Client Stickiness: Quintessential Indian MOAT?

Going through my Portfolio I am realizing a common themes. Among the different well known sources of competitive advantages (Tech, Brand, Network, Scale etc.) One that I see emerging lot more in my portfolio is Client Stickiness. I have come to realize that this is a very quintessential Indian MOAT. Globally Indian businesses have excelled in service based Industries. Even in manufacturing we have done well in B2B businesses (for e.g. chemical industries supplying to global Brands).

Of course like everything in investing this is not the only answer and theme. But personally this is something I have come to rely on more and more. If I see a good performing business with a list of marquee clients I feel higher conviction.

It may not be most sustainable of MOATs compared to something like having a Strong consumer brand or access to unique technology. But I feel concept of MOAT overall is anyway over sold. It is more of a relative advantage and if you can maintain it for a few years you can have a few years of good performance. After that it is anyway how you evolve as a business and build on the strengths.

I have found it easier to find such businesses in Indian context. It also feels more tangible as it is difficult to evaluate how sustainable something like a brand or technology is. But having a set of strong clients speaks of proven track record.

Of course there are business with other MOATs like having a brand and some kind of network effect. But they are probably rarer and hence more expensive.

Also is could be a case that we have some kind of inherent advantage in having access to human resource pool where service economy is well developed.

Also importantly if you can start with having client stickiness as your strength and then build on other area like some technological edge or consumer brand business becomes all the more stronger.

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