Internationalization of India Inc. - SHRM

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					                     Internationalization of India Inc.
                       Mohan Thite, Adrian Wilkinson & Pawan Budhwar1


       “For Asia and around the world, India is not simply emerging. India has emerged” – US
President, Barack Obama addressing the Indian parliament on 8th November, 2010.

In the aftermath of the global financial crisis, the Western economies are under pressure as their
growth has either stalled or drastically slowed down and there is growing awareness that their
dominance of the global economy might be under serious threat. They increasingly see their future
in the emerging markets. At the same time, major emerging economies, including China and India,
are powering ahead and in the process are redefining the global economic landscape.

Multinational companies from emerging economies, particularly from Asia, now account for 70 of
the Fortune Global 500 list and according to the United Nations Conference on Trade and
Development (UNCTAD), today account for over 16% of outward foreign direct investment (FDI). As
a result, the Western model of the multinational firm is coming under scrutiny and management
scholars are paying increasing attention to the uniqueness of the emerging economy multinationals.

Whilst today China occupies the central place in this scrutiny, there are structural barriers in
transferring best management ideas and practices from China to the rest of the world due to the
peculiarities of its political and economic systems. On the other hand, India shares many common
bonds with the Western world - democratic political system, free market economy and judiciary,
respect for intellectual copyrights, familiarity with Western economic systems and language.
Accordingly, the India model is worth considering in drawing lessons on how to navigate the
changing contours of the 21st century global economy.

With its increasing integration with the international economy and the burgeoning middle class,
Indian economy offers a fertile ground for international expansion for Western multinationals. As we
will see in this paper, Indian firms are fast internationalizing by investing abroad and employing
locals. According to a Columbia University study, Indian firms have invested over $75 billion overseas
in the past decade. A joint study by the University of Maryland, India-US World Affairs and the
Federation of Indian Chambers of Commerce and Industry reported that over the last five years,
Indian FDI projects in the US created about 60,000 jobs with investment worth $26.6 billion.
Similarly, according to the Confederation for Indian Industry (CII), Indian firms are the second highest
foreign employers in Britain, with Tata, the UK’s largest foreign investor, employing over 47,000.

In 2008-2009, we conducted 88 extensive interviews with the CEOs, business heads, country heads
and other senior managers of eight Indian multinationals not only in their Indian headquarters but
also in their subsidiaries in both the developed and developing markets. We wanted to track their
global footprints in order to ascertain their corporate and international business strategies and how

1
 Mohan Thite (M.Thite@griffith.edu.au) is an Associate Professor at Griffith University, Australia. Adrian
Wilkinson (Adrian.wilkinson@griffith.edu.au) is the Professor of Management and Director, Center for Work,
Organization & Wellbeing, Griffith University, Australia. Pawan Budhwar (p.s.budhwar@aston.ac.uk) is
Professor and Associate Dean, Research at Aston Business School, UK.

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they differed from Western multinationals. We captured not only the corporate strategic intent of
these companies but also how it is executed in the world markets they operate.

Our study discovered that Indian multinationals adopt a wide range of differentiation strategies
underpinned by innovation and a sound corporate philosophy. One of the core strengths of Indian
firms is to extract maximum value from even ailing businesses by applying innovative and cost
effective methods that they have developed over the years in an extremely resource constrained
and uncertain domestic environment. They have a unique approach to their international growth
that is grounded in their Indian heritage and culture. We call it ‘compassionate capitalism’ and it
manifests in several ways, such as a preference for sustainable growth, long-term commitment to
their businesses despite economic turbulences, faith in the management team of the acquired
overseas companies and commitment to employees in terms of job security and investment in
training. This approach however, has not dampened their ambition to reach for the stars with
stretched goals.

In the following sections, we describe the international odyssey of five Indian multinationals, mostly
in the words of their top 25 business leaders. Our analysis is based on two well established
conglomerates (Birla and Tata), two well known IT companies (Infosys and Wipro) and an upcoming
bio-pharmaceutical company (Biocon). See the sidebar on their brief profile.

Internationalization Process
We begin with India’s two most well known and established companies, the Aditya Birla Group and
the Tata Group. Both of them have a strong Indian heritage and have contributed immensely to the
modernization and globalization of India. They are firmly embedded in the psyche of the nation and
instead of resting on their past laurels, they have reinvented themselves as modern multinational
corporations in a range of sectors, both manufacturing and services. The founder of Birla
Corporation, Ghanshyam Das Birla, was a close associate of Mahatma Gandhi and the founder of the
Tata Group, Jamshedji Tata was known for his vision for India and established the nation building
industries, from steel to chemicals to cement and aviation. While both the companies are still India
centric, they have expanded overseas rapidly and successfully.

