospitality, Consumer-led, and Transportation sectors: <ul><li>In Infrastructure, Auctus has helped governments and businesses navigate the complexities of developing and implementing large-scale infrastructure projects across highways, railways / metro, utilities, commercial real estate, and others. Auctus brings expertise in areas such as project management, financing, transactions and due diligence, and public-private partnerships, helping clients optimize their investments and deliver and operate projects efficiently. </li><li>In hospitality, Auctus brings expertise in areas such as site selection, project viability assessment and structuring, and on the consumer side, helps clients stay ahead of evolving consumer preferences and trends, enhance revenues, and optimize operations. </li><li>Finally, in the transportation sector, Auctus helps organizations develop and implement strategies on go-to-market, project evaluation and bids, commercialization, operational efficiency, etc. </li></ul>Across all these sectors, Auctus brings functional capabilities in form of strategy development &amp; execution, digital transformation and implementation, valuation &amp; commercial due diligence, bid advisory, regulations &amp; policies, program management, and more. Auctus’ constant growth is aided even further through its integration with YCP’s management consulting arm, YCP Solidiance, expanding the firm’s presence across key cities in the Asia-Pacific region, the US, and Europe. Its global network of professionals, who are well-versed not only in unlocking opportunities for global clients but utilizing local insights and strategies, have extensive experience across a wide variety of business sectors and capabilities. To learn more about YCP Solidiance, please visit <a target="_blank" rel="" href="http://ycpsolidiance.com">http://ycpsolidiance.com</a>.

Expanding Auctus’ Global Capabilities with YCP Solidiance 

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YCP Auctus

The next generation of IT CEOs must be master integrators. Only those who can derive synergistic value from amalgamations of consulting, design, analytics, and engineering will succeed. Three trends underpin this assertion:First, business and technology are now interdependent. Five years ago, it was possible to build growth strategies for a railway company or a retail conglomerate without focusing on the technology. It is impossible today without integrating data engineering, data analytics, customer experience, front-end design, and back-end cloud mechanics. IT CEOs now lead integrated business solution companies, not just IT services companies.Second, IT budgets are getting distributed to business CXOs. Earlier, both the “run" and “change" budgets resided with the Chief Information Officers (CIOs.) Now, the “change" budget is rapidly moving to Chief Digital Officers and business CXOs such as Chief Revenue Officers and Chief Supply Chain Officers. These CXOs are focused on business outcomes, not the underlying technologies. IT CEOs must be able to re-position and sell to business leaders beyond the CIOs to capture this high-value business.Third, companies which directly impact the client’s business outcomes are valued higher. Analytics companies like Fractal and Tredence can charge $40 per hour or more in India, whereas the corresponding rate for IT firms is in the low twenties. This results in valuation multiples of 30X forward Ebitda or more for analytics firms, while for IT companies, it is around 10X. Consequently, IT CEOs must re-position the “centre of gravity" of their firms higher up the value chain and closer to the business outcomes of their clients.These trends have become obvious over the last few years and have resulted in a spate of M&amp;A activities: Management consulting firms such as McKinsey are acquiring analytics, design, and engineering firms to capture downstream value. IT companies are acquiring niche consulting, design, and analytics companies to re-position themselves higher up the value chain.Basically, both top-end management consulting firms and large IT firms are trying to restructure themselves as amalgamations of four distinct businesses: Consulting, design, analytics, and engineering. In a way, this is an effort to re-create the Accenture model.Even though most of Accenture’s offerings and talent resemble Indian IT firms, it is positioned as consulting-led and can command higher billing rates and value.But as most CEOs learn the hard way, successful acquisition does not mean successful integration and successful integration does not lead to expected value realization.The likes of McKinsey are struggling with the relatively lower rates that analytics, design, and engineering companies can charge. IT companies are struggling to integrate the high-cost talent and ambitious culture of consulting firms within their existing cost-focused structures.Therefore, IT CEOs who master integration will be disproportionately successful in the coming decade. This will require two capabilities:First, master integrators must have a visceral understanding of the cultures of the constituent businesses. Management consulting firms comprise of insecure over-achievers who solve smaller, but high-impact problems for Boards and CEOs. They are highly paid, have large expense accounts and want to rise fast.Design firms are often led by moody mavericks who believe in the transformative power of design. They see what others do not and therefore are often exasperated. Analytics firms typically struggle with their position, as they compete with consultants on the data analytics side and with IT firms on the data engineering end.Consequently, each requires a different type of leadership, organization design and incentive structure.Trying to integrate these diverse cultures within the prevailing Indian IT culture (large, relatively simpler projects delivered cheap) is unlikely to succeed.Second, master integrators understand how each of the four distinct components contribute to revenue, margin, value, and influence. Consulting revenues may be relatively smaller, but it yields high margins and exercise disproportionate influence on the positioning of the overall company. Design may have very specific utility, but its influence on consumer behaviour may make or break strategies.Master integrators are able to deploy the right team to the right problem, with the right incentive structure, to add end-to-end value to clients. They are able to drive cooperation without structural integration.Mastery in integration is no longer a good-to-have, but a must-have capability for the next-gen IT CEOs.<hr>This column was written by YCP Auctus Partner&nbsp;Abhisek Mukherjee, and was initially published by Mint, one of India's most esteemed business news publications.&nbsp;The content may be viewed on&nbsp;<a target="_blank" rel="" href="http://livemint.com">livemint.com</a>.

