India presents a huge new opportunity for businesses of all sizes to improve their revenues and profits. But many myths and pitfalls hinder the success of American companies in India. Brother Bagla offers Seven Tips for Success.
With the sluggish domestic economy American companies are increasingly seeking overseas markets and resources to boost their sales and profits. In recent years many corporations have turned their attention to the fastest growing free-market democracy in the world— India.
In the 2007 fiscal year American exports to India grew an incredible 74.3% according to U.S. government statistics. India is already among the top 20 trading partners for the United States and may soon rise to the top 10. Growing at about 9% per year this trillion
dollar economy is home to Asia’s oldest stock market and holds enormous untapped business potential.
IBM sells over 1 billion into India each year. General Electric’s annual sales to India have crossed 3 billion. Bechtel Corporation had up to 3500 engineers working on designing and building one of the world’s largest refineries in Jamnagar India. At the other end of the market venture capital firms have flocked to private companies that plan
to draw revenue from the Indian market Kleiner Perkins has already profited from the public stock offering of Naukri.com India’s job portal and is the primary investor in ClearTrip a travel web site whose leaders are European expatriates living in Mumbai India’s largest city. Boeing has located many top executives from the west into India and
Cisco has committed to building a second headquarters there.
For my book I interviewed Scott Bayman who spent 14 years in New Delhi leading General Electric’s business there prior to retiring. Lockheed Martin hired a former U.S. Ambassador to lead its business in India the company has sold six of its giant Hercules transport aircraft to India’s air force. India offers superb career enhancement opportunities for intrepid Deltasigs regardless of prior experience. But an open mind and
ability to learn and respect another culture is a requirement.
Today more than 2 million Indians in urban areas around New Delhi Mumbai Bangalore Chennai Hyderabad and a dozen other cities work in the “information technology enabled services” IT and ITES industries. Outsourcers from India are growing at over 30% per year for the last decade: most of their sales growth is fueled by
American customers. American companies such as ACS Citigroup EDS Hewlett Packard Honeywell and Pfizer each employ tens of thousands in India. In fact by the time you read this IBM staff in India will exceed 100000.
One of my large clients is designing the next generation of medical devices using the talents of engineers in India. Another small firm has been able to transform its market
research services for Hollywood by leveraging statisticians and MBAs from India who work during their nighttime to permit my client to answer questions from studio executives during their workday. It’s not just American call centers that are being transformed by resources from India. I have seen attorneys tax preparers physicians
ghost writers graphic designers video game creators and more offering competitive
advantages to their American counterparts through their intellectual capacities.
If you want to explore business opportunities what are some key success factors? Here are some tips culled from my years of helping American companies succeed in India.
Business Tip 1: Enter India with the correct assumptions of market size.
For most companies it is a mirage to think of India as a market of 1.1 billion
people—more than 700 million of its population earns less than 2 a day.
While the Indian government may legitimately claim that a third of its population
is “middle-class” by its own standards it’s not meaningful to base a marketing
plan imagining 350 million Indians with single-family homes complete with white picket fences 2.1 cars and a dog.
By American standards there are around 60 million Indians who qualify as middle-class. That is still a huge untapped market that can’t be ignored. It is also a market where brand preferences for products and services are not yet locked in. Further it is predicted the
middle class in India will likely grow to 500 million by 2020.You can truly experience
exponential growth in India and your India sales and growth will likely continue over the next two decades given the demographics.
Business Tip 2: English divides as much as it unites.
Much of the media hype would have you believe India is a country of English speakers. This can be misleading. First of all 90% of the Indian population does not speak fluent English. Second there are 23 distinct “official” languages spoken in the country and Bengali is as different from Malayalam as French might be from Turkish. Third the way people speak English in India might confuse you even further.
For example an Indian might say respectfully “My name is Jayalalitha B. and my email ID is jaya at the rate of alphaIndia dot com what is your good name madam?” or she might continue in writing “Vide Annexure B of the vakalnatama sent to you a fortnight ago please sign the same and return in the attached franked envelope.”To translate
“Indish” into English refer to my company’s web site www.amritt.com/Indian English.html.
Business Tip 3: Don’t assume India is a market for your obsolete products.
In the rural areas of India Citibank and ICICI Bank have both introduced ATM machines that don’t need passwords. Instead they rely on biometric recognition such as fingerprint matching. This was driven by the reality that many rural Indians can’t read or write.
Developers of smart ATM technology have a tough time overcoming legacy issues in the US but India is leapfrogging into the 21st century.
Optical fiber based telecommunications is also snaking its way into Indian homes and businesses in densely populated cities at a rate faster than many American municipalities have permitted. India’s military demands seeks the latest technology from American and
European vendors today for use in extreme environments such as the world’s highest battlefield at 20000 feet equivalent to the peak of Mount McKinley in Alaska and India’s energy providers need modern technology for nuclear gas solar oil and coal plants. Today India demands world-class technology and is often willing to settle for
nothing less. Do not be surprised if you are required to innovate to serve this new market.
Business Tip 4: So called ironclad contracts may offer scant protection.
Many Americans enter India with the comfort that since India’s legal system is
based on a British foundation similar to the American system they can rest easy
once they have secured a signed contract. It is true that protection for confidentiality
and intellectual property is quite high in India compared to other emerging economies. However you cannot make the leap that Indian courts offer you or anyone much in terms of real protection.
Lawsuits can take years to come to trial and a decade or more to reach a decision. Appeals are frequent and relatively inexpensive. Collecting on a judgment is another long road. For most pragmatic business people in India protection in the form of strong trusted relationships cultivated over time is as important as signed contracts. Invest in
those relationships and nurture them. It can be quite profitable in India.
Business Tip 5: Be ready to tailor your product offering to the local market.
The ambient heat humidity and dust can bring some American products to their knees unless design production packaging and shipping are adjusted to account for local conditions. Brownouts are common and power outages are routine.
If you sell software that displays numbers be aware that Indians count in lakhs one hundred thousand and crores ten million rather than millions and billions. Be sure you can display a number such as 123465758 which an Indian reads as 12 crore 34 lakhs sixty five thousand seven hundred and fifty eight and is the same as 123465758 in
American.
When PepsiCo’s Tropicana first tried selling pure orange juice to Indians its ad agency pointed out that Indians don’t like drinking cold sour liquids in the morning and the color of the juice reminded Indians of mangoes not oranges. Indians at the time preferred
the sweetened taste of a local brand that was half the price. By positioning Tropicana as a healthful drink and through persistent marketing Tropicana was able to topple the market leader.
Today Tropicana counts India among its
top ten markets worldwide.
Business Tip 6: Leave your arrogance at home.
Americans American brands and American companies are welcomed in India. The Pew Center’s latest Global Attitudes Survey confirms that most Indians have a positive attitude toward the United States—far more so than the Chinese or Russians. This does not mean that proclaiming “American superiority” will win you any business. In
fact many Indian buyers react negatively to such talk.
Business Tip 7: Be patient or don’t start at all.
If you are looking for a quick win India will likely disappoint you. Indians are cautious about new business relationships. You may also encounter unexpected or unfamiliar competitors from Europe Israel or from the Far East. Early orders might emerge months later than you first expect. Ramp-up may be prolonged as well.
Once you are established however you will find those very relationships can serve as barrier to entry for your competitors. This is partly why General Electric and Citibank boast about their decades-old connections with India.
Regardless of where India figures in your global expansion plans today it will
surely occupy an important place four years from today. But you must start
now.