Aditya Birlas’ internationalization journey began in South East Asia in line with India’s so-called First
Wave of internationalization in the 1970s when the Government of India actively encouraged South-
South cooperation in foreign investment. At the time, the major Indian industrial houses, including
Tata and Birla, opted for Greenfield investments by pursuing joint ventures with firms in the host
countries and leveraged on their capability in reverse engineering by replicating foreign technologies
in cost efficient modes, mostly in the manufacturing sector.

While 90% of Aditya Birla Group’s income comes from the commodity business, over 60% of its
revenues are generated outside India. As Sudhakar Ramasubramaniyan, the President and Head of
Corporate Strategy, explains: “Most of the businesses that we are in are the businesses of the First
World in the 50s, 60s and the 70s. Today, the first world economies do not have the ability to do
these businesses. I cannot set up an aluminum smelter in America and Europe anymore. It’s not
worth it. I will service the American customers (but) Mexico is the geography that I enter to service
the US market ... even for new age businesses I would hesitate to go and do something there



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because the markets are very consolidated ... pole positions have been taken by few players ... and
labor costs are very high”.

However, Birla chose the acquisition route to expand downstream aluminum business (Novelis in the
USA) and the BPO business (Minnax in Canada) as these acquisitions offered “big and sticky clients
with marquee names”. The current Chairman, Kumarmangalam Birla set the goal in 2003 to join the
Fortune 500 league and having achieved that his next goal is to join the Fortune 150 league which
meant tripling the businesses. In the process the strategic focus of the Group which was earlier
conglomerate-centric based on manufacturing and large scale operations has changed to being flat-
footed and focusing on niche opportunities. As a result, the internal management dynamics has also
changed. As Santrupt Misra, a member of the Corporate Board and Group HR Director explains,
“from individual personality dependence, it has moved to systems dependence and process
dependence and I believe it will move to more and more self regulating norms dependence... it is a
best leverage approach (as it is) flexible, adaptable, sustainable and scalable”.

The international character of the Tata Group was evident more than 130 years ago when its
founder Jamshedji Tata employed foreign managers in Tata Steel and Tata Electric. The present
Chairman, Ratan Tata believes in the same philosophy. He says “one of the reasons I have been keen
to find a way to really prepare the organization proliferated with other nationals is nothing changes
the perspective quicker or deeper than in fact having to have a coexistence of cultures”.

Whilst like the Birlas, the Tata group is a conglomerate with multiple business lines, here we focus
on Tata Motors which has a dominant market share in trucks in India and the neighboring countries,
including South Africa. Its product profile has traditionally suited the “bottom of the pyramid
emerging markets” which is now changing with new world class products, such as pick-up trucks and
prestige cars, being added. Global auto companies that are coming to India are forging
collaborations with Tata Motors. For example, the company has a joint venture with Marco Polo in
Brazil for bus body building and distributes Fiat cars in India. It has been in the car market for only 10
years and already boasts an impressive range of cars from Nano, the world’s cheapest car to prestige
global brands with the acquisition of Jaguar and Land Rover (JLR). It also recently acquired the truck
business from Daewoo.

Rajiv Dube, President, Passenger cars, believes that “(as a result) we are in the phase of transforming
as a corporation and Tata Motors (of the future) will be very different from the one that you see”.
He says that the international image of the Tata Group rides on the success of its car business, as it is
highly visible and emotive to customers, and as such “we have great opportunity to be the
ambassadors of the group in terms of opening countries for other businesses”.

Tata Motors have effectively leveraged their dominant presence in the domestic market to expand
overseas. Says Rajiv, “All of our group companies are wedded towards nation building activities and
we are very proud of the fact that we are an Indian company”. For example, despite bitter
experience in the Indian state of West Bengal where local agitation on land acquisitions forced the
closure of Nano car plant, Tata Group continues to invest there. While compared to the meteoric
rise of the biggest Indian company, Reliance, the growth of Tata Group might be considered slow
and the philosophy as conservative but as Rajiv says it would prefer core values and quality over
aggressive growth. “It is not a value judgment on others but reflects the belief that fast growth often
leads to temptations to cut corners”.

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In contrast to the growth story of the Birlas and Tatas, our next three companies are the products of
modern India and were set up only in the last three decades. Wipro and Infosys are globally
renowned IT companies whereas Biocon is a fast growing bio-pharmaceutical company. Shibulal,
COO of Infosys, describes his company’s internationalization process in terms of three phases: the
‘where’ phase when people didn’t even know where India was in the early 90s, the ‘when’ phase
when they wanted to do business with Indian firms but not sure when and the ‘now’ phase where
they are now ready to strengthen and deepen their engagement. He says yesterday was all about
automation, industrialization, productivity through repeatability, capital intensive projects and
leveraging on the regulatory regime. Today it is all about people, intellectual property, technology,
innovation and capital light projects in a less regulated world.

