While India may provide tremendous growth opportunities, the strategies that an American corporation needs to deploy to succeed there have to be different from what we are used to here - the infrastructure is lacking, affordability continues to be an issue (despite the presence of aspiration), and finding the right people to drive strategy implementation continues to be a challenge.
These were some of the messages that emerged yesterday at The Conference on India & Its Neighbors at the Harvard Business School. I was very impressed with the quality of the conference (speakers, panelists, and topics of discussion), and believe it or not, it was organized by the MBA students under the SABA umbrella. Here are some additional points that business leaders need to think about as they contemplate their India strategy:
These were some of the messages that emerged yesterday at The Conference on India & Its Neighbors at the Harvard Business School. I was very impressed with the quality of the conference (speakers, panelists, and topics of discussion), and believe it or not, it was organized by the MBA students under the SABA umbrella. Here are some additional points that business leaders need to think about as they contemplate their India strategy:
- While BRIC countries often get clubbed together, I learned that India and China (China was also covered briefly during several panel discussions but I was surprised to learn that there are limited opportunities beyond low-cost manufacturing), are not only different from other BRIC countries, they are poles apart despite being neighbors. (Related article: Growth opportunities in China)
- Among the BRIC countries, India is probably the only country that has almost all the components of the ecosystem needed for a business to thrive. The challenge will be to build infrastructure fast enough.
- India is becoming an attractive venue for automotive parts design, biotech research, pharma contract manufacturing, high-end clothing and textiles, and business analysis (back-end operations of management consulting firms, investment banks, etc.).
- Cost-driven businesses like IT services and BPO no longer provide attractive options as they get commoditized and face competitive pressures from other emerging countries (e.g The Philippines).
- The Indian middle class is achieving critical mass with the rapid growth in consumption of branded goods (growing at a healthy 8%).
- Economic changes are producing social changes. Surprisingly enough, Indians are dealing with the same issues that we worry about: work-life balance, influence of media on youth, retirement planning, etc.
- Interestingly enough, as India has earned its own place on the global platform during recent years, Indian youth is increasingly proud of its heritage. While English may be widely spoken, it does not imply that Indian consumer can be treated like an American or a British consumer. The strategy will need fine-tuning.
- Despite the short term social impact of offshoring/outsourcing on our society, they are here to stay and we better learn to leverage the choices. What was initially driven by labor/cost arbitrage can eventually be used to create competitive advantage by redesigning business processes as they are moved to India.
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