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30/08/2004Doing business in India: A marketplace shifting to high speed

We introduce you to one of the fastest growing economies in the world today and offer a series of tips on how to go about doing business in India.

Introduction: A marketplace shifting to high speed

Skyscrapers reminiscent of Amsterdam’s Schiphol corridor, houses patterned after neighbourhoods in Florida or California, and a high tech labour force that five years ago might have been working along Boston’s 128 or in Silicon Valley.

This is the new India, a product of the 1990s, when its markets opened up in time to take advantage of the little used worldwide network of fibre optic cables. Today, it’s not unusual to telephone your Internet service provider or credit card help lines from Dallas, Brussels or London and be connected to a call centre in India.

In what some economists say is a natural seismic shift in the free market economy, which will eventually balance out to everyone’s advantage, the outsourcing of high tech labour from Europe and the U.S. has fuelled one of the fastest growing economies in the world today.

With U.S., Western European and Japanese labour shortages predicted as populations age, a well-qualified pool of Indian workers might seem an ideal solution. However, the resulting movement of thousands of jobs to India is alarming politicians in Europe and US who see the drain of high level positions from their constituencies as a major threat.

Paul Koster, a governor of Autoriteit Financiële Markten, Amsterdam, which supervises the Dutch financial markets, says, "the Indian economy has the great benefit of an infrastructure still based on the British model, so the legal framework--albeit not as sophisticated as ours—is available and will help a great deal in setting up companies there."

Koster continues, "The sheer size of the population makes it just mind-boggling to see that market open up for outsourcing, the higher echelons are very well educated and will indeed be available for most of the jobs now still in our domain. So the threat is real and the soothing remarks of economists are just that. We will have to really focus on innovation and new job creation to compensate for those that move to India."

According to Fortune magazine (November 2003), there are more than 350,000 people working in the high tech service and outsourcing segments in India, with the number predicted to top one million before 2008. Much of this activity is taking place in Bangalore, the centre of information technology industry in India today, with IT companies occupying several million square feet of office space and employing 110,000.

Adding to a roster of Indian companies, such as Infosys, are Microsoft, Dell, CitiCorp, Oracle, Sun Micro Systems, SAP, Cisco, Philips, GE, AOL, Motorola and Texas Instruments and, soon, IBM, which will hire several thousand employees. These organizations not only find the cost savings here important to their bottom lines, they welcome the large pool of educated high tech labour, young people who have chosen to stay in their home country when offered opportunities from incoming multi-nationals.

According to Indian-born Shayonti Misri, who currently lives in the Netherlands, "Another very important factor is the proficiency of the educated labour pool, in the English language. It enables the successful operating of all call centres and makes outsourcing from India much easier and acceptable for European and U.S. companies."

Add to them the tens of thousands of Indian engineers and managers who have returned home from Europe and the U.S., and it is easy to see why the population of Bangalore is expected to rise to seven million by 2011, from 4.8 million in 1991.

Of the other cities in India, Delhi is the centre of government and diplomacy, as well as a growing back office IT centre, while Mumbai (formerly Bombay) has been considered the New York or Los Angeles of India and possibly the easiest city for expat living. Mumbai is home to India’s largest conglomerate, Tata.

Relocating IT jobs to India is not without its problems which are principally power outages (requiring back-up generators), inadequate roads and airports, and widespread poverty. Still, the companies come, learning as they go how to make it all work.

Misri points out, "It is important to note that the call centres work 24hrs to cater to the European and US clientele, in spite of using labour and over and above normal working hours, which includes the night, the multinationals are able to get away without compensating the employees due to the lack of stringent application of labour laws and rights. Something which would not occur in Europe."

Culture and lifestyle

  • Indians in general are very polite, with the "namaste", a gesture with hands folded as in prayer, a respectful greeting. Shaking hands is also acceptable.

  • Be aware that there are cultural differences regarding food: Hindus do not eat beef and many are vegetarian, while Muslims do not eat pork. Many more conservative Indians do not drink alcohol. Says Misri, "Though pork, beef and alcohol is readily available in all towns and cities, especially the four main metropolises."

  • Avoid commenting upon the Indian caste system or poverty. Learning something about the history and culture of the country helps build understanding.

  • Women should consider dressing conservatively when going out in public. For example, shorts are not usually worn in public. ..However, as Misri points out, "In today’s India, especially in the major cities, you can wear whatever you feel like especially the foreigners. Conservative dressing is advisable while travelling by public buses or visiting city suburbs or in certain cities in the Muslim-dominated areas."

  • Be aware that relationships between family members and caste distinctions are hierarchical. The importance of these relationships must be considered when working with Indians. Misri adds that "Caste systems are left behind within the premises of ones home if an individual practices it. Even an averagely educated person doesn’t bring it or practice it in any form at his or her work place."

  • In some cities, dinner parties start very late and guests arrive long after the hour mentioned in the invitation.

  • Medical doctors are considered to be excellent, while nursing care and hospitals often fall short of western standards. Misri adds that there are private clinics, hospitals or medical centres, which do not fall short of any standard but they cost a lot as per Indian standards but not European. "Government hospitals and clinics surely are of very poor standards and always overwhelmed by queues of patients," she says.

  • Care should be taken to avoid malaria and other diseases more in humid areas. (Banglore, for example, is a less humid, higher-altitude city than some other major cities in India, which may explain in part its attractiveness to multi-nationals.) Drinking water is a major problem and care should be taken to consume bottled or boiled water only.

  • Pollution, though improving, can be a problem in the large cities.

  • Traffic is so bad that many expats hire drivers to negotiate the crowded streets. Misri confirms, "Traffic is extremely unruly and in many places the rules are just not followed. When there are no sidewalks pedestrians use the roads making it very dangerous to drive.

  • In shopping areas and market places one can be easily cheated in terms of price and quality, it is advisable to take help from a local.
 Business etiquette
  • One of the effects of the British Raj was that English has remained the primary language in business and government, though accents and word usages differ from region to region. A few words to know: "Ach-cha" means fine, while "T.K." means okay. "Na-must-ay" means hello.

  • The Indian business culture is hierarchical, with respect for age and status affecting all business interactions. This is something you can find in family businesses not within a corporate culture.

  • Decisions will only be made after they have been sent up the chain of command; don’t expect immediate answers. Everywhere in the corporate world there are definite positions for decision making.

  • Do not force lesser-ranked executives into giving concrete answers, as that will embarrass them in front of the group.

  • Reconfirm all appointments. Depending upon industry or region, punctuality may not be an important issue.

  • You should be aware that the left hand is considered unclean. Although, Misri observes that nobody bothers whether you eat or write or distribute visiting cards with it. "It is considered unclean when performing religious ceremonies." She says.

  • Never use first names with business superiors, as India is a more formal culture.

  • Ask for input from participants in a business meeting.

  • Don’t take a "yes" at face value and don’t push for a final yes or no at a meeting. People's attitude is to "ponder over" something before taking a decision.

  • Negotiation on price and terms is normal; you should both offer and expect concessions when making a deal.

  • Bureaucracy is rampant and can be extremely depressing to handle observes Misri. "Needless to say bribing is prevalent especially when dealing with the government," she says.

  • Follow up meetings with a written overview of what was on the agenda.

  • Something very alarming for a western expat will be the total lack of respect for labour, the unskilled or semi-skilled labour force.
March 2004

Sharri Whiting specializes in reporting on business and cross cultural issues and is guest lecturer at the American University of Rome and Simmons College in Boston.

Special thanks to Shayonti Misri, an Indian-born expat who has travelled extensively with her Indian husband in Europe and Asia for her input.


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