The Hindu Business Line : Indian businesses on a high, Down Under

Australia offers Indian companies a familiar environment to work in: The similarity of governments, the legal system, shared interest in things like cricket. Finally, a big market. Maybe there are only 20 million consumers, but they are wealthy.

THE IMPOSING Melbourne skyline. — K. Venugopal

To know who his next customer ought to be, Mr Raj Kumar, Regional Manager, Corporate Services (Pacific) of Satyam Computer Services, needs only to look out from his office on the 40th floor in downtown Melbourne. On the imposing skyline around him are signboards announcing the presence of the biggest names in Australia's business: Banks, insurance and telecom companies. The only trouble is his company has already picked up business from three of the top five Australian companies.

Indian software companies such as Satyam are beginning to make inroads into corporate Australia. Having set up its first office eight years ago, Satyam now has over 400 employees in Australia, of whom a third are Australians. Infosys has a global development centre that not only caters to clients in Australia but also elsewhere.

WINNING OTHER MARKETS

It seems to make sense for these large information technology companies to invest their energies in Australia. "They are doing that for two reasons," explains Mr Barry Jones, Executive General Manager, Invest Australia, a Government initiative to market the country as an investment destination to overseas companies. "Firstly, to service the offshoring of work that happens from Australia to India, that is setting up offices to attract business, to have a sales presence.

Second, they are expanding beyond; they are using their Australian operations to win markets in other countries."

"Infosys has set up a global development centre in Melbourne that is integrated with other development centres round the world," according to Mr Jones. It has 200 people working in that centre.

Similarly, TCS, having acquired the Sydney-based Financial Network Services (FNS) in October 2005, has a development centre, again in Melbourne, providing high-end technical services to clients in Australia and New Zealand. "These are examples of Indian companies capitalising on Australian skills," says Mr Jones.

One of the selling points for Australia is the skills base: A highly educated and multi-lingual workforce. He points out that because of the history of immigration, the country has people from a wide range of cultural backgrounds and a surprising range of language skills, to the extent of hosting Japanese language call centres.

ENHANCING COMPETITION

Indian companies are finding their indoctrination in the new territory easier than they would elsewhere because the Australian government has been welcoming of investment from all sources. "The Indian IT companies are bringing in extra competition to the Australian marketplace, which means Australian companies have to become more efficient to compete and that benefits the overall economy," according to Mr Jones.

If Infosys and TCS are winning business in Australia, it only confirms they are doing better than the people who were already here. By definition they are improving the competitiveness of Australia." It is not just the software companies from India that are establishing subsidiaries — they are comfortable growing their own businesses rather than setting up joint ventures — mining and manufacturing outfits have also a foot in the door.

The Birlas have invested in a copper mine in Western Australia, the Oswal group in a fertiliser plant, Saurashtra Chemicals is looking at coal as is Sterlite. Indian Hotels has bought a boutique hotel near Sydney for A$26 million.

An increasing number of other companies are showing interest in investing. SAIL is said to be looking not only to securing coal supplies but to manufacturing, there being in Australia, as Mr Jones puts it, "exciting technologies to convert lower grade iron ore to steel".

Oil companies are evincing interest in exploration and extraction of oil and gas. There are companies from the food industry as Australia has a large and efficient agricultural sector.

A GOOD BASE

"For Indian companies wanting to expand internationally, Australia is a good base to expand especially to South-East Asian markets," argues Mr Jones. Australia is closer to ports in South-East Asia than are cities on the west coast of India.

"Australia offers Indian companies a familiar environment to work in: The similarity of governments, the legal system, shared interest in things like cricket. Finally, it offers a big market itself. It may be there are only 20 million consumers, but these are wealthy consumers," he said.

If India has to address its adverse balance of trade with Australia, now at $3.6 billion, it has to be done by setting up manufacturing plants there, believes Mr Sujan Chinoy, India's Consul-General in Sydney.

But, then, that will not be easy because at the lower end of the spectrum of manufacturing is the monopoly of Chinese companies, and at the top end are multinational companies based in the US, the UK and Europe.

The pioneering Indian companies, at least, seemed unfazed by it as they make their foray Down Under.

More Stories on : Overseas Investments | Insight | Foreign Direct Investment

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
WHY FDI IS THE BEST BET

Farm sector holds growth key

Budget and the art of the possible

Outdated format

For development with equity

Managing disasters

Mine with a view

Indian businesses on a high, Down Under

Importance of micronutrients