The Boyden Report: India
The Sun Rises on the Indian Executive
Welcome to the first edition of The Boyden Report, a quarterly series to provide a deeper understanding of the global market for talent.
At Boyden, we work closely with global companies to craft their executive strategy. But that strategy must be continuously reevaluated. What works in one market may not be effective in another region. Each industry has its own management dynamics.
The Boyden Report is designed to help you navigate this complexity in the ever-changing global market for talent. Each report will provide you with the context to make sustainable strategic decisions about your executive team.
In our reports, we’ll be looking at the key emerging markets where revenue growth is fastest. Multinationals that wish to respond to the immense commercial opportunities in these markets must build their global management benches with full knowledge of each market.
And nowhere is there more executive opportunity than in India. That is why we’ve made the Indian executive and the country’s unique entrepreneurial spirit the subject of our first Boyden Report.
“The Boyden View” on page 14 offers some practical points of advice for our clients and friends to help them attract and retain executive talent inside and outside India.
We would like to thank the business leaders and entrepreneurs who provided generous insight for this report.
Chris Clarke
President and CEO
Boyden World Corporation
Dinesh Mirchandani
Regional Managing Director, Asia/Pacific
Boyden Global Executive Search
The Indian Opportunity
If the 20th Century was the “American century,” India is determined to play its part to ensure that the 21st Century will be the “Asian century.”
India’s Prime Minister, Dr. Manmohan Singh, has declared: “My government’s endeavour would be to create such an atmosphere in the country that ... the talent in the country should work to prove that we are unparalleled in the world.” If current signs are any indication, they are well on their way.
Prime Minister Singh’s ambitions are bold, but not unrealistic. India is undergoing an extraordinary transformation with an unprecedented rate of change. A quiet revolution is taking place, as an emerging entrepreneurial spirit takes hold among India’s business executives.
The widely cited catalyst for this change was the economic reform of the 1990’s which removed state protectionism and encouraged foreign direct investment. Private enterprise was actively encouraged to replace a command economy. The result is now a US$1 trillion economy. And today, 44 percent of the Fortune 500’s top 100 companies can be found in India.
"I see a big change in corporate India. Indian companies, which earlier enjoyed protected markets, have adapted well to the opening up of the economy. India is a classic example. I am impressed by how well Indian companies have moved from a management style rooted in a protected environment to a management style which is exploiting global competitiveness."
Klaus Schwab
President and Founder of the World Economic Forum
A Booming Economy
India’s success story may have become familiar, but the facts remain startling.
India’s GDP has made huge strides, jumping by 9.4 percent in the fiscal year ending March 2007 – its second fastest growth on record. Its annual growth is projected to remain at a steady 8 to 9 percent over the next five years.
Now the fourth largest economy in terms of purchasing power parity, India is projected to surpass Japan. It will become the world’s third major economic power within 10 years. Within 20 years, experts predict that India will emerge as the third pillar of the global economy after the US and China, with a GDP about 60 percent of the size of the US economy by 2025. By 2035, some estimate that the Indian economy will be larger than that of Western Europe, and only slightly smaller than the US economy.
A population with executive potential
What is behind this growth? Or rather, who is behind it?
It’s the Indian people who are transforming their economy as they embrace a new entrepreneurial culture distinguished by individual talent and flair. And at the heart of this phenomenon is an emerging talent pool of individuals with executive potential – ambitious businessmen and women – who are driving the country’s economic reinvention.
"Through the wisdom of its government leaders and the entrepreneurship of its private sector, India has risen to become a major force in the global economy."
John Chambers
Chairman of the Board and CEO of Cisco Systems, Inc.
Why has Indian executive talent emerged?
There are several reasons why this pool of talent has emerged.
First, specific government measures have helped. India has always placed a premium on educating its growing populace. And it is now reaping the rewards. Specific measures, such as the introduction of an education tax of 3 percent of the service tax amount applicable to business invoices, will contribute to an education fund. The government is also doubling the number of Institutes of Technology (IITs) and Institutes of Management (IIMs) across the country.
