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 Article Published in The Economic Times  30 October, 2001

Infosys shows the way to globalise

Globalisation offers huge challenges as well as opportunities. While $8 billion Indian software industry has established an international brand name and stamp of quality, it is facing a crisis since the US economy has taken a hit.   Indian companies now need to develop a different business paradigm to capture a larger share of the world IT market, particularly in non-US markets. Therefore Narayanmurthy’s strategic move of hiring Chinese software talents to penetrate successfully in the Chinese market is a welcome step and it shows that Indian players have started thinking long term to take advantage of opportunities in different countries. Jeffrey Immelt, the new boss of GE says that the next challenge in creating a truly global company is to add more brown and black faces at the top and middle rungs of the GE structure and he has for the first time in GE history selected Yoshiaki Fujimori, a Japanese to head GE Plastics. Therefore as companies expand their operations in different continents, internationalization of brainpower has become a sina qua nonto achieve success.

For diversification to new markets, Indian players will need to de-learn many of the current business practices and speedily adapt to new cultures, languages and work practices to understand each of their clients and their requirements in different countries. Recently an Indian financial software company operating in Japan hired a local talent for business development and it experienced a big impact on its clients in meeting their expectations and in fetching fresh orders. Learning the nitty-gritty of the local cultures goes a long way in managing customer relationship and in creating a positive brand image, consequently boosting the bottom line of the company. While technology may be the common denominator for different markets, business model in each country will have to be localized and customized, keeping in mind the sensitivities of the local people and their culture-specific nuances. Human resource practices relating to recruitment, compensation, promotion, rewards and punishments will have to be designed to the country-specific work cultures and practices.

Indian companies like Infosys, Wipro and NIIT have been expanding their operations in different continents. China offers excellent opportunities for future growth. It has a huge domestic market in the IT industry, as sales of IT products last year equaled $20 billion. It is churning out 80,000 graduates a year and skilled manpower is cheaper than Indian brains. All major software companies from US, like Microsoft, Cisco, Oracle have already moved to China to take advantage of the booming market. Chinese are quite sensitive in developing software in their own language and idea of collaboration between Indian companies with their valued experience and the US giants or Chinese companies to meet those demands is an opportunity not to be missed. Software development for Chinese telecom market also offers new opportunities. China already has world’s largest cellular customer base and therefore development of innovative products and services for cellular industry is a big opportunity for Indian companies.

China also has a huge hardware industry and there is a stampede to establish manufacturing units there. Contract manufacturers and Electronic Service Companies (ESCs) from Taiwan, Singapore, and Japan are rushing to China to take advantage of low-cost manufacturing. China’s manufacturing industry now needs more software for better management and tools for inventory tracking, product development and CRM will be high in demand. Chinese language software in voice-recognition, security etc will be another big opportunity. Chinese are obsessed with creating their own software; question is whether Indians can help them in realizing that ambition and consequently grab a larger share of the global market.

Future of IT industry lies in the embedded devices and lot more software will be developed for embedding in hardware of various sorts. Therefore there is a synergy in combining cheap and quality software from the Indians with low-cost quality hardware from the Chinese. While moving to the Chinese market, Indian companies will also gain in international experience of working in a non-English culture, which can be put to profitable use in expanding software markets to Singapore, Taiwan and HongKong, with a predominant Chinese population. It will also make Indian companies more agile and flexible in their operations to understand customers’ specific requirements, which can be usefully exploited in other cultural settings.

Sino-Indian co-operation in software may possibly lead to a new era of cooperation between the two countries. Trade can bring the two most populous lands together on many issues of common concern and finally a thaw may develop in the prevailing tense atmosphere. Therefore strict scrutiny of Chinese nationalities and Visa restrictions should not be resorted to, least of all for educated professionals. Infosys tomorrow may after all deserve the kudos for bringing the two estranged neighbours together.