The business model of Infosys is based on four pillars - predictability, sustainability, profitability, and
de-risking (PSPD). It wants to be the trusted transformation partner for its clients by attracting the
best and the brightest, building world class infrastructure and following best in class practices.
Infosys is a federated organization with an inclusive decision making and a highly evolved
governance process. The five year corporate strategy planning process is bottom up and
collaborative. Sanjay Purohit, VP and Head, Corporate Planning & Business Assurance explains that
Infosys’s strategic planning process takes place over three time horizons with different focus areas:
the annual planning is driven by operational units focusing on optimization, the three year planning
is done by the business units and is built around differentiation and the 5 year planning is about
sustainability and is spearheaded by the Board.

Infosys has grown rapidly at a five year CGR of 42% to reach a turnover of over $5 billion and an
employee base of over 100,000. It has expanded its services footprint rapidly by 51% in five years
from application development to enterprise solutions, infrastructure management, outsourcing and
consulting. Sanjay describes this evolution from ‘keeping the lights on projects’ to building business
solutions and now being trusted transformation partner. The success of its ‘high touch, high
relationship’ model is reflected in the fact that its repeat business is traditionally over 95%.

In the process, the employee profile has changed to include 72 different nationalities which Sanjay
believes is a ‘fairly good spread but we need to increase the depth’. Its international employee base
which has already grown from 2 to 10% in the past few years will grow further. One of its successful
endeavors in this regard is the ‘global internship program’ affiliated to over 95 universities creating
enormous brand equity and future leadership team from the global talent pool. This is augmented
by investment in employee training of over $200 million with the world’s largest corporate
education centre in Mysore, near Bangalore. Sanjay believes that the company’s commitment to
developing employee talent is unparallel. The fact that 97% of its customers are overseas and are
serviced mostly by India based talent is a ‘unique model of leveraging global talent’.

At the core of Infosys’s success is its value system which is summarized as CLIFE (customer delight,
leadership by example, integrity, fairness and transparency and pursuit of excellence). These are well
ingrained and seeped into the company through multiple means, such as education, leadership
behavior and role modeling. To the company, its value system is ‘time invariant and context
invariant’. In the future, Infosys intends to reduce its dependence on developed markets by
expanding into developing markets. While currently the mix of markets for Infosys is 65% USA/25%
Europe/10% Rest of the world it wishes to change the mix to 40/40/20. This shift will obviously lead


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Infosys to become a true multinational in all its dimensions – investor, clients, geography and
employee base.

Wipro is another successful global IT services brand coming out of India. Like IBM, Wipro has
transformed itself from a hardware company into a software powerhouse as is well documented in
the best-seller ‘Bangalore Tiger’. Wipro’s approach to internationalization is based on the ‘global
service delivery model’ where the immediate value proposition lies in cost competitiveness along
with value additions in terms of high quality and high service levels. With regard to
internationalization in the developing markets, cost competitiveness is replaced by high competence
and expertise along with high quality and service. In addition to seeking market access, the
developing markets are also used as a resource pool to tap the local talent base to service both local
as well as overseas clients.

Girish Paranjpe, Joint CEO, Wipro Technologies says that the bulk of Wipro’s growth has been
organic and is expected to continue that way because the services business is mainly about people
and client relationship with little hard assets and as such M&As can only be supplemental to its
growth strategy. Wipro follows a ‘string of pearls approach’ to M&A as a vehicle to fill in niches
where Wipro couldn’t build business or capability fast enough. Girish defines the organizational
culture of Wipro in terms of strong work ethic, customer focus and autonomy to employees. Wipro
also strongly believes in offering career opportunities to internal employees to the extent that in
filling a position, it prefers an employee who is 70% job ready to an external candidate who is 100%
ready.

Wipro’s approach to entering developing markets is based on localization. As Bala, Sr. VP –
Manufacturing & Healthcare explains, in Western markets one can get straight into business
whereas in emerging markets “it takes enormous time to cross the barrier of trust before you can
start getting to be effective (and that broad basket of trust includes) local networks, forums and
contacts (which an expat cannot access)”. So, he believes that in emerging markets one needs to
establish trust before selling content whereas in developed markets content alone is enough to start
a dialogue. When Indian MNCs enter developed markets, the immediate intent is to exploit the
present (in terms of market share, infrastructure, talent base etc) whereas when they enter
developing markets, such as China the intent is to exploit the future potential even though it means
taking a hit in the short run.

Throughout its evolution, Wipro has never compromised on its core ethics and that has placed in
good stead over the years. Wipro’s ability to drive its cultural DNA throughout its global operations
without diluting its values in spite of rapid organic growth and acquisitions has underpinned its
success. This has been made possible with huge investment in learning and development
opportunities for employees.