Second, the government’s education objectives are a response to and an attempt to leverage India’s demographic global competitive advantage. While the working-age populations in the US and China are shrinking, India’s is growing. By 2020, nearly half of all Indians will be between the ages of 15 and 59.
"India has seen an explosion of its middle classes over the last few years with an emerging generation of highly educated young workers earning higher incomes than ever before. This has driven massive growth in domestic consumption. If you combine this with the boom in government spending on infrastructure, India reveals itself as one of the most attractive growth stories in the investment world right now."
Arun Mehra
Head of Investment Strategy for India, Fidelity
The third reason Indian talent has emerged is that it has benefited from the boom in outsourcing services. In the 1990s, India was at the centre of the wave of outsourcing of some business functions to emerging economies by multinational companies in the United States and Europe. India successfully demonstrated that it had a comparatively low-cost workforce that could deliver a cost-based strategic advantage.
"India’s entrepreneurship is particularly fascinating, in that it does not take a single form. It has not solely been learned, or acquired, or brought in. It is like a DNA strand running through the population– thicker here, thinner there, more scientific here, but a constant in India’s story."
Dinesh Mirchandani
Head of Boyden India
But in recent years, the outsourcing appeal of India has moved to a higher level. No longer is it just about cost advantage. The talent of Indian employees, their rapidly developed skill set and, above all, the rise in the quality of Indian management have inspired greater trust and reliance from multinationals. Other business functions and key parts of the supply chain are now being outsourced to India. And the country has benefited from the emergence of a talented management cadre as a result.
A national admiration for entrepreneurship
By far the most significant factor in the emergence of a management talent pool is India’s natural and cultural inclination towards entrepreneurship. This is reflected in several networks such as The Indus Entrepreneurs (TiE) and the National Entrepreneurship Network (NEN), which have helped harness entrepreneurial talent globally, not just in India, creating a structure for the global exchange of ideas and finance.
As well as providing an exchange for ideas, these entrepreneur networks have also been highly effective in addressing some of the practical challenges for any early-stage ventures such as access to venture capital and development finance. The benefit of these networks even reaches well-established groups such as Biyani’s Pantaloon Retail, where there are continual financing issues, as reported by The Hindu: “Biyani has ambition combined with street smartness, but his business model could choke if there is inadequate funding.”
Success factors of the Indian executive at home and abroad
A frequent question among global business leaders is why do Indians do so well abroad?
“Indians are very creative, out-of-the-box thinkers,” explains Mirchandani. “They have grown up with a scarcity of resources, fierce competition and population pressures.” Competing to achieve any kind of position has taught Indians to strive as a basic requirement of success. For example, in the 1970s there were over 100,000 applicants for fewer than 2,000 seats at the five IITs– and the numbers keep growing.
Other cultural characteristics have shaped the instincts of the Indian executive. Indians typically speak between two and four languages – English, the language of business and urban India; Hindi, the national language; a mother tongue, and probably another language required to interact with people in neighbouring regions. They are therefore used to a high level of complexity in dealing with other people, not only in terms of language, but also with reference to different religious and social dynamics. This has created a microcosm of the global environment in which India’s executives are able to flourish.
India also traditionally accentuates the extended family, with individual ambition shaped by collective responsibility. Respect for other people is very important. And it’s a quality that many non-Indian multinationals encourage in their workforce.
India’s limited infrastructure, widely acknowledged as a longstanding liability, obliges people to develop their own resourcefulness. “India is a highly complex, ‘nonlinear’ culture,” says Mirchandani. “Living and working here requires an ability to deal with uncertainty, constantly creating backups for everything, even in something as fundamental as getting to work and back.” By the same token, the country’s still cumbersome bureaucracy has encouraged inventiveness and creative thinking just in dealing with it. The flip side is that values often get fuzzy or become casualties in the process.
“To answer the question on Indian success abroad, one must take into account all of these factors,” says Mirchandani. “Given local influences during their formative years, Indians who find opportunity abroad do well because they know what to do to achieve success. Quite simply, they understand what it takes to get where they want to be.”
