Over past 18 years, I had opportunity to witness industry transformation from diverse perspectives – 1. Work experience in Middle East, multiple cities in India with service & product organizations. 2. Business travels across the world with a chance to work & collaborate with disparate teams. Below is an analysis and insights on setting up and running thriving organizations in India.
Over past 2 decades, India has been the top outsourcing destination for most companies in North America & European regions. The National Association of Software & Service Companies (NASSCOM) reported that over half of all Fortune 500 companies choose to outsource software development to Indian outsourcing firms. While Software Development, R&D, Training, Staffing have been among top outsourcing choices, Business Process Outsourcing (BPO) has been the single largest market & straightforward option for many companies across industries.
There are number of reasons why India presence makes sense
- India has one of the largest talent pools on the planet – Hiring simultaneously in two markets would load up talent quickly and allows tapping into more minds to innovate, disrupt and stay ahead of competition.
- Provides Business Continuity in case of disaster situations.
- Outsourcing of the support functions helps you re-focus on the core business and do more of what you are good at doing.
- Globalization/Localization – India is emerging economy with 1.2 Billion people with growing purchasing power, is fast expanding to be one of the largest markets in the east – This can help create a launch pad for your international business and expand your Total Addressable Market (TAM) with much needed stability for your business that shareholders are looking for.
Bangalore has been the IT capital of India with over 1 Million IT professionals working in over 5000 companies. Hyderabad is currently the second largest IT exporter and the largest bioinformatics hub of India with over 2000 companies, according to Wikipedia. Pune, Chennai, Mumbai & National Capital Region (NCR) are providing competing talent pools & lifestyles and are equally desirable locations depending upon industry & focus of business.
Of all benefits, cost savings continues to be a major factor in the decision making. The economy has been a fluctuating one, more so since 2001 – Companies that managed optimize their spend have always had more chance of survival and continued growth.
Historically, India provided cost savings on payroll and allowed continued delivery of services at 1/2 to 1/8th of the cost, especially at entry to mid level talent. While there have been concerns about quality of talent and delivery, organizations have always found ways to make it work by investing in trainings & improving communication channels. This helped companies to advance the cause from saving costs to creating innovation hubs for next generation products & services.
While it makes business sense to have presence, there’s science & art to running successful operations in India. Few companies of understood this and operationalized this knowledge to scale seamlessly and support business demands.
Below is a summary of few critical aspects of setting up & running successful operations in India.
1. Many things in common, but many things are different too:
Being aware this fact is critical. India is largest english speaking country outside North America and usually pretty hospitable – By the virtue of being thousands of miles apart, there are significant differences in culture, motivation factors, expectations, behaviors and responses. This seem insignificant to untrained eyes, but it is most important lever for productivity and stability for running successful operations.
Exposure to local culture is essential to understanding the nuances and building a model that works best.
2. Invest in leadership with past experience in building & running India Operations for a global company:
You will need leadership team that clearly understands domestic market, compensation philosophy, talent acquisition, engagement & retention dynamics, Popular (& unpopular) policies. They will alert when its time to expand, make build or buy decisions for support services, facilities, real estate etc.
Do not look to mix cost savings with leadership hiring, its a foundation and that needs to be experienced & solid. Once you have the top team in place, it will build an organization that can have longer term talent, cost and all other advantages with a sustained model.
3. Cross-shore projects need a gift packaging…
Goods need packaging – longer the commute, higher the need for better packaging to ensure safety & durability of goods. Project execution needs specfic & different dynamics with cross-shore engagements.
Package the projects/tasks with below attributes.
- Clear definition of ownership (Onsite/Offshore etc)
- Dates – For each phase
- Scope – Whats in scope and whats not
- Deliverables – Exact description how does the end product or service would look like.
- Communication methods – Daily/weekly reporting, conf calls, documentation
4. Matrix reporting structure : What to & what not to.
- Always hire local managers and then the line employees. Doing the opposite could cause continued attrition and instability due to lack of local management capital to hire & nurture.
- Offsite managers help connect teams with business priorities while local managers will translate & break tasks down and ensure timely delivery. Employee satisfaction depends on number of factors apart from the work alone, which is hard to understand & manage from a different location or a country. This aspect gets amplified if the offsite manager doesn’t have working experience in the market that he or she manages a team.
- Best model is to manage managers remotely and have individual contributors report to local managers. Large companies such as Microsoft usually have minimum directors reporting to the headquarters.
Summing it all up, time tested best practices & practical experience are priceless when it comes to business dynamics. Hope these inputs will help you build and run massive businesses across world.