• Each purchase must be at least 500 rupees.  This created problems with purchasers needing credit which Walmart does not provide.  Retailers returned to the local sellers who have always provided credit.  Walmart has brought in local banks to offer credit to purchasers but this credit is likely hard to get.
• Walmart’s tested model for rating suppliers finds that no one in India can match effeciencies needed.  The average score is 60 out of 100 where in the US its 95.  Walmart forces inventory control onto suppliers and expects them to manage inventory for them.Deliver problems have forced them to take on additional inventory which is an anathema to their model for profit.
• Getting product from the store to the retailers has proven to be difficult.  They have some carts which have been destroyed over the past 15 months through intense use.  They now deliver to retailers.
• They work with 110 farmers in India vs. 300,000 farmers in China.  Because of the lack of scale they are unable to make larger commitments to farmers and use only verbal contracts to establish relationships.
• Walmart has discovered that each region in India is very different.  They are working on creating region specific plans to cater to local marketplace needs.

There is a lot to learn from Walmart’s experience in India.  Every firm entering India retail can look to them as a model for possible changes in a business model that works so well in the US, but relies on infrastructure that does not exist in India.

Thanks to McKay for this picture: http://www.flickr.com/photos/mckaysavage/

The NYTimes article this week breaks open the real trends in this outsourcing vertical:

• India’s legal outsourcing vertical is experiencing lightening growth
• India is successfully recruiting American lawyers to lead a team of Indian lawyers (end running concerns about dispensing advise outside of India)
• Corporations WANT this.  Right from the mouth of GE: “You don’t need a $500-an-hour associate to do things like document review and basic due diligence”

In a culture that regards legal process with such high esteem, the transition of these services is bound to cause consternation.  America is the most litigious society in the world.  But the economy has forced this issue to the desks of many law firm partners who watched competing firms fail last year.  Newly graduating law students are not finding jobs because firms are not hiring.  The economics of the decisions around outsourcing to India for legal tasks are the same as any other industry.

Legal outsourcing is going to continue.  American based lawyers will be the new IT managers, moving up the chain in responsibility with additional remote employees to lead.  These lawyers will need to be cross-culturally savvy, something they did not focus on in school, to lead their diverse workforce.

There will always be room for top talent that comes from places like Harvard, etc.  But other law students should be wary as India continues to hire on lawyers from inside its country, convince NRI’s to return home, and woo Americans away from the US it will expand its breadth of services making it tempting for law firms to resist the margin.  This is compounded when American companies demand firms take action on fees.

I want to highlight a comment to the article posted by Russell Smith who talked about how this shift, allowing cheaper labor to be involved in litigation, is changing the dynamics of access to the American legal process.  Smith’s point of view is that companies are now engaging in the legal process instead of settling for costs.  This is such an important point of view its unfortunate the reporter did not pick up on this angle.  Russell’s blog is here: http://lawwithoutborders.typepad.com/legaloutsourcing/

India Climbs Career Ladder

The social media report from APAC was just released by Neilsen Ratings.  It provides an indepth understanding of the culture of social media preferences for each country reviewed (study chose to focus on Australia and New Zealand in the same report as India, China, Japan, and Korea) and is very detailed.

For India the following stats were revealed.

• Top internet sites are a combination of MBA forums, Bollywood chats and travel sites.
• 57% of Twitter users in India have used it for less than 1 yr.
• 32% of social media users use Twitter at least once a day.  This should increase with Airtels deal to provide Tweets over SMS.
• The new Press Conference in India is held over Twitter through celebrity postings

India is the only country with a top site focused on education across all countries reviewed which is a telling sign of the importance in the Indian culture to be educated.

The report reviews the following:

• Where each APAC country in the survey hangs out on the internet.  There is an extensive look at China’s preferences including a list of sites the Chinese prefer in every category.
• Where growth is being experienced
• How companies are cashing in on large sets of eyes on their sites.

Thank you to Mckay Savage for the image: http://www.flickr.com/photos/mckaysavage/1026606495/

Another strategy to consider is to bring in a third party into your relationship early.  This intermediary will serve you when a problem presents.  Instead of threatening contract violation you can instead engage a second level of negotiations / conversations with a reliable third party.

According to Business Week “Its well-known that Litigation in India is a no-go zone for companies because of how long it takes.”

Long means up to 25 years for litigation to be settled.  The average length of time is 12 years.  India’s legal system also breed corruption because of low judge pay and these incredible time lags. Bloomberg magazine covered the hopeful changes put forward by the Law & Justice Minister for India’s courts.  This will reduce the length of time to an average of 3 years to settle disputes.