TiE – The Indus Entrepreneurs
The Indus Entrepreneurs (TiE) network has built a brand synonymous with entrepreneurship around the world. A non-profit network, operating in 47 cities in 11 countries, TiE’s contribution to economic wealth creation is estimated at $200 billion. In keeping with its mission of fostering entrepreneurship, TiE has advocated government policy initiatives and has successfully influenced the liberation of key sectors in India and Pakistan.
“It is not simply one of the largest networks of executives who have business interests in common,” says Suren Dutia, CEO of TiE Global. “TiE is a dynamic organisation that advances entrepreneurship and supports its members through highly focused mentoring, networking and educational programmes.”
TiE has articulated a “market approach”, which it calls the AAA Programme – Awareness, Advocacy and Assistance. Each of these aspirations is backed by a tactical plan, including skills-building programmes to raise finance, a focus on creating a viable seed capital pool in India, and VC connect programmes to link early-stage companies to sources of funding.
“What Indian entrepreneurs are particularly good at is implementation through people,” says Suren Dutia. “Not only do they have vision, industry knowledge and drive, but they also know how to make things happen, through personal motivation, from one individual to another. TiE’s goal is to maximise the opportunities people have to learn from successful entrepreneurs and thereby nurture the talent of the future.”
TiE brings intellectual rigour to leveraging knowledge and experience to give budding entrepreneurs a jump start. For example, the London TiE Chapter recently established a formal mentor training programme. As Dutia explains, “Mentoring is the cornerstone of TiE’s commitment to those with entrepreneurial talent. The London Chapter is a trailblazer in establishing training programmes that can be replicated elsewhere in the network. This will enable us to share learning in ways that provide specifics to the mentoring process.”
TiE’s intellectual capital includes almost 1,600 highly accomplished and successful charter members. By invitation only, these people have made a commitment to mentor young entrepreneurs, give advice on business planning, and introduce them to venture capitalists and potential board members. Charter members include many well-known figures, such as C. K. Prahalad – one of the most highly regarded thought leaders; Vinod Khosla – a venture capitalist, previously with Kleiner, Perkins, Caufield & Byers and co-founder of Sun Microsystems; Rajat Gupta – former MD of McKinsey & Company Worldwide; Gururaj Deshpande – Founder and Chairman of Sycamore Networks, Inc. and a Corporation Life Member of MIT; Kanwal Rekhi – serial entrepreneur behind more than 50 companies; N.R. Narayana Murthy – one of the founders of Infosys; Padmasree Warrior – CTO of Motorola; The Hon. Apurv Bagri – MD of Metdist Group, Chairman of the London Metal Exchange and Chairman of TiE Global, and many other visionaries.
Suren Dutia is passionate in expressing his belief that the charter members are united in their sense of altruism, especially due to the far-reaching impact of TiE’s mission. He states, “Entrepreneurship is the most powerful paradigm for eradicating poverty, creating jobs, developing human capital, facilitating economic development and thereby bringing social change.”
From an international perspective, Dutia concludes, “It is through entrepreneurs, intrapreneurs and pioneers who leverage India’s wealth of talent and instinctive know-how that India Inc. will change the future of global business.”
Who are the Indian Entrepreneurs?
Entrepreneurs in India fall into four identifiable groups: the first generation entrepreneur, the family entrepreneur, the corporate crossover and the corporate intrapreneur.
Examining the background, motivations and careers of the people in these groups gives Indian companies and multinationals an insight into what is driving current and future generations of Indian managers and executives.
The First Generation Entrepreneur
First generation entrepreneurs typically start from firm foundations: a strong family and a solid education. They represent some of the best “homegrown” executive talent, having developed their skills in India, rather than by studying or working abroad. These executives are now in the forefront of building businesses from within India that are ready to challenge global competitors.
“Right across India, a new generation of entrepreneurs has emerged,” says Dhruv Shringi, co-founder of Yatra.com, one of India’s fastest-growing travel websites. “And they share a lot in common; most come from middleclass backgrounds and they value their education. Many entered the workplace and honed their business skills in India throughout the 1990s when there were very few entrepreneurial opportunities around. Now that there are plenty of options, they have the skills and the personality to execute their business vision.”
