Newswise — Indian corporations—which are rapidly attracting worldwide attention in information technology and other critical areas of business—need to continue breaking free from the nation's "feudal mindset" to become major players in the global economy, according to a new report released today by The Conference Board.
"A solid period of domestic economic growth, the perception of India as a premier destination for international outsourcing, the rise of India-based multinationals, and an explosion in direct foreign investment by Indian firms have thrust Indian business practices into the global spotlight," says Poonam Barua, Director of The Conference Board's India Operations.
The report also emphasizes the need for Indian organizations to become less insular, noting that Indian executives have traditionally managed a workforce comprised almost entirely of Indians, conducted business almost exclusively in India, and sold products and services to Indian customers. Going beyond geographic boundaries and operating in other countries means Indian executives managing global operations must now learn to deal with a multi-ethnic, multi-racial, and multi-cultural workforce and consumer while still meeting standards of excellence, ethics, and compliance.
Barua says that Indian companies are going to need to develop a new focus on employee issues, corporate social responsibility and ethics—and meet or exceed acceptable standards to compete globally. She says organizations will find that a significant proportion of their efforts will be channeled in the direction of compliance and coordination with differing complex ethical and governance standards across the globe.
The report shows that information and technology are rapidly transforming Indian business, having a major impact on customer needs and creating a more informed and demanding workforce. With the faster development of newer and efficient technologies, companies and countries that are able to innovate will be market leaders. Early adoption of technologies that are far ahead of current Indian practices and standards may hold the key to future global competitiveness for local firms.
The boom in offshoring and expansion of Indian enterprises to other countries underscores the need for business leaders to adopt a more global mindset to compete and succeed. Among the report's set of do's for Indian business leaders and organizations:
? Learn that having a true global perspective means more than just having a physical presence in other countries. Key is learning to think globally in terms of size of operations, quality, processes, talent, and best practices.
? Go beyond platitudes and focus on execution. Strategy, ethics, and principles of good management that are written in text books may look relatively easy to introduce, but their successful implementation is difficult, requiring sustained efforts by senior management.
* Develop skills in talent management, retention, and recruitment. Indian CEOs must create and communicate a vision that is knowledge-led and shared by all employees, not just the CEO and top management. * Embrace technology developed throughout the world, not just in India. Reaching across borders for innovation is how global business is being done.* Manage and promote diversity so that differences among people don't become a blaming game.* Aggressively manage performance and benchmark competency standards against global norms.* Be conscious of, and be prepared to meet, regulatory compliance on an international scale. Compliance with laws from different countries and cultures adds to the complexity of operations of any Indian organization that views itself as a global entity.
INDIA CARVED AN IT NICHE FOR ITSELF: MANUFACTURING IS NEXT India's success in developing information technology solutions has given the country the branding recognition needed to awaken the world to its capabilities and potential in other sectors. Most Indian CEOs feel that the country is poised to become one of the low-cost manufacturing hubs of the world. But the report notes that there are lessons to be learned from other global regions that have successfully developed world-class manufacturing sectors. Manufacturing may lack the glamour and cache of IT, viewed by some as a stodgy, slow-growth sector, but with the growth of outsourcing and the success of Indian businesses in attracting international clients, more foreign businesses are rethinking Indian manufacturing.
"Once thought of solely as a local or national sector, there is a growing recognition that manufacturing could follow the lead of the IT sector in attracting a global clientele," says Barua. "But, the manufacturing sector in India has much work to do to boost its image and reach world-class productivity and quality. It needs to attract and retain better talent, improve its supply chain, update pricing strategies, and improve its leadership."
ENTERPRISE RISK MANAGEMENT IS CRUCIALIndian companies going global also need to initiate enterprise risk management—the act of protecting or enhancing company value by managing corporate risks (credit risks, market risks, and operational risks) with an organization-wide approach. Such risk mitigation strategies should be embedded in the architecture of the firm, according to Barua. Potential sources of internal and external risk need to be identified and addressed.
Enterprise risk management practices can minimize the overall company-wide risks involved with a growing organization, reduce the cost of capital and increase shareholder value, enable ratings agencies to more rationally rate debt and equity, and reduce the cost of directors and officers (D&O) insurance because of enhanced corporate governance.
Indian companies that have been able to manage global diversity effectively include Infosys and Ranbaxy Limited.
Indian CEOs whose views are represented in the report include: Mr. Nandan Nilekani, President and CEO of Infosys Technologies; Mr. Sajjan Jindal, Vice Chairman and Managing Director of Jindal Iron and Steel Company; Mr. Hital Meswani, Executive Director of Reliance Industries Ltd.; Mr. Muthuraman, CEO and Managing Director, Tata Steel; Mr. Arun Nanda, Executive Director, Mahindra and Mahindra; Mr. R. Gopalakrishnan, Executive Director, Tata Sons, and Mr. Tejendra Khanna, Chairman of Ranbaxy Laboratories.
Source: Going Global: Challenges for Indian Business, Executive Action #152, The Conference Board
About The Conference Board Non-partisan and not-for-profit, The Conference Board is one of the world's leading business membership and research organizations. The Conference Board produces The Consumer Confidence Index and the Leading Economic Indicators for the U.S. and other major nations. These barometers can have a major impact on the financial markets. The Conference Board also produces a wide range of authoritative reports on corporate governance and ethics, human resources and diversity, executive compensation and corporate citizenship. Our conference and council programs bring together more than 10,000 senior executives each year to share insights and learn from each other. Visit The Conference Board's award-winning website at http://www.conference-board.org.
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