India in the global arena
Once India was known more for low-cost factories than multinational companies. As technology took over, we became the preferred offshore destination for those companies. Now, more and more persons of Indian origin are assuming leadership positions in corporations that span the world.
IN THE early 1990s, before liberalization, most Indian companies were not in a position to cater to the international market. This was simply in keeping with the prevalent business and regulatory environment and had nothing to do with the caliber of the Indian professional. Given the size of the Indian market there was really no need or incentive to look beyond the borders.
Finance was a challenge, production was limited, imports were restricted, quality was hardly a concern, exports were rare and, not surprisingly, very few Indian business leaders were exposed to international business.
On the other hand, the developed nations were already exporters. Given the size of their home markets, they had no option but to consider other “continents” like India. By the time India was taking baby steps in the global arena, countries like France, Germany and the UK were already well-established as global suppliers. Being a colonial power made it easier to understand and deal with the Asian market.
Change of scene
The picture is different today. Economies like China and India are no longer low-cost factories for the advanced. They have emerged as a billion-plus market with burgeoning purchasing power.
Some experts estimate that, by 2025, these economies will consume almost two-thirds of the world’s manufactured goods. Already, 45% of knowledge-intensive technology-based services are flowing from the advanced to the developing world.
On the leadership front, it is no accident that more and more persons of Indian origin are assuming leadership positions in corporations that span the world.
Y2K and BO are history
Remember Y2K? Perhaps no other (anticipated) problem caused as much anxiety as the opportunity it provided to many programmers. The Millennium Bug triggered by the imminent arrival of Year 2000 at a time when computers identified the year by the last two digits (with the first “19” an assumed constant), increased the demand for programming skills to thwart crashes.
Even before Y2K, India was very happy being the back office to the rest of the world. Given the availability of plenty of cheap labor with the right skill set, the assumption was that the developed world would always prefer India as the back office to handle all the voluminous, repetitive work. For many software companies, offshore office was synonymous with office in India.
However, this situation is rapidly changing. As the rest of the developing world has caught up, the offshore principles now opt to go nearshore. So, instead of India, a company in the USA now prefers to go “nearer” say to Mexico or Argentina. Similarly, a German company would rather go to Poland or Romania. Some even prefer the service providers to come “onshore” and work at their facility, usually just a couple of hours away, for a certain number of hours.
More depth please
It is obvious that offshoring is no longer a definitive competitive advantage for India. Instead, the country would do well to open its global pathways.
This is what Pankaj Ghemawat, the Global Professor of Management and Strategy and Director of the Center for the Globalization of Education and Management at the Stern School of Business at New York University, has to say. “For a country to be globally connected, it must have both large international flows relative to the size of its domestic economy (what we call ‘depth’) and its international flows must be distributed globally rather than narrowly focused (what we call ‘breadth’).”
While lamenting the poor “depth” of India (133rd out of 140 countries) in The DHL Global Connectedness Index 2016, Prof. Ghemawat points out that higher depth is associated with faster economic growth.
Despite all the real and perceived uncertainties out there, Ghemawat points out that opening up the country to more foreign competition “accelerates the upgrading process that is essential to national economic development, and in turn, it makes the country a more fertile ground for the development of companies that can go out and win abroad.”
The Indian MNCs
Today, an increasing number of Indian companies have operations in and employ people from multiple countries. Taking a cue from those leaders, it is now important for the Indian professional to cultivate a global mindset.
While opening up the economy remains a politically charged decision, it is up to the Indian corporate leader to be ready to face and ace the best in the world, whether within India or elsewhere.
Train yourself. Take that language class. Read up on culture. Do it for yourself. Do it for India.
Your turn
If it were up to you, what one step would you take to make India and Indians more global?