INTRODUCTION
Globalisation is the term used to describe the increased pace of interconnectedness that has taken place over recent years. It came about as a result of two developments. Firstly, technological changes have enabled information and goods to travel much faster than before, making it easier to transport things and communicate with people. Secondly, the end of the cold war and the spread of a new political philosophy of liberalization have lead to the removal of trade barriers. As a result of globalisation, foreign trade and investment have grown dramatically and the world’s economies and societies have become more and more integrated.
Today, we are witnessing the implosion, where four great forces-corporations, capital, communication and the citizens can freely criss-cross national boundaries. A single virtual world is being formed, comprising hubs of economic activity, interconnected by technology, and unrelated to the geographic limits of the nation states that they are part of. Thus, economic liberalization, global business opportunities, increasing competition, onslaught of technological innovations and emergence of global communication networks have all impacted businesses
in a large way.
Globalisation has opened up an array of opportunities to corporate India. To emerge successful in its new tryst with destiny, there are no soft options available and the Indian corporate sector must necessarily turn to good governance in its pursuit of competitive excellence in a challenging international business environment.
INDIAN CORPORATE SECTOR
As we stand in 2004, 57 years after independence, India is witnessing a new phenomenon on the industrial front. This is the emergence of a confident, competitive Indian industry, which is now looking at global markets increasingly, and not merely at defending its position in the Indian market as fortress India.
In the short decade that India has grappled with the challenges posed, and capitalized on the opportunities offered by a liberalizing economic environment, there are already shining examples of corporations achieving business excellence concurrently with, or perhaps more appropriately, because of the excellent standards that they have set for themselves. Further, maturation of the market place is likely to recognise and reward such corporations in greater measure in the decades ahead.
The going global is rapidly becoming Indian Company’s mantra of choice. Indian companies are now looking forward to drive costs lower, innovate speedily, and increase their International presence. Companies are discovering that a global presence can help insulate them from the vagaries of domestic market and is one of the best ways to spread the risks. Indian Corporate sector has witnessed several strategically important success stories in the recent past. Tata Motors acquisition of Daewoo Commercial Vehicle Company, Tata Steel acquisition of Singapore’s NatSteel, Reliance’s acquisition of Flag is the culmination of Indian Company’s efforts to establish a presence outside India. In terms of cost competitiveness, India’s Steel Industry ranks among the top in the world (it is ahead of the US). Nalco and Hindalco are among the lowest-cost producers of aluminium in the world. Ranbaxy’s products are successfully fighting in markets abroad against local or multinational brands and many of its labels are market leaders in their segments. A whopping 70 % of Ranbaxy’s revenues come from abroad.
Reliance Industries, Infosys Technologies and Wipro are among the eight Indian companies that have been included in the Forbes magazine’s list of best big companies in 2004. Bharat Petroleum, ITC, Bharti Tele-Ventures, Oil and Natural Gas Corp, and State Bank of India are the other domestic companies in the “World’s 400 best big companies. India’s software exports are on track to grow by 30 per cent in the year to March 2005, despite attempts in the key US Market to discourage outsourcing and protect jobs. India’s information technology (IT) sector and business process outsourcing (BPO) industries, which offer back office and call centre services, logged exports worth $12.5 billion in the 20032004 fiscal year. Nearly 25 per cent of the exports that involved 800,000 workers come from the top three companies in the sector namely Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd.
India is also rapidly emerging as a hotspot for outsourcing pharmaceutical products, engineering design, R&D, clinical research, textiles and even auto components besides in IT enabled services. The obvious thing going for India is cost and quality of services. However, studies on outsourcing IT enabled services have shown that companies also stand to gain from reduced investments in physical and telecommunication infrastructure when they offshore work to Indian companies. India is ranked 34 in IMD’s World Competitiveness Report, 2004. That is 16 ranks higher than its 2003 rank of 50. There’s more in terms of business efficiency, its rank has moved from 51 to 22 and in terms of economic performance from 22 to 12. The ranking is not a surprise: the dismantling of the industrial licensing system, the rationalisation of the tax regime, and the removal of the competition-stiffing tariffs have not just contributed to faster economic growth they have made Indian companies more competitive.