So far, Wipro’s growth has been underpinned by its entrepreneurial spirit but today it is in a maturity
and consolidation phase and therefore, many of its senior executives feel the recession in the global
market has given them the chance to take a breather, introspect and plan for the future growth.
Says Manoj Punja, Chief Sales & Operations Officer – Americas: “Indian companies that started their
internationalization journey in the last decade or so are far more global today in their growth
trajectory than any Western MNC. One needs to temper the ambition to have a global footprint too
fast because it is not just about economics but integration of people, culture and systems”.

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The last company we cover is Biocon. It started as an industrial enzymes company and focused on it
until the mid-90s before venturing into biopharmaceuticals. Considering that India has a huge
diabetic population, Biocon started its foray into the insulin business as a substitute to expensive
imported insulins by making it affordable by using novel enzyme technologies developed by its own
R&D. The company then brought the next insulin analogue, ‘Glargene’. In its next phase of
evolution, the company focused on immunotherapies and immunological drugs for treatment of
cancer and autoimmune diseases. Today its crown jewel is the oral insulin which is in trial stage.
Thus, Biocon’s mission has been to focus on ‘affordable healthcare by developing high end, cutting
edge drugs.

Kiran Mazumdar, the founder, Chairperson and MD, explains the rationale for this strategy:

        “I have been sort of a big proponent of the fact that the world needs affordable health care..
by and large we have seen that biotech drugs have been very expensive and have been the kind of
preserve of the Western world and that is why I felt that if we could come up and start developing
novel biotech drugs which could provide access to a larger number of patients across the developing
world and then finally the developed world gets advantage of that. (In this endeavor).. We have
matured as a technology company, as a manufacturing company but as a marketing company I think
we have a few more years to go”.

Biocon’s internationalization strategy is based on ‘organic growth through partnerships’ and not to
dramatically increase market share by acquisitions which it believes is a recipe for disaster. It wants
to be known as a large, India based, innovation lead, world class biotechnogy company with a
world-wide distribution network built on partnership with local players. It wants to continue to focus
on both domestic and global markets simultaneously. Accordingly, it has marketing and distribution
arrangements in Latin America, Mexico, Middle East, Eastern Europe and South East Asian countries.

The world is also coming to India to conduct clinical trials in recognition of the increasing maturity of
Clinical Research Organizations (CROs) in India and Biocon is riding the wave of this offshoring to the
extent that 80% of its business in this space comes from overseas clients. Arvind, COO of Biocon
subsidiary, Clinigene, says ‘the dependability and integrity of (clinical trial data from India) is surely
but slowly getting better but still it is a long way to go”. With the increasing affluence of Indians, the
Indian market is becoming too big for pharma MNCs to ignore.

Biocon has always been known as a quality provider and has gained particular appreciation from
regulators who visit Biocon’s plants and rate them as being at par with the best in the world. Biocon
is driven by its founder Kiran’s leadership vision and her leadership style has percolated down to
other senior managers. Says Arvind: “we are encouraged to be an entrepreneur in the
entrepreneurial enterprise .. with lot of freedom. Biocon has succeeded because of quicker decisions
that we have taken and like a flee we move quicker, flexible to the client compared to the large
monoliths of big MNCs... We have gone through a model of learn, earn, burn rather than burn and
then earn.. (Biocon will keep changing) because (we) would like to make a mark as a discovery
company rather than a me-too product company”.




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Innovation-driven Differentiation Strategies
At the heart of the success of the above Indian multinationals is the emphasis on innovation which
they believe is the only sustainable competitive advantage in the 21st century knowledge intensive
global economy.

We begin our analysis of differentiation strategies of Indian multinationals with Infosys. To the
question, how does the company try to avoid the ‘strategic sameness’ trap by differentiating itself
with its local and international competitors, Sanjay Purohit, VP & Head, Corporate Planning
highlights three building blocks: To become a transformation partner, to become a global sourcing
expert and execution via non linear growth. See the sidebar on “Infosys’s Differentiation Mantra”.

In order to infuse fresh thinking at all levels of the company, Infosys has established a ‘Voice of the
Youth’ program under which ‘each management council of each business unit has to have 15% of its
people who are below 30 years of age’ from diverse backgrounds who participate in the
deliberations as equals. This approach places the ‘hierarchy of ideas’ above the ‘hierarchy of
experience’. Every quarter, the participants in the Voice of the Youth program have a global video
conference with the CEO providing a direct link to air their views directly to the top management
without bureaucracy and managerial interference. Another bottom up decision making approach is
the ‘strategy internalization contest’ whereby employees at the bottom three layers of the company
articulate the company strategy as to how they live and practice the company vision and mission.
This gives them the sense of ownership of corporate goals. Thus, through the ‘philosophy of
triangulation’, the senior management makes sense of what is happening inside and outside the
company.

