The economic pundits say that India will be the world’s second largest economy by 2030 (with China top and the USA pushed into third place). Going back a decade or so this assertion might have seemed nothing more than a fantasy, but everybody now seems to agree that India is finally going places. With a rapidly growing population of 1.3 million which boasts a vibrant middle class and a demographic which is heavily weighted towards youth, the potential of India seems almost limitless.
In the past, many developed economies saw India as a destination for the low-cost outsourcing of back-office or R&D-type functions and, whilst this area of the economy continues to thrive, India needs to be viewed in a very different light these days. India is, quite simply, the world’s largest potential market for goods and services. Where China has already developed much of its infrastructure and service economy, India still has enormous work to do. Look around on the streets of Delhi, Bangalore or Chennai and the need for development is obvious – move into the second or third tier cities and this need becomes even more acute.
What does all of this point to? Opportunity. India is a land of endless possibility where the people are aspirational, energetic, open and eager for progress.
So, what is your corporate strategy with regard to India? Don’t have one? Well it is high time you started to put one together. We have worked on many India projects and here are some key areas we feel you need to focus on when looking at India as a potential market.
All of the major India-based outsourcing projects we have been involved with have thrown up enormous cultural challenges. The underlying factors which drive Indian business culture are deeply rooted in the country’s religious, societal and ethnic past. Clients are often fooled into thinking that because Indian’s often speak good English and because the country has a western-influenced history, that the cultural challenges they might face will be minimal. Nothing could be further from the truth.
You simply cannot hope to succeed in India unless you gain a very good understanding of the local cultural landscape. Some of our clients come to us at a very early stage of their India journey and ask us to run an India cultural awareness training programme to help them work effectively in the Indian environment. However, many more of our clients come to us and say, ‘we have been in India for a couple of years now and we are finding it very difficult – what are we doing wrong?’ Factoring some key cultural aspects is essential from the get-go.
The biggest mistake organisations make when looking at India as a market is that they fail to do adequate research. To say that India is enormous would be a massive understatement. A country with 1.3 billion people, multiple languages, ethnicities, climates and geographies cannot be approached as a homogenous unit. You can’t really have an ‘India strategy’ – you probably need multiple India strategies.
The first question has got to be is: ‘Is India the right market for your products or services at this stage of your development, taking into consideration the current needs of India?’ This is not an easy question to answer. So many factors come into play when addressing this – what is you price point and how does that sit against the competitive landscape in India? Who are your major competitors and how are they faring? Can you afford to invest in India knowing that the returns might not accrue for a number of years? Which city or region would be a good starting point?
All of these questions need answers, but good quality information is not always easy to come by in India. You will need to engage people on the ground in India who can really get under the skin of the local market and get back to you with honest, trustworthy answers to key strategic questions. Don’t convince yourselves you can do all your research via a laptop back at base – you quite simply can’t.
There are basically two ways to structure your entry into India – direct or indirect. This is fairly obvious – you can start your own permanent establishment, set up a rep or liaison office or form a joint-venture with a local operator. These approaches would be deemed to direct entry models. Indirect models would include agency or distributor arrangements in-country or even by starting to sell through an online presence.
It is really easy to outline the options but a completely different situation when it comes to deciding which of these is the optimum route for you. All the options have advantages and disadvantages and the right solution will be determined only after a close analysis of your objectives. One India expert once said to me, ‘Entering the India market is free but leaving the market can be really expensive.’ This is such a true statement. If you don’t get the structure right in the first place the consequences can be very damaging. Get the right advice from knowledgeable people at the outset. In our view, the best approach is to see India as a journey. Start small, venture, validate each step of your journey and only ramp up when you are convinced the rewards are attainable.
India is full of really great potential employees. On the whole Indians are well-educated, ambitious, enthusiastic and motivated. Lack of local talent definitely isn’t the issue; finding and retaining good people though can be very difficult.
The Indian employment market is very fast-moving. Indians are always on the look out for ways of improving their career prospects, job titles and income. How are you going to convince good people that you offer them a bright future? Why should they join your company when there is a myriad of opportunities for the type of people you are looking for?
The recruitment process can be very complex, and you need to be ready to move very quickly once you have identified the right candidate. Hesitate for a few days while you seek approval back home and the likelihood is that your ideal hire will have accepted a role elsewhere in the interim.