Americans also should note that India does not allow foreign lawyers to provide legal guidance.  Law firms from the US have been allowed to create tie-ups / alliances with Legal teams in India but that is the extent of their ability to help.  India has a pending lawsuit that is intending to ban 31 foreign firms to keep the Indian profession in country the only viable option for American investors.

The companies in the article follow a simliar set of steps that we use at IndiaThink: Assess, Identify, Mediate or AIM.

1. ASSESS. They assess the local market. What does the local market understand about their existing brand and does that brand need modification?
2. Identify. They IDENTIFY differences. They look for how this existing brand may fail.  For example, if your brand teaches Dutch management practices you may have a problem if these are played out inside India or Brazil where all people are not expected to be treated equally.  In some countries its acceptable for the Prime Minister to stand in line at an ATM.  This is not going to be acceptable other places.  Identifying how these differences might mean nothing changes.  Perhaps the attraction to your brand will be that its different.  Its important to understand that this may also not be the case.
3. MEDIATE. They mediate by offering altered products or modified brands.  How can an American company be American but mediate to accommodate a new market? McDonalds did this beautifully in India by serving up different items than in the US.  But McDonalds does not stop there.  It also offers different things in the north than the south of India to accomodate vegetarian preferences in the south and interest in eating chicken and lamb in the north.  No beef is served on either menu.

Final word: remember during the Identify process companies may come up with: nothing needs to change.  And this is OK.  Your brand may be global.  But remember, brands are not people.  When it comes to managing people and directives culture still matters.

Thanks to McKaySavage’s photostream for the picture: http://www.flickr.com/photos/mckaysavage/3058666051/in/set-72157600199764408/

The 3 Tips for Engaging India in Online Communications

1. When you commit to being your real self online, you discover parts of yourself you never dared to share offline. Write what you would say to India to the teams face if they were sharing your office cube with you.
2. When you visualize the real person you’re about to e-mail or tweet, you bring human qualities of attention and empathy to your online communications. Try to really visualize the person you are verbally screaming at in the email.  Would this be the most effective way to engage them if they were in the same physical office building as you?  Perhaps picking up the phone is the BEST option.  Go for the BEST option by visualizing the recipient as a real person.  When you hear a voice something magical happens: empathy picks up and conversations become more about accommodation on both sides of the connection.
3. When you embrace online conversations as real, you imbue them with the power to change how you and others think and feel. What if every word you wrote to your remote team was recorded for all to hear and replayed at the next company wide meeting?  Are you communicating with passion and from a place of power?  Think about this every time you write an email.

Try these three steps and see what value they bring to India business communications.  These three steps will change the way you write to your India based team.

photo credit: sanja gjenero

India Knowledge@Wharton interviewed Infosys leaders about the iRace program a new HR plan widely criticized in India and blamed for the departure of up to 4K empoyees.  The Infosys program is culturally appropriate for India, but does the new IT generation demand something different?

From India @ Wharton: Under iRace, there are three main criteria for role mapping: total years of relevant experience that an individual has, past performance and role maturity. Infosys defines “role maturity” as the duration of time spent by the individual in the current role. This is taken as an indicator of the competence of the role-holder since it would typically mean greater exposure, higher on-the-job skill and the necessary expertise required for playing the role successfully.

In short, this program relies on India’s preference for longevity in roles before promotion. It’s focus is on how long an employee has been working, education, and how long that employee has stayed in a particular role.  In inscription cultures, like India this is very common.  A career path is laid out before you hop from role to role while working up the ladder slowly.  From the American perspective, this creates no opportunity or perceived benefit for the employee to work harder so they can move faster.  Its hard for Americans to understand how the relationship with the employee and the organization in these types of cultures is greater than the employees own career.  These feelings are more prevalent in group oriented cultures like India.These preferences are at a crossroad inside the IT sector.  Typically Indians would work inside organizations that are more family oriented…with Infosys hitting over 100,000 employees pushing a family oriented structure is getting more and more complicated.

The real crossroads at Infosys is that it used a more American style environment when the economy was thriving with 50% growth…and now wants to return to a traditional Indian approach to management.

IT employees in India are a generation with a new set of business culture preferences.  They are the first group in their countries history to be in DEMAND, so much so that they have the power to command a salary undreamt of by their parents, by things normally saved for over a life time like a house or a car, and live alone instead of with their parents or in-laws.  Providing India HR services from the US to this group is complicated at best.

One take away from the Infosys problem is there may be the underlying complaint