The next generation of IT CEOs must be master integrators. Only those who can derive synergistic value from amalgamations of consulting, design, analytics, and engineering will succeed

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Next-Gen IT CEOs Must Be Masters of Integration

Abhisek Mukherjee

In the nineties, pioneers of Indian IT had to sell India before selling their services. Often, the first slide used to be a world map, with US and India marked out with airline routes. The pioneers sold well. Within three decades, we have crossed USD 300 billion in IT services exports and the trillion-dollar figure is within reach.Over the past three years, I have worked with multiple Japanese clients who are building businesses in India. This engagement accelerated after the management consulting firm I co-founded became a part of a Tokyo-listed (and Singapore headquartered) consulting and investments company. Over the past three months, I have met dozens of Japanese companies to understand their India plans. What I learnt may be summarized in three statements:One, many Japanese companies, and almost all conglomerates, are keen to invest in India. Two, many are unsure about how to enter India. Three, most are scared about the inherent ambiguities and uncertainties in the Indian market. Let me elaborate:One, nobody doubts the fundamental opportunity of the Indian market. In fact, one Japanese leader told us that after ChatGPT, India is the second most-discussed topic in Japanese boardrooms. Thirty years of growth and evangelization has re-established Bharat as the land of milk and honey. Establishing the opportunity is no longer the challenge.Two, there is significant confusion on how to enter India. We heard many questions: Do we acquire or build organically? Given the noise in the M&amp;A market, how do we find the right targets? Can we manufacture in India, or should we import for the domestic market? Which state has the best incentives? Are consumers ready to pay for Japanese quality? Do we hire local leadership or send expatriates? Do we build ourselves or partner with a local player? How can we identify the right partner? These questions indicate that a standard playbook for the Japan-India corridor is yet to emerge.Three, there is a palpable sense of fear about the Indian market, which to the relatively orderly and disciplined Japanese, appears to be the embodiment of VUCA (volatility, uncertainty, complexity and ambiguity.) This perception discourages Japanese companies from taking large bets on India. The resulting smaller and cautious bets (such as posting a few expat managers to scout the market) rarely lead to outsized returns and this creates a vicious cycle: lack of meaningful success stories discourage new bets.Therefore, the Japan-India corridor needs a different kind of pioneers from the west. The evangelization needs to focus on how to access the market and how to de-risk meaningful bets, rather than the opportunity. There are four ways to do this:First, industry-specific advocacy groups (such as NASSCOM for IT) comprising of individuals and companies with deep roots in Japan and India need to be built. The members of this group need to have deep experience and networks in both markets, and they need to run focused campaigns with Japanese companies on how to enter India and de-risk investments. While the relationship is well-established in auto and manufacturing, such advocacy groups are required for IT, deep-tech, consumer products and so on.Second, these advocacy groups must curate industry-specific lists of potential Indian partners. Having a body that is trusted by both parties that vets potential partners will help address the risk perceptions Japanese companies have on India.Third, there is an opportunity to build funds (both Venture Capital and Private Equity) focused on the Japan-India corridor. These funds should pool investments from Japanese companies and build a track-record of successful investments in India, across sectors. This will help Japanese companies build confidence in the Indian market while avoiding direct exposure.Finally, there is space for specialized advisors, who have networks, capabilities and experience in both markets, to emerge as facilitators in the Japan-India corridor. These advisors need to be committed to this corridor, as given the cultural and linguistic nuances, customized solutions are necessary. These advisors should help build the standard playbook for Japanese investments in India.Japan’s population (and therefore market) is shrinking, and India is the last large market left to drive global growth. It is for us to lose billions of dollars of Japanese investment.<hr>This column was written by YCP Auctus Partner&nbsp;Abhisek Mukherjee, and was initially published by Mint, one of India's most esteemed business news publications.&nbsp;The content may be viewed on&nbsp;<a target="_blank" rel="" href="http://livemint.com">livemint.com</a>.