Job titles or ‘designations’ are incredibly important in India. I’ll repeat that – job titles are incredibly important in India. Job titles reflect where a person is in terms of societal and family recognition – they can even impact on your ability to raise a loan. If you insist on keeping your job titles in India in line with how they are ‘back home’ you might find that you simply cannot get people to accept the position. Take local advice on this. Read this article by local HR expert Rohan Moktali which has lots of good advice.
Not all Western professional advisers really ‘get’ India? Do yours? If they say they do, what depth of experience do they actually have of successfully advising clients on complex India-related matters? You need to dig into this.
You might find that, as far as India is concerned, you need a whole new set of accountancy, tax, legal, HR and recruitment advisers. There are lots of really good people who regularly give great advice to people who are entering and developing the India market – you need to make sure that these are the people you are talking to because there are also many people giving very poor advice where India is concerned.
By the way, don’t necessarily expect advisers based in India to be cheap. Good people know their worth, the value they add to their clients and they charge accordingly. Our experience is that those clients who chose advisers in India based solely on price usually come to regret their decision further down the line and then need to turn to higher-charging professionals who have to untangle an unholy mess.
The first point to make here is that, although millions of Indians speak really good English, not all Indians speak English. In fact, a lot more people in India do not speak English than do.
However, it is likely that the people you are looking to hire or work with will have a very high level of fluency in English and this fact implies that there will be few, if any, language barriers. Unfortunately, this is not the case. Almost every client we have worked with on India related matters have cited language barriers as a major obstacle to successful business interactions.
The most common complaint people make is with regards to accent. People say that they often struggle to understand Indian accents. It sometimes makes me smile because the people who are making this complaint are often from Texas or Glasgow or Madrid – and have really strong accents themselves! Indian accents are only a problem when you are not familiar with Indian accents just like Scottish accents are only difficult when you haven’t had much contact with Scots. If you are looking at India as a long-term investment, take the time to acclimatise to the Indian accent – this comes quicker the more regular interaction you have.
A more challenging aspect of working with India is that people don’t always say what they mean. People in India generally want to tell you what they think you want to hear because bad news is difficult to convey. The obvious answer to this dilemma is to not tell people what you want to hear! If you say to people, ‘we are OK for Friday’s deadline, aren’t we?’ the answer is likely to be ‘yes’ but if you ask, ‘where are we exactly with the process’ you might get a clearer answer.
You might find you need some advice in this area – we’re happy to help.
Lots of companies find that, although there is a huge potential market for their product or service across India, certain adaptations need to be made so that everything really is ‘fit for purpose’ in an Indian environment. The changes you need to make might be very minor or they may be significant but before you attack the market you need to do sufficient research to enable you to act. This is another area where quality, in-depth research is invaluable.
India is vast and has multiple climatic and geographic differences. Think of India as a continent – would you address the whole of Europe in exactly the same way? Would you expect Swedes and Greeks to respond to your offering in a uniform manner?
Do not just take your successful China strategy and think you can apply it piecemeal on India. India is a unique, complex and varied country which needs to be approached accordingly. Start with a blank piece of paper, determine your objectives and work back from that – forget the ‘cut and paste’ function.
In fact, the approach you successfully apply in Delhi might not even work that well when you move down to Bangalore. All of this might sound very complicated, but India is complicated. It is also soon to be the third largest economy in the world and cannot be ignored simply because it isn’t easy.
Things don’t always happen quickly in India for several reasons. It is important to understand how important it is to build deep, long-lasting personal relationships with potential partners, employees or clients. Indians want to take the time to get to know you before deciding to business with you – in fact I’d be wary of anybody who wants to jump straight into a relationship. Relationship-building takes time, patience and funding. You can’t really circumvent this process and you need to engage in it with willingness and sincerity. You will eventually reap the rewards.
You will not only need patience, you will probably also need investment and cashflow. Return on investment might take longer than you originally planned, and you will need the financial courage to stick with it for the long-run. (You might also at some point need the courage to decide that your India venture just hasn’t worked…).
These top ten tips are not really in any particular order of importance. Don’t think that you can use this list as a shopping list from which you can buy some and ignore the others. All nine tips form a holistic whole. All are important.
Global Business culture runs India cultural awareness training and market-entry strategy workshops for clients on a regular basis. Although our clients vary in size, sector and level of maturity with regard to India, they all have one thing in common – they recognise that India is different and can be difficult if not approached in the right way.
If you would like to discuss how we might be able to help you with your India issues, please contact us for an initial conversation.