The company recently won the Balanced Scorecard Hall of Fame Award for implementing a metrics
driven performance assessment and reward system from top to the bottom that helped the
company to achieve and measure organizational alignment, communicate organizational priorities,
reengineer the performance review process and focus on key areas.

The focus on performance metrics is also at the heart of Infosy’s local rival, Wipro. One way Wipro
has tried to manage its global growth is by creating a metrics driven organization that fosters
autonomous team based structures because it believes that collaborative teams scale up faster and
better. In order to encourage what Wipro calls ‘applied innovation’, the company has established an
Innovation Council that recognizes and rewards innovative ideas and uses the visibility provided by
these events as a springboard of innovation.

Manoj Punja, Wipro’s Chief Sales & Operations Officer – Americas, believes that the Indian IT
companies’ global delivery model has been a disrupter of business model as much as Google being a
technology disruptor. He believes it is a radical not an incremental innovation. For example, the
services business in the BPO market has today evolved from transactional back office to knowledge
intensive, value added services, such as research and analytics. However, being a service innovation
in the B to B space, it is not as visible as a product innovation. Lee Fields, Sr. VP – Global Programs
Team, who joined Wipro after the acquisition of his previous company (Infocrossing) says Indian IT
companies are highly process, quality and metrics oriented. He is pleasantly surprised by the level of
energy that he found in the company, what he calls ‘fire in the belly’, the ability to deliver and
excellence in customer service.


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Similar to IT companies, Tata Motors which is hardly 10 years into the global passenger car business,
is taking on the world auto majors based on innovation. For example, referring to the effect that
evolution of Nano car has had, Ratan Tata says: “Nano effect is much beyond the car industry, it is
forcing people to think how you can do things differently to address a market which you thought
does not exist or will take some time that those consumers will graduate and come into higher
segment after some time. And I am sure inside the company it has had a great amount of impact in
the way we started looking at things. So, people are now willing to believe that nothing is impossible
to achieve”.

Biocon is also trying to make a similar difference in the bio-pharma industry. According to its founder
and Chairperson, Kiran Mazumdar, Biocon’s philosophy has always been about differentiation.
Considering the increasing scrutiny by health regulators about the side effects of the long term use
of drugs, Kiran believes that “pharmacovigilance is now proving to be a very important part of any
pharmaceutical company’s business activities” and that is another point of differentiation that she
sees for the company in the future. The other area that the company is focusing on is ‘antibody
technologies’ which it wants to again make affordable by developing a pipeline of antibodies in
collaboration with Cuban firm. By simultaneously focusing on generic and novel technologies, the
company wants to spread its risks by channeling its profits from low risk generic drugs into high risk
novel drugs.

Unique Characteristics of Indian Management
It is widely recognized in the management literature that the country of origin and national culture
play an important role in the shaping of multinationals. Many articles have appeared in the HBR
highlighting the uniqueness of Indian management style, particularly with respect to innovation
(Innovation’s Holy Grail, HBR, July-August, 2010) and investment in people (Leadership Lessons from
India, HBR, March, 2010). Our research unearthed similar features, which are detailed below.

Indian Culture

In the minds of the Indian business leaders there is no doubt that Indian culture and mindset are
quite different than Western countries with both positive and negative effects on their global
growth. These differences show up in unexpected ways. Ratan Tata gives an example on the
concept of clarity. “The Indian executive has all the clarity he needs but it is not dotted in cross like
the Western people want ... they want clarity of direction three months before the person here
needs it. They want it in writing whereas the Indian executive is quite happy to just exchange it
verbally .. . So, there is a formality that the Western companies have come to accept which we don’t
have here”.

The Indian leaders point out that the Indian culture is fairly adaptive. Unlike the Chinese and
Japanese, it is very multicultural. Says Manoj Punja from Wipro: “The personal life (of Indians) is very
traditional but when it comes to business they are highly adaptive”. Compared to the multinationals
from other emerging economies, India has certain natural advantages: multi-ethnic and multi-
religious society, democratic political system that is often chaotic but functional, good education
system, young population, familiarity with English and Western management systems and highly
successful Indian diaspora.



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Lee Fields (Wipro) believes that “India owes it to itself to do a better job of branding so that they are
not seen as a very foreign culture because there are many similarities between India and the United
States people don’t realize it”. The need for national branding was clearly evident in the way India
organized the recent Commonwealth Games. In contrast to China which successfully showcased its
strengths in holding the Beijing Olympics, Delhi floundered badly in the beginning attracting
widespread criticism and even though it eventually went well, the initial bitterness lingered on.

The Indian leaders unanimously agree that one of the key challenges for Indian multinationals is the
need to develop a ‘global mindset’. For example, they point out that Indians take their work too
seriously and emotionally which upsets their work-life balance; they involve too many people in the
decision making process which often leads to bureaucratization and concentration of power in the
Indian headquarters. Another challenge is the ‘chalta hai’, that is complacent attitude, which leads
to lack of discipline, compromise on quality and poor customer service.