Japanese clients interest in building business in India. Japanese companies are keen to invest in India. 

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How to Attract More Japanese Investments to India

The common complaint against management consultants is that they deliver glossy reports and not results. There is significant truth in this, but the reason is not lack of intent. The real reason is complicated. Two points before exploring the real reason:First, typical clients are reasonably smart CXOs who understand their business, are measured, and often paid, on results. If management consultants lacked results focus, they would not be hired at a premium. Yet management consulting has been one of the enduring and profitable industries for the past century.Second, there are two ways to do management consulting: First-principles and hypotheses-driven. First-principles firms sell pedigreed consultants and a differentiated way of thinking. They jointly solve a business problem ground-up in close collaboration with the client. Basically, such firms imply that they have smarter people with better thought processes. While many such firms find a few loyal, long-term clients, they rarely scale. It is difficult to replicate impact across multiple clients through first-principles. They either remain niche or devolve into higher end body shopping.Our focus today are hypotheses-driven firms (e.g., McKinsey, Accenture) which sell economies of knowledge (like economies of scale in manufacturing.) Because of their broad clientele, across industries and geographies, they can bring potential solutions to most business problems (hypotheses) on day one. Often, these hypotheses are presented in the proposal itself. The actual project is about validating the hypotheses in the client context and preparing customized plans do deliver results. This approach is focused on delivering impact quickly. These are the firms which have scaled.Despite this intent on delivering quick results, the implementation challenge endures. The reason is a vicious cycle comprising of four segments:First, consultants cannot deliver results independently. They must work closely with the organization. For the organization though, this is “overhead," beyond regular roles. Most implementation plans assume that the organization can absorb this overhead. Only few can.Second, to compensate, management consulting firms deploy teams long-term, to coax the results. But management consultants come at a premium. While this premium is justifiable for short-term projects, it adds up over long-term engagements, especially for McKinsey, BCG, and Bain (MBB.) As costs rise, clients start “internalizing" the implementation work.Third, these internal teams, despite their capabilities and best intents, cannot substitute the consulting firm. Implementation is identifying and executing a series of “mini-strategies." Without the economies of knowledge of the underlying consulting firm, the time to identify and ability to execute such mini-strategies suffer, resulting in impact-dilution. The internal teams also get trapped in politics more than their external colleagues.Fourth, the impact dilution affects morale, which reduces the organizational energy necessary to drive complex transformation. The vicious cycle is completed when the initiative is abandoned and all that is remembered is the glossy report.Management consulting firms understand that they cannot survive and scale without impact. They have been adopting three broad strategies to break the vicious cycle:The first strategy is “string of pearls:" Create different entities with different price points in different parts of the implementation value chain. This addresses the cost segment of the vicious cycle described above. This is driving the increasing number of acquisitions of analytics, design, and engineering companies by management consulting firms. There are also approaches such as McKinsey Implementation aimed at creating a more sustainable long-term engagement model.The second strategy involves partnerships between firms with different commercial models. This is like the first strategy but done through partnerships. It helps build scale quickly and allows for highly customized offerings for clients. Of course, such partnerships require creative approaches to protect the Intellectual Properties of all the partners. The third strategy is linking significant upside payments to results. This has two major risks: One is the risk of loss if results are not achieved, for reasons beyond the consultants’ control. Two, the risk of disagreements on credit attribution even if the impact is delivered. This can only work when there is significant trust between the consultant and the client.The model that addresses the implementation challenge in management consulting sustainably is yet to emerge. Perhaps the world is waiting for a firm which delivers 80% of McKinsey at 40% the cost.<hr>This column was written by YCP Auctus Partner&nbsp;Abhisek Mukherjee, and was initially published by Mint, one of India's most esteemed business news publications.&nbsp;The content may be viewed on&nbsp;<a target="_blank" rel="" href="http://livemint.com">livemint.com</a>.