Globalisation is the term used to describe the increased pace of interconnectedness that has taken place over recent years. It came about as a result of two developments. Firstly, technological changes have enabled information and goods to travel much faster than before, making it easier to transport things and communicate with people. Secondly, the end of the cold war and the spread of a new political philosophy of liberalization have lead to the removal of trade barriers. As a result of globalisation, foreign trade and investment have grown dramatically and the world’s economies and societies have become more and more integrated.
Today, we are witnessing the implosion, where four great forces-corporations, capital, communication and the citizens can freely criss-cross national boundaries. A single virtual world is being formed, comprising hubs of economic activity, interconnected by technology, and unrelated to the geographic limits of the nation states that they are part of. Thus, economic liberalization, global business opportunities, increasing competition, onslaught of technological innovations and emergence of global communication networks have all impacted businesses
in a large way.
Globalisation has opened up an array of opportunities to corporate India. To emerge successful in its new tryst with destiny, there are no soft options available and the Indian corporate sector must necessarily turn to good governance in its pursuit of competitive excellence in a challenging international business environment.
INDIAN CORPORATE SECTOR
As we stand in 2004, 57 years after independence, India is witnessing a new phenomenon on the industrial front. This is the emergence of a confident, competitive Indian industry, which is now looking at global markets increasingly, and not merely at defending its position in the Indian market as fortress India.
In the short decade that India has grappled with the challenges posed, and capitalized on the opportunities offered by a liberalizing economic environment, there are already shining examples of corporations achieving business excellence concurrently with, or perhaps more appropriately, because of the excellent standards that they have set for themselves. Further, maturation of the market place is likely to recognise and reward such corporations in greater measure in the decades ahead.
The going global is rapidly becoming Indian Company’s mantra of choice. Indian companies are now looking forward to drive costs lower, innovate speedily, and increase their International presence. Companies are discovering that a global presence can help insulate them from the vagaries of domestic market and is one of the best ways to spread the risks. Indian Corporate sector has witnessed several strategically important success stories in the recent past. Tata Motors acquisition of Daewoo Commercial Vehicle Company, Tata Steel acquisition of Singapore’s NatSteel, Reliance’s acquisition of Flag is the culmination of Indian Company’s efforts to establish a presence outside India. In terms of cost competitiveness, India’s Steel Industry ranks among the top in the world (it is ahead of the US). Nalco and Hindalco are among the lowest-cost producers of aluminium in the world. Ranbaxy’s products are successfully fighting in markets abroad against local or multinational brands and many of its labels are market leaders in their segments. A whopping 70 % of Ranbaxy’s revenues come from abroad.
Reliance Industries, Infosys Technologies and Wipro are among the eight Indian companies that have been included in the Forbes magazine’s list of best big companies in 2004. Bharat Petroleum, ITC, Bharti Tele-Ventures, Oil and Natural Gas Corp, and State Bank of India are the other domestic companies in the “World’s 400 best big companies. India’s software exports are on track to grow by 30 per cent in the year to March 2005, despite attempts in the key US Market to discourage outsourcing and protect jobs. India’s information technology (IT) sector and business process outsourcing (BPO) industries, which offer back office and call centre services, logged exports worth $12.5 billion in the 20032004 fiscal year. Nearly 25 per cent of the exports that involved 800,000 workers come from the top three companies in the sector namely Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd.
India is also rapidly emerging as a hotspot for outsourcing pharmaceutical products, engineering design, R&D, clinical research, textiles and even auto components besides in IT enabled services. The obvious thing going for India is cost and quality of services. However, studies on outsourcing IT enabled services have shown that companies also stand to gain from reduced investments in physical and telecommunication infrastructure when they offshore work to Indian companies. India is ranked 34 in IMD’s World Competitiveness Report, 2004. That is 16 ranks higher than its 2003 rank of 50. There’s more in terms of business efficiency, its rank has moved from 51 to 22 and in terms of economic performance from 22 to 12. The ranking is not a surprise: the dismantling of the industrial licensing system, the rationalisation of the tax regime, and the removal of the competition-stiffing tariffs have not just contributed to faster economic growth they have made Indian companies more competitive.