According to Birla’s Santrupt Misra, “Indian multinationals will have the challenge of meaning in the
sense of time, space, forthrightness, transparency, speaking their mind freely, sharing your feeling,
learning to say no. A lot of the cultural nuances of these would be challenging for Indian companies
as they go global because they are for far too long used these categories in a certain way”. Ratan
Tata believes that the Indian companies need a mixing of cultures to encourage people to have the
ability to speak up because “hierarchies, stratification, even sycophancy cause many Indian
corporations to live in a fools’ world and sometimes the boss is isolated”. However, as Manoj Punja
(Wipro) points out “the challenges are not so cultural but more evolutionary issues, more
globalization issues, more scalability issues, management issues ... have I learnt fast enough that is
the bigger challenge”.

Compassionate Capitalism

Bharat Singh, the Managing Director of Aditya Birla Nuvo, states: “the philosophy that rules the
(Birla Group) is very, very strong, that is that if we are blessed with an opportunity to deploy the
wealth of the society, then we owe it to deploy it in the wisest possible way. .. whichever
international market we have pursued, we have never gone as mighty conquerors... we don’t want
to project the image, ever, of anything else other than good businessmen in the true Gandhian
concept. That we are here to contribute to construction and advancement of that society, of building
that society rather than doing anything destructive... spirituality is in our psyche’.

This compassionate approach manifests in many ways, for example, preference for sustainable
growth (as detailed in previous sections), long term commitment to international expansion and
acquisitions, keeping the management team intact after acquisition and commitment to job security
and employee growth. As Gautam Das, COO of Biocon subsidiary, Syngene International Limited,
says “Indian multinationals in general don’t start a business with an exit route that in itself shows
that they have a better sense of commitment to continue with the business”.

When Birla acquired Minnax, a BPO business in Canada, the employees at Minnax welcomed the
acquisition as they believed that “they would not get sacked because they thought that Indian firms
with benevolent management style do not easily sack people. So, there the perceived image of
Indian firms in taking care of employees helped (the integration process)”. Similarly, the trade
unions at Jaguar Land Rover (JLR) in the UK preferred Tata Motors over other bidders when Ford

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sold the company because “they felt that Tatas had a high degree of integrity in the way they dealt
with employees and felt comfortable that they could trust Tata to do the right thing for employees”.

When Tatas took over JLR, Ratan Tata promised that both the brands will retain their distinct
identities and will continue to pursue their own business plans. Despite the ensuing global financial
crisis that seriously affected all luxury brands, Tatas stuck to their promise. As Des Thurlby, Head of
HR at Jaguar Land Rover (JLR), explains “they have been true to their word in terms of leaving the
Jaguar Land Rover business to run itself and leaving the brands to develop themselves”. The
management team was also left intact. Des compares this to Ford and says they were more hands-
on. It was directive and ‘my way or high way kind of stuff’. In the aftermath of the global financial
crisis, JLR had to resort to many cost cutting exercises, such as reducing the workforce, enforcing pay
cuts and shelving expansion plans. However, “Tata took a conscious decision to carry on with
product development spending and launching of new products and these products have now started
to hit the market ... Tata are a long-term holder of businesses so they know that things are cyclical”.

Dirk Ulrich, CEO of Axicorp which was recently acquired by Biocon narrates a similar experience.
While looking for suitable partners, Axicorp found that Biocon fitted the bill not only for business
reasons but also in terms of cultural fit. While there was some initial apprehension as to whether the
work would move to India as portrayed in some German media, it ended up as ‘the best deal of our
life’ because Axicorp now have better growth, profitability and local employment with a ‘wonderful
working relationship’ with Biocon’s senior management. He appreciates the fact that even though
sales went down significantly immediately after the merger, Biocon kept faith in Axicorp and as a
result the current growth rates are better than expected . The senior leadership team at Axicorp has
also remained intact as a deliberate strategy. Nehal Vora, Biocon’s Head of European operations,
explains “One of the principal reasons why Indian MNCs have succeeded with their foreign
acquisitions is because their net sale to the debt ratio is very, very small even when plenty of
venture capital was available during the boom time. In that sense opportunities have been well used
not misused”.

Reaching for the Stars with Stretched Goals

Indians have been quick learners in internationalization both in scale and speed. With the domestic
market fast catching up with the developed market, the learning has had a multiplier effect. With
booming local economies, the emerging market multinationals are reaching for the stars. This is in
contrast to the saturated economies of the West and decreasing appetite for growth amongst many
Western multinationals. Says Sudhakar, Birla’s head of corporate strategy, “most of the developed
world companies are little bit of a spent force in the current context. They don’t have the gumption
any more. They are more worried about what the lawyers are going to say and what their investors
are going to crib and things like that rather than focusing on the business and what needs to be done
for it”.