The common complaint against management consultants and challenge for Management Consultants.

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The Implementation Challenge for Management Consultants

There is a saying among older Private Equity (PE) investors: A successful deal is 70% buying cheap, 20% selling high and 10% operating well. This formula has two consequences. First, within PE firms, investment is accorded primacy over operations. Second, founders often do not get meaningful operating support from their PE investors. This formula is changing fast. It is becoming increasingly difficult for PE firms to buy cheap, for three reasons:First, founders are becoming savvy. There is an ecosystem of consultants, bankers and fellow founders who advise them on how to extract maximum value from PE investors. Consultants advise on building the compelling “story" and how to game the due-diligence process. Bankers ensure competition among the PE firms. Fellow founders share cautionary tales enabling better negotiations. More founders now know how to maximize deal values.Second, the growing number of PE firms is raising competition and pushing up deal values. Decades of easy money has enabled many new funds to emerge, many with formidable dry powder, making cheap deals even harder to source.Third, given the information networks created by journalists, consultants, and bankers whose livelihoods depend on deal volumes, it is getting difficult to do bilateral deals. PE firms prefer bilateral deals directly with founders to limit competition. But deep information networks are making it progressively difficult to keep bilateral negotiations under wraps.It is difficult to buy high-potential companies with capable founders cheap anymore. The ones available cheap are invariably challenged in some way (e.g., less capable founders, difficult industries, poor client portfolio) and are the ones which will require disproportionate operating interventions after investment.It is becoming equally difficult to sell high. Secondary sales often happen to other, often larger, PE firms. Ironically, as described above, PE firms are obsessed with buying cheap and hence it is tough to do deals above fair market value. The option of selling to the public through Initial Public Offerings (IPO) still exists but is available only to the largest PE firms that can do large, late-stage deals. And like founders, the public too is learning from mistakes and getting savvier.Therefore, the operations lever is becoming increasingly important for PE firms to sustain returns. However, the investment teams, who have traditionally enjoyed primacy in PE firms, are not ideally suited to flex the operations lever. They are bandwidth constrained as their job is to find the next deal. And they are capability constrained, as most are direct recruits from business schools or consulting firms, with limited operating experience. They may know what is to be done, but as most operators understand, that is different from getting it done. Founders prefer advisors who know how to get things done.The larger PE firms realize this and have been steadily building operations capabilities. KKR has Capstone, its in-house arm of operating experts who ensure value maximization of portfolio companies. TPG and General Atlantic have deep pools of domain experts integrated with the investment teams who ensure value through operations. Many of these experts are ex-founders and ex-CEOs who have scaled businesses themselves. For example, ChrysCapital recently hired Sanjay Jalona, the ex-CEO of LTI, to drive its technology and allied investments.But beyond the top-tier PE firms, this operations challenge is stark. The mid-market is where most new funds emerge, increasing competitive intensity. The relatively lower size makes driving bargains difficult during purchase. Most mid-market funds exit through secondary sales to larger PE firms, who rarely buy high.Therefore, PE firms need to think strategically about this changing formula of successful deals. It is not an easy transition – the investment DNA (that focuses on buying cheap and selling high) and the operations DNA (that focuses on painstaking incremental improvements over long durations) are fundamentally different, requiring very different teams.And there are different ways to build operations teams – in-house or through partnerships with consulting firms, as domain-experts or generalists who can be deployed across portfolio companies, as a network of experts who can be leveraged part-time (as is being curated by companies such as IndusGuru) and so on.Going forward, the PE firms with the strongest operations capabilities are likely to deliver the highest returns.<hr>This column was written by YCP Auctus Partner&nbsp;Abhisek Mukherjee, and was initially published by Mint, one of India's most esteemed business news publications.&nbsp;The content may be viewed on&nbsp;<a target="_blank" rel="" href="http://livemint.com">livemint.com</a>.

PE Firms need to create deeper operations capabilities, the operations lever is becoming increasingly important for PE firms to sustain returns. PE firms need to think strategically about changing formula of successful deals.

Insights

Financial Technology Trends to Look Out for in India This 2023

How to Attract More Japanese Investments to India

The Implementation Challenge for Management Consultants

PE Firms Need to Create Deeper Operations Capabilities