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Weekly UpdatesIndia
By Michael Wood
(Basic Books)
Best known for his TV documentaries (In the Footsteps of Alexander the Great, In Search of the Trojan War), this Oxonian BBC presenter and unabashed India-phile offers a compelling first-person narrative of India's civilization, presented with sumptuous photography.
India Arriving -- How This Economic Powerhouse Is Redefining Global Business
By Rafiq Dossani
(Amacon)
A concise historical and political overview written by an insider who helped introduce progressive reforms to the Indian government. Of value is the author's chapter on non-resident Indians (NRIs) living in America.
The Quest for Global Dominance (Chapter Nine: "Leveraging China and India for Global Dominance")
By Anil K. Gupta, Vijay Govindarajan and Haiyan Wang
(Jossey-Bass)
With the academic thoroughness without turgid academic prose, the authors, representatives of Maryland's Smith School of Business, Dartmouth's Tuck School and the China India Institute, set forth a concise overview of strategic developments and options for business leaders. A must-read.
RELATED ARTICLE: The Next Frontier?
Nandan Nilekani, one of India's most renowned business leaders, is co-founder and co-chairman of Infosys Technologies in Bangalore.
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Why should U.S. companies bother with India?
India is the next frontier. India is going to go through a cycle of growth for many years to come. For a variety of reasons--because of the strength of our entrepreneurs, because of our technology, because of our comfort with globalization, because of our young population, global factors working in our favor--India is poised for a long cycle of growth. Also, India is a large consumer economy. Two-thirds of India's economy is driven by the consumer. Any global company which is trying to grow globally and to outwit its competitors globally cannot afford to not be here.
Having said that, it depends on the industry. There are a lot of industries in India where it's a competitive free market, where 100 percent can be owned by the foreigner, like in our [technology] industry. In those free markets it's a pure business play, where you're deciding market, consumer, how to sell and distribution. In other markets it may not be advisable to come on your own and then look for a good partner, or the laws may not permit you to come 100 percent. The strategy depends on the context of the rules.
What about all the seeming insurmountable challenges of doing business in India?
It's a demanding market; it's a very tough market. Indian consumers are very demanding. The Indian consumer now has global access, he has seen global products. You have to create a superior value proposition. He's well informed, he goes on the net. He demands the best, and he demands it at a very good price. It's a demanding market, but I think it's a fair market. It's a genuine consumer market in that sense. There is a lot to be done. It's a great time for global companies.
Have a lot of companies gotten it wrong?
Companies that have essentially just tried to duplicate their global strategy here, companies that have not looked at how to adapt their products to local needs, companies that have not looked at how to price in this market, companies that have not invested in brand building and distribution channels--there are many examples where they have not succeeded. It's not that somebody stopped them, it's just that their strategy was not resonating with the market.
Are they getting smarter?
Absolutely. I've seen a sea change. There was a time in large companies when India was the backwater. You didn't build your global resume by going to India. It was neither high on the investment criteria nor was it a great thing for an up-and-coming manager. Now it's completely changed. It's very, very high on the business agenda. It's on the CEO agenda. And for a young manager in a global firm who wants to burnish his global credentials, it's a great place to go and work. So I think both the CEO focus as well as the fact that the leaders coming here are among the best and the brightest, I think that's making a big difference.
RELATED ARTICLE: Making Offshoring Work
Offshoring services has been a favorite and cost-effective exercise for many global companies based in the U.S. and the EU. But, owing to varying approaches, not everyone succeeds equally well. Offshoring operations simply to save direct labor costs has limited utility because over time labor costs rise. Offshoring to take advantage of lower direct costs and the skilled Indian labor force also gets you only so far in that skills, too, are bid up by virtue of the fact that many Western firms are drawing upon the same talent pool. Outsourcing services to offshore destinations is not just about cost management anymore.
"It's more about knowledge transfer, adding value and time management, says Bharani Aroll, VP, service delivery, Butler International, a tech-outsourcing and engineering services company based in Ft. Lauderdale, Fla. Bharani explains that a company intending to move an internal organizational process offshore needs to have a foolproof transition management capability, a service Butler International, with its strategic offshore location in Hyderabad, India, offers to multi-billion dollar U.S. corporations.
In fact, one global consumer personal care products company reduced its manpower costs associated with quality assurance more than 60 percent as a result of moving this process offshore to India. This was accomplished in large measure by leveraging its service partner's onsite skill in ERP software implementation.
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Companies that have both onsite and offshore operational capabilities also play a role in knowledge transfer, which can be critical in taking any organizational process offshore without encountering interruptions in service or delays in production. For example, a large Midwest heavy construction equipment manufacturer, which is in the process of modernizing its fleet of vehicles in compliance with Tier 4 U.S. emission standards, was able to reduce the cost by about 20 percent from an estimated $43 per hour to $36 per hour by engaging offshore delivery services. Using the onsite-offshore model, companies that offshore non-core operations are also able to capitalize on time zone differences where project work begun in the home country is handed off at the end of the workday to teams in the offshore location so that the effort becomes continuous. The heavy equipment maker, for example, managed a 40 percent reduction in the project turnaround time.
Not surprisingly, leveraging time zone differences where the work never ceases is a major reason for companies to offload non-core competencies to places like India. "With these models, our clients have achieved significant reduction in the project turnaround time by about 50 percent," says C. Praveen Reddy, SVP, manufacturing, Butler International. "When an onsite team is working for 12 hours, the offshore team makes up for the next 12 hours and this way a 24-hour cycle is achieved."
--Fayazuddin A. Shirazi
RELATED ARTICLE: India and China Competitiveness
India has already edged China in crucial factors. The latest World Economic Forum's "Global Competitiveness Survey for 2006-2007 shows India at 43, well up the ladder compared to China, at 54, and even further ahead of Russia and Brazil. Efficient capital markets, quality of public institutions and a sound judicial system, as well as a vibrant civil society and vigilant media, accounted for India besting her competitors.
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India's greatest weaknesses are its poor quality of universal modern education outside the sciences and its shortcomings in infrastructure and governance. China's principal weaknesses are its massive misallocation of capital by state-owned enterprises and a government-owned banking system that allocates funds on directives rather than on sound banking practices.
A global CEO jet-setting to Shanghai would probably not notice this lack of soft infrastructure in China and instead would be wowed by the modern glowing ports, highways and airports. Nor would he worry unduly about how China is manipulating the yuan to its trade advantage.
India's other strengths are its entrepreneurship, the global perspective of its leaders and managers and its ability to manage complex global businesses, thanks to several generations of Western-trained elite.
In China's defense, its strong points are an abundant access to capital and a healthy blend of good universal education. Allowing a small crack in the wall of Communism's absolute control over all aspects of life and business, the Chinese government has opened a small degree of private ownership of companies. After all, the richest person in the country is a woman whose company recycles paper. But full freedom is not even on the drawing board.
Adapted from Think India--The Rise of the World's Next Superpower and What it Means for Every American, by Vinay Rai and William L. Simon
Reprinted by arrangement with Dutton, a member of Penguiu Group (USA) Inc., for THINK INDIA by Vinai Rai and William Simon.
Copyright [c] 2007 by Vinay Rai
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