Critical Success Factors for Indian Companies Operation Globally
Date: Thursday , September 01, 2011
Over the last two decades, as ex-CEO and Founder of i2 Technologies, a public company, and currently as Chairman of o9 Solutions, I have worked with executives at many Global 1000 companies. I would like to share my thoughts on the big opportunities Indian companies have to build market share on a global scale.
Rapid economic growth in the last twenty years has made India an important player in international markets. Foreign corporations have made capital and human investments to gain a share in the lucrative Indian market, positioning themselves for long-term success. The next twenty years will see the wheel turn in the opposite direction.
Like their foreign counterparts, Indian companies seek to spread their wings on the international stage. What will propel these Indian companies — exporters, services outsourcing companies operating globally, and companies trying to establish local operations globally — to quicker and greater success?
At i2, I worked with some of the largest Indian corporations helping them build and deploy business solutions. What impressed me most is the management team. It is comparable to or better than many of their global counterparts, and is driven by a hyper-competitive environment that requires consistently outstanding performance to progress along the management ladder.
Indian management teams work in a very complex operational environment without the benefits of a reliable or scalable infrastructure. The number of branches that State Bank of India, India’s largest bank, operates is greater than some of the biggest banks globally. This experience with complexity and scale, combined with the ability to keep costs low, can give Indian companies a significant edge in competing internationally.
There are also areas of opportunity for Indian companies to build upon these strengths. Indian companies need to invest in developing leadership styles that create truly integrated teams positioned for success in global operations.
The global business environment is highly competitive and variable. In my experience, companies that have agile, integrated decision management processes across key business functions have a significant advantage over their competitors. GE, Walmart and Samsung have superior market intelligence capabilities that enable them to identify risks and opportunities in real time and allocate resources dynamically to maximize revenue and profit potential. Indian companies will need to augment their business processes to successfully operate in highly variable markets and automate decision management to deal with the scale and complexity of global markets.
Product and Service Innovation
In 2007, the top 10 countries spent 2.5 percent to 4.7 percent of GDP on research and development (R&D). India’s investment, by contrast, was 0.8 percent. This is one of the major reasons why foreign companies have succeeded globally, offering goods and services that are strongly differentiated.
However, the nature of innovation for Indian companies could be quite different from their western counterparts. Indian companies have a unique opportunity to develop new technologies and products at price points that consumers can afford in developing countries across Africa, South America and Central Asia. Nano is a great example of such innovation. R&D investments made now in such areas will pay off well in the years to come.
Recent macroeconomic events point to a shift in the global economic balance from developed countries to developing countries such as the BRIC nations. Personally, I am excited by the prospect of continuing to work with Indian executives who have a global vision for their companies and helping them achieve it.
The author is Founder & CEO, o9 Solutions