S. Ramachander

Signs are emerging that Indian companies taken together will soon be investing abroad sums large enough to stand respectable comparison to the foreign capital inflow. This is something quite unprecedented for Indian managers, who have been for long used to the flow being all in one direction with India being a net importer of capital, technology and manpower.

In the transnational corporations, however, it is quite common for Indians to be sent on secondment to the headquarters and then to run other country operations. Technology too is slowly becoming a two-way discourse with Indian scientists offering their expertise to overseas markets.

Uphill Climb

Building Indian MNCs was a new theme coined just twelve years ago at the first of the annual CEO Forums, run by Academy for Management Excellence. Prof C.K. Prahalad saw it as the only way Indian companies could meet the challenge of the foreign competition; and many were sceptical. He cautioned managers that this was an arduous, uphill climb and might take some companies ten years.

One joked that if we spoke of Indian MNCs too soon people would ask what we had been drinking; so incredible was the idea then. Indian companies were much smaller than their international counterparts, with similar sized ambitions, and depth of their pockets! The Bombay group had just been agitating for a level playing field against the invading corporate armies.

It was a while before we realised that if wanted to play with the big boys, we had to play according to their conventions. Free markets and accounting norms demanded their own discipline and all one could do was to play, if necessary wearing helmets and thigh pads, but on pitches and to rules accepted by the wider world.

The 1990s saw considerable efforts by Indian manufacturing companies at improving quality and productivity, which gave them the confidence to face the challenges in other markets. After much hesitation and doubt, they managed to weather the storms of the first 15 years of liberal policies.

Greater diversity

Now that some prominent Indian business houses have set up operations in other countries or bought going concerns elsewhere in the world, while we raise well-deserved toasts, we must turn to the far more important question: How well will Indian entrepreneur-led companies manage far-flung operations?

They will surely have to learn the ways of working in other countries and cultures under very different marketing and competitive conditions. This is not a trivial challenge. Managers who have earned the respect of the owners over the past few decades might, for instance, find themselves under-prepared for the transition. Their work styles and lifestyles might clash with those of their new colleagues in other climes. Used as they have been to greater power-distance, formality, respect for seniority, status symbols and age as well as referring everything back to the Boss, they might be out of place among fellow employees who have less respect for hierarchy.

My guess is that soon these ventures into overseas markets will revolutionise the way companies deal with talent in the local market. One can see few options to accepting a much wider devolution of real executive authority to professional managers, and living with much greater diversity . It will be interesting to watch how this pans out in the coming months.

(This article was published in the Business Line print edition dated October 9, 2006)
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