The ‘fire in the belly’ attitude of emerging multinationals is evident in the way they are pushing the
top management in the companies that they have acquired abroad to stretch their goals. For
example, one of the major changes in Jaguar Land Rover (JLR) after Tata’s acquisition is the increase
in the speed of decision making and risk taking that has resulted in significant cultural change. As
Des Thurlby explains JLR’s traditional approach has been to “aim for the clouds and if you get to the
clouds, you’ve achieved your objective” whereas Tata’s approach is to ‘aim for the stars and if you

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fall short, you will have still done very well. If you aim for the stars, you might get to the moon. You
won’t have got to all the stars but you’ll have got further than the clouds. (Thus), there is a bit of
natural British conservatism being challenged by the Indian guys and (they would justify it by saying)
in India, every day is a crisis, every day is a fight for survival, and therefore we’re in a constant sort of
period of flux”. Echoing these views, Ratan Tata found that Tata Motors could add value to JLR by
shortening the time taken from design to market from five to three years. It involved some painful
discussions. Ratan explains, ‘for Rover the first defense was that we are Jaguar (and therefore) we
cannot bring out products earlier. Why should it take them two years to okay a new paint that they
buy from a supplier? Those are the issues that we feel we can add value by just mandating that this
not be the case”.

Santrupt Misra (Birla) provides his explanation for the contrast in goal setting between the emerging
economies and the West: “In the developed world, professionalism is understood in a certain
straight-jacketed way. For example, in the context of economic setting, Western countries have got
used to one to three per cent growth. In India, we are used to six to nine per cent growth. So what
they call a stretched goal is far easier for me. When you can show the people how we have been
able to grow at seven, eight per cent and how many years you have done that, that creates a
credible story then people start respecting you. So there are these macroeconomic variables that
have shaped and influenced our way of thinking about decision making, risk taking, stretch or
performance etcetera where there is a gap there”.

Referring to the aggressive competitive spirit of Asian MNCs compared to Western MNCs, Manoj
Punja (Wipro) says, “since the leadership comes from a very different mindset the level of strategy is
obviously very different. What is the possibility (to developed world) becomes a necessity (to
developing world)... While the world’s top 500 companies are still largely the same, you will notice
the change in the top 5000 companies. So, it is chipping away at the bottom and it is going to move
on”.

The New India
After decades of inward looking government policies and apathy, the India Inc. is finally breaking the
shackles to make its mark in the global stage. Despite structural deficiencies that still plague the
Indian economy, such as poor infrastructure, corruption and painfully slow process of liberalization,
the Indian entrepreneurs are making up for the lost opportunities and have found a way to get
around the problems by leveraging their strengths in a global economy that is tilting towards the
emerging markets.

In comparison to China, the India growth story may not be that compelling but the world’s largest
democracy and soon to be the most populated country on earth is surely finding its feet. While
feeling proud of their Indian heritage, the Indian leaders are acutely aware of the challenges that lay
ahead, particularly, the need to develop a global mindset and innovate radically and not just
incrementally. Kiran Mazumdar of Biocon stresses this need by saying that unlike Western counties,
‘failure in India is affordable’ and therefore, ‘affordable innovation’ is what India can bring to the
global economy. Coming from an environment of scarcity and high cost control, Indian enterprises
can show the way to the world in terms of how to leverage economic and political uncertainties in
global markets to their advantage and extract value from the ‘bottom of the pyramid’ developing
economies where the growth rates far outpace those in the developed world.

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India is very good at adding value and innovation in a simplistic way (what is called in India as
‘Jugad’) that is when they take a job they will find a way to get it done, not always in a sustainable
way or with acceptable confidence but in a way that will definitely add value. As Santrupt Misra from
Birla says “Indian multinationals bring their ability to be very, very efficient with very little resource
and therefore to be often very innovative ... from the usage of resources point of view”.

However, unlike established MNCs that have gone through multiple economic downturns, survived
them and learnt from them, emerging market MNCs are yet to get exposed to such experience and
become resilient. Rather than calling this century as the Asia century, Birla’s Santrupt prefers to call
it “the global century where there will be a lot of cross learning from each other, cross adoption, so
there is a kind of a diffusion of learning between both sides”. Birla’s Rakesh Jain aptly concludes by
echoing the general consensus amongst the Indian business leaders: “(Indian multinationals) are still
infant multinationals, they are not yet truly global multinationals. We are learning from different
organizations... as long as we are like a sponge, we can learn and adapt (and with) proactive change,
we will be successful”. With US President, Barack Obama, calling the US relationship with India a
“defining partnership of the 21st century”, India is poised to claim its rightful place in the global
economic landscape and hopefully taking its entire people, not just the select few, with it.