The rise of graduates from Indian business schools such as IIT and IIM has swelled the ranks of these first generation entrepreneurs. “Indian business schools are tremendous institutions,” says Shringi, “turning out exceptionally smart graduates. I think they are one of the contributing factors responsible for the rise of the homegrown entrepreneur and business executive.”
Dishman Pharmaceuticals and Chemicals Ltd, HQ Ahmedabad
Dishman Pharmaceuticals & Chemicals Ltd is a global company manufacturing active pharmaceutical ingredients and intermediates, quaternary compounds and fine chemicals. Its manufacturing and distribution capabilities are sited inside and outside India, and Dishman’s 78 percent export sales reach all continents.
Dishman is one of India’s leading Contract Manufacturing Outsourcing (CMO ) organisations. By 2006 it had achieved a consolidated turnover of 27,745 lakh rupees (US $685 million/Euro 510 million) – a 48 percent annual increase – since its inception in Ahmedabad in the 1980s. Dishman is a preferred outsourcing partner to companies such as Merck, GSK and Astra Zeneca.
Reaching into the Heart of an Industry
In the 1980s, with his eye on the pharmaceutical industry, founder J. R. Vyas pursued Dishman’s potential in Europe and the US A by setting up two wholly-owned subsidiaries. “In order to gain a leading foothold in pharma, Dishman needed to establish a knowledgeable local presence in key industry markets. This would facilitate better communication with customers, understand their needs, offer supply-chain efficiency and add value to the whole process,” says Vyas.
With a strong operational foundation, Dishman began to pursue growth through acquisition in the same year that it won its first contract research project, starting with Chemconserve BV in the Netherlands. It now has subsidiaries in Shanghai, Africa and Switzerland.
Vyas prefers the personal touch in acquiring talent. “To smooth the integration process, I visit the company to talk to every employee. I establish a level of communication where there is a complete understanding of what the new entity means to our business, what we hope to achieve, and how we will support our teams.”
The acquisition of CARBOGIN AMCIS, a large Swiss research-based company, made big news in 2006. It was one of the largest overseas acquisitions made by a company based in Gujarat. Vyas explains: “We staked out our ambitions and applied local insight to achieving our global potential. We knew we could leverage our competency in operational efficiency in India to improve margins in the Swiss operation.” The acquisition made Dishman the only CMO in India with high-potency manufacturing capability.
The Family Entrepreneur
The second group of business executives are those that have inherited a company. In India, where in the days before privatisation many major firms were stateowned but family-run, most successful executives grew up watching family members at work. Now, inherited private businesses are benefitting from a new generation of executives from these family-owned businesses.
“These entrepreneurs are acutely aware that their business success comes from and nurtures their family,” says Boyden’s Dinesh Mirchandani. “They don’t flaunt their wealth, and are intensely aware of a sense of financial custodianship.”
The best-known example is the Ambani family, whose name was established by Dhirubhai H. Ambani when he launched Reliance in 1966. The inheritors are his sons Mukesh D. Ambani and Anil Ambani.
Both Anil and Mukesh Ambani studied at American business schools and came back with a global perspective to shape Reliance’s future. When the company was divided in two in 2005, Anil Ambani became Chairman of the Anil Dhirubhai Ambani Group, encompassing Reliance Communications, Reliance Capital, Reliance Energy and Reliance Natural Resources. He is regularly conferred with accolades and has been named CEO of the Year 2004 by Platts Global Energy Awards, and Entrepreneur of the Decade by the Bombay Management Association in 2002.
Mukesh Ambani became Chairman and Managing Director of Reliance Industries, India’s largest private conglomerate. It has businesses in energy and the materials value chain, textiles, infrastructure and financial services. Its turnover is nearly US$20 billion; it contributes 5 percent of India’s total exports and 3 percent of the country’s GDP. Mukesh Ambani cochaired the World Economic Forum Summit in 2006, and Reliance has won national and international accolades for both corporate management and industry excellence. As for the future, according to his annual report for 2006, Mukesh Ambani intends Reliance Industries to be the catalyst for India’s retail revolution.
Read more >>>
BOYDEN Global Executive Search
Posts