Global tech research firm Forrester has recently in its report titled ‘Low-Cost Global Delivery Model (GDM) Showdown’ passed the verdict that Indian IT services vendors have better global delivery capabilities than their overseas counterparts. The report places Indian Vendors TCS, Wipro and Infosys a few decisive notches above IBM, EDS and Accenture on offshore capabilities.
IMPEDIMENTS IN PURSUIT
Despite the stunning success of Indian companies in the recent past, the fact that the number of true Indian multinationals can be counted on fingers remains an issue. Indian products and services are expected to be low-cost, low-price and low-margin. As a result the Indian companies are unable to invest in new resources and competencies that are necessary to protect and enhance their competitiveness in future.
Most Indian companies start on their internationalisation journey on the strength of their low- cost labour based manufacturing. They lack both the upstream capabilities of technology development and design and the downstream strengths in brand marketing and distribution. This is one area where Indian companies appear to face some difficulties. Perhaps, there is something in the psyche of the Indian management that hinders their ability to work horizontally in a partnership mode with foreign firms. The ability to form, sustain and learn from alliances is a core competency that Indian companies will have to acquire or develop.
HOW ORGANISATIONS GO GLOBAL?
An organisation typically proceeds through three stages. In stage I, management makes its first push toward going international merely by exporting its products to other countries. This is a passive step toward international involvement with minimal risk because management makes no serious efforts to tap foreign markets. Rather, the organisation fills foreign orders only when-or if-it gets them.
In stage II, management makes an overt commitment to sell its products in foreign countries or to have them made in foreign factories. However, there is still no physical presence of company personnel outside the company’s home country. On the sales side, stage II typically is done either by sending domestic employees on regular business trips to meet foreign customers or by hiring foreign agents or brokers to represent the organisation’s product line. On the manufacturing side, management contracts with a foreign firm to produce its products.
Stage III represents a strong commitment by management to explore international markets aggressively. Management can license or franchise to another firm the right to use its brand name, technology, or product specifications. This is a widely used approach among pharmaceutical companies and fast-food chains like Pizza Hut. Joint ventures involve a larger commitment since a domestic and a foreign firm shares the cost of developing new products or building production facilities in a foreign country. These are also often called strategic alliances. These partnerships provide a fast and less expensive way for companies to compete globally.
An organisation with a vision to become truly world-class and in turn competitive should consider and incorporate the following factors in its strategy:
— Premium quality of products/services
— Long-term vision
— Financial strength
— Market leadership
— Customer Centricism
— Strategic Leadership
— Organizational Culture and Climate
To quote a few instances, ICICI, on its aggressive path of internationalization is following the customer. It has already started on building its operations in Singapore, Dubai, Shanghai, New York, Canada and Britain. ICICI Bank has chosen this mix of subsidiaries, offshore branches and representative offices. Its senior managers will focus on India-related business, rather than trying to compete against global banks for global clients.
Infosys is developing downstream capabilities by creating proximity development centers (PDCs) in key cities around the world. It has recognized that it can not succeed globally unless it can develop insider positions with location wise domain knowledge within the business networks in the home countries of customers. Infosys’s PDCs would be staffed predominantly by local people in an attempt to provide a local image.
OVERCOMING PAROCHIALISM
As a result of globalisation, foreign trade and investment have grown dramatically and the world’s economies and societies have become more and more integrated. Doing business beyond the national borders is now a commonplace. Reliance Infocom is offering telecommunication services in US, Maruti is exporting its cars to middle east, Indian IT companies are making software for companies around the world. Not only are market borders blurring, but acquisitions, mergers and alliances are obscuring the nationality of many companies. To quote a few examples, half of Xerox’s employees work on foreign soil, and half of Sony’s employees are not Japanese.
As markets expand, national boundaries and national allegiance matter less and less. When the German manufacturer Daimler-Benz, makers of Mercedes luxury cars, merged with US carmaker Chrysler, one executive commented: “There are no German and American Companies. There are only successful and unsuccessful Companies.”
Equally significant in creating a global village are incredible advancements in communication technologies. The Internet now permits instantaneous oral and written communication across time zones and continents. Software firms in Silicon Valley depend on programmers in India to solve intricate computer problems and return the solutions overnight via digital transmission.