Acknowledgements: This study was funded by a grant from the SHRM Foundation, USA. However,
the interpretations, conclusions and recommendations are those of the authors and do not
necessarily represent the views of the SHRM Foundation.




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Profile of Companies Covered in the Study

Aditya Birla Group: This 50 year old US$29 billion Fortune 500 Corporation employs over 130,000
people from 40 different nationalities. It operates in26 countries, including USA, UK, Australia,
Canada, Brazil, China, Thailand and Egypt, and over 60% of its revenues are derived from
international operations. Globally, it is a metals powerhouse in aluminum and copper (with
Hindalco-Novelis being the largest aluminum rolling company), No. 1 in viscose staple fiber, the
fourth largest producer of carbon black and the ninth largest cement producer. In India, its other
operations include branded apparel, chemicals, mobile telephony, BPO and retail businesses.

Tata Motors: As part of Tata Group, this 60 year old company is India’s largest automobile company
with revenues of US$20 billion and an employee base of 24,000. Apart from plants in India, it has a
strategic alliance with Fiat, joint venture with Brazil’s Marcopolo and has subsidiaries in the UK
(Jaguar Land Rover), South Korea (Tata-Daewoo Commercial Vehicles), Thailand and Spain (Hispano
Carrocera). Tata Indica is India’s first indigenously developed and largest selling passenger car in its
segment. Tata Nano is touted as the world’s cheapest car with a unique mono-volume design, world
class safety features and a low carbon footprint.

Infosys Technologies: Infy is it is known is a global leader in IT and consulting with revenues of
US$5.4 billion and a global workforce of over 120,000. Its operations include business & technology
consulting, application services, systems integration and BPO. It pioneered the Global Delivery
Model that spurred offshore outsourcing. Its global footprint includes over 63 offices and
development centers in India, USA, China, Australia, the Czech Republic, Poland, UK, Canada and
Japan. Over 97% of Infy’s revenues come from existing customers. It was ranked among the top 50
most respected companies in the world by Reputation Institute’s Global Pulse 2009.

Wipro Technologies: Wipro is amongst the largest global IT services, BPO and Product Engineering
companies with revenues of US$6 billion and a workforce of over 100,000 working in its 72 global
delivery centers in over 55 countries. Thanks to its strong R&D and innovation focus, it gets 95%
repeat business. Wipro is the world’s largest independent R&D services provider, first PCMM Level 5
company and the top three offshore BPO service companies.

Biocon: Ranked among the top 20 global biotechnology companies, Biocon is focused on
biopharmaceuticals, custom research and clinical research. With a strong R&D focus, it boasts a
robust drug pipeline led by monoclonal antibodies and anti-cancer drugs. With the aim to offer
affordable medicine to the world, it has successfully launched biosimilar insulin for diabetes and is
developing the world’s first oral insulin. Its subsidiary, Axicorp (Germany) is amongst the fastest
growing in Europe.

Source: Corporate web sites of respective companies.




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Infosys’s Differentiation Mantra
As against the whole-of-business outsourcing advocated by Western MNCs, Infosys recommends
“modular global sourcing that breaks it into smaller pieces giving greater control and flexibility to
clients and at the same time leverages on specific capabilities of vendors.

Infosys wants to fight its local competitors by scaling on the consulting side and its global
competitors by scaling on the execution side. Infy’s biggest business differentiator is providing
consulting services based on its unique ‘impact model’ and ‘value realization model’, combined with
the ability to execute flawlessly and predictably. Thus, it seamlessly blends consulting with execution
capabilities. In terms of products suite, its banking product, Finnacle, is performing well in India and
overseas. Infosys is also endeavoring to offer ‘productized services’ to clients that are outcome
focused. In line with its aim to become a ‘global sourcing expert’, Infy came out with a new platform
called “Mantra” in the area of software maintenance. This is a self learning intuitive platform which
is supposed to simplify maintenance to a point that the clients can realize the enormous amount of
cost saving.

In its quest for differentiation, Infy is in constant search for new paradigm shifts. One such shift it is
focusing on is ‘non linear growth’ which tries to break the traditional linearity between efforts and
revenue and instead focus on outcome. Instead of telling the client ’20 people worked on a task for
20 days’, what is more important is whether the solution promised was delivered. The challenge is
to ‘take a complex problem, deconstruct it and execute it’.

Thus, Infosy’s business model is based on three planks: “in understanding the customer’s business,
be their transformation partner. When they get down to executing, you be the expert, but don’t do
it only in the conventional manner. Do it in a non-linear fashion”. Infosys believes these ‘genetic
changes’ will deliver a sustainable competitive advantage. The overarching transformation partner
goal defines its ‘position’ in the market place. Its global sourcing expert focus provides it with the
unique ‘capabilities’ as a counter to the commoditization threat to the global delivery model. Finally,
the strategy of non linear growth helps ‘neutralize competition’.




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