As world commerce mingles more and more, another trend gives cross-cultural communication increasing importance. It is not unusual for German and Italians to speak three or four languages. Most Japanese school children begin studying English in the early elementary grades.
Successful global management requires enhanced sensitivity to differences in national customs and practices. Management practices that work in Asia may not work in Europe or America. As we enter this current period of globalisation and multiculturalism, managers are expected to make adjustments and adopt new attitudes. Adjustment and accommodation become easier if managers understand other cultures and respect them.
PEEPING INTO FUTURE
In the 70’s work was normally outsourced to the domestic vendors in the local market, in 90’s work started to be off shored to a low cost providing country. In the times to come global product/service will be produced with collaboration from various centres all over the world. The call centre may be based in Gurgaon, the back-end software developed in Manila while manufacturing takes place in Shanghai. According to a new report by the research firm Forrester Research, companies are trying to shift to a model that capitalises on centres of technological excellence around the world. New areas like web services, database monitoring, radio frequency identification, GPRS solutions, insurance and banking can now adopt this model.
The recent trend of globalisation suggests that the organisational structure that would stem from enabling features resulting from the convergence of several technologies and increasing demand for a global workforce would be rather virtual. Virtual organisations look like a great idea. However, organisations may not go for full scale virtual structure. Rather they may use virtual teams for tactical projects. After all, they allow an organisation to bring together its best minds to work on a project, regardless of where they are located.
With globalisation running rampant, virtual teams can cross the boundaries of company, culture and country and can be managed from anywhere. A growing body of industry research shows few organisations proactively adopt virtual teams as a means of creating a competitive advantage. Most organisations do so reactively, as a means of coping with an organisational structure that has grown through acquisition or rapid global expansion. At the same time the dangers of getting it wrong are also real. For the employees, working in a badly managed virtual team can leave team members feeling ambiguous about their role, reducing their level of commitment.
Infosys is developing downstream capabilities by creating proximity development centers (PDCs) in key cities around the world. It has recognized that it can not succeed globally unless it can develop insider positions with location wise domain knowledge within the business networks in the home countries of customers. Infosys’s PDCs would be staffed predominantly by local people in an attempt to provide a local image.
OVERCOMING PAROCHIALISM
As a result of globalisation, foreign trade and investment have grown dramatically and the world’s economies and societies have become more and more integrated. Doing business beyond the national borders is now a commonplace. Reliance Infocom is offering telecommunication services in US, Maruti is exporting its cars to middle east, Indian IT companies are making software for companies around the world. Not only are market borders blurring, but acquisitions, mergers and alliances are obscuring the nationality of many companies. To quote a few examples, half of Xerox’s employees work on foreign soil, and half of Sony’s employees are not Japanese.
As markets expand, national boundaries and national allegiance matter less and less. When the German manufacturer Daimler-Benz, makers of Mercedes luxury cars, merged with US carmaker Chrysler, one executive commented: “There are no German and American Companies. There are only successful and unsuccessful Companies.”
Equally significant in creating a global village are incredible advancements in communication technologies. The Internet now permits instantaneous oral and written communication across time zones and continents. Software firms in Silicon Valley depend on programmers in India to solve intricate computer problems and return the solutions overnight via digital transmission.
As world commerce mingles more and more, another trend gives cross-cultural communication increasing importance. It is not unusual for German and Italians to speak three or four languages. Most Japanese school children begin studying English in the early elementary grades.
Successful global management requires enhanced sensitivity to differences in national customs and practices. Management practices that work in Asia may not work in Europe or America. As we enter this current period of globalisation and multiculturalism, managers are expected to make adjustments and adopt new attitudes. Adjustment and accommodation become easier if managers understand other cultures and respect them.
PEEPING INTO FUTURE
In the 70’s work was normally outsourced to the domestic vendors in the local market, in 90’s work started to be off shored to a low cost providing country. In the times to come global product/service will be produced with collaboration from various centres all over the world. The call centre may be based in Gurgaon, the back-end software developed in Manila while manufacturing takes place in Shanghai. According to a new report by the research firm Forrester Research, companies are trying to shift to a model that capitalises on centres of technological excellence around the world. New areas like web services, database monitoring, radio frequency identification, GPRS solutions, insurance and banking can now adopt this model.
The recent trend of globalisation suggests that the organisational structure that would stem from enabling features resulting from the convergence of several technologies and increasing demand for a global workforce would be rather virtual. Virtual organisations look like a great idea. However, organisations may not go for full scale virtual structure. Rather they may use virtual teams for tactical projects. After all, they allow an organisation to bring together its best minds to work on a project, regardless of where they are located.
With globalisation running rampant, virtual teams can cross the boundaries of company, culture and country and can be managed from anywhere. A growing body of industry research shows few organisations proactively adopt virtual teams as a means of creating a competitive advantage. Most organisations do so reactively, as a means of coping with an organisational structure that has grown through acquisition or rapid global expansion. At the same time the dangers of getting it wrong are also real. For the employees, working in a badly managed virtual team can leave team members feeling ambiguous about their role, reducing their level of commitment.
This can lead to workers delivering sub-par performances and, eventually, to absenteeism.
Two issues stand in the way of managers successfully operating virtual teams. The first is the level of politics resident within the organisation and management fearing they need to be close to people lest they suffer if they are not. The second issue is the maturity of managers themselves, and their ability to manage by objective rather than by headcount. Cultural trends can exacerbate the latter issue. While objective-based management is growing in popularity in Western Europe and North America, in Latin American countries, having their people gathered around them enhances a manager’s importance.
The next step to empowering a virtual team is for management to make a top down assessment of the various tools available to that team. It can then decide when and how they can be best applied. These include traditional tools such as the telephone and e-mail, and also latest technologies like audio and video conferencing, online discussion forums, and collaborative file sharing.
While none of these tools are especially new and, in many cases, are resident within the applications available to most workers in knowledge-related industries, rarely are those workers ever trained in their effective use.
ROLE OF PROFESSIONALS
A Professional is supposed to make judgements in situations where even knowing all the facts does not make it clear what would be the right course of action. Recognition of the difference between a profession and other forms of occupation is credited to the Greek doctor, Hippocrates, who lived 2500 year ago but the current range of different professions did not begin to emerge until the nineteenth century. Professionals normally have a code of ethics, take the trouble to keep their knowledge and expertise up-to-date and are paid to enable them to devote their time to using and improving their skills.
Technology is changing the world at a frightening speed. Professionals should therefore develop new skills that are not only based on sound and proven theories and concepts, but also laced with practical and contemporary issues and dimensions. They need to be leaders. They should possess and demonstrate qualities and characteristics that they would advocate as signals of success. From effective time-management, self-awareness, self-organisation and self-confidence to updating knowledge, net-working and effective communication skills, all these should not only
be mere percepts and concepts, but possessed, practiced and demonstrated by a professional in his every day life.
In today’s demanding business environment, organisations face multiple challenges. They have to comply with law and regulation, communicate with their stakeholders, ensure that their internal procedures run smoothly and, of course, go about their everyday business. Organisations need people who can deliver on every front, ensuring that they find ways to meet their obligations, maintain efficient operations and prosper in their field.
Company Secretaries are ideally qualified to meet an organisation’s multiple needs. The depth and breadth of their training ensures that Company Secretaries are equipped to answer multiple needs and to provide solutions to workplace issues. Their knowledge and expertise in company law, finance, contracts, general management and corporate governance can be applied to all sectors, from companies to local government, from charities to the armed forces, from universities to hospitals. With the strong requirement to meet and maintain the highest standards of probity and ethical behaviour, the Company Secretary is a true professional.
CONCLUSION
India is now set firmly on a faster growth path. It needs to follow a bold pro-growth programme of economic reforms. The goal should be to achieve a sustainable rate of growth of 7 to 9 per cent, which is necessary to make a quick and visible reduction in poverty, unemployment and regional imbalances.
In this endeavour to achieve self-growth and global growth, Indian Corporates will have to work actively with the International business community. If Indian companies are already a good business value proposition they can become even better one in the times to come.
A steady and growing market size, abundant availability of natural resources for manufacturing, cost attractiveness, reliable business community, high levels of intellectual manpower, engineering expertise and a reform process that has brought about impressive economic liberalization, would surely make Indian companies competent to meet the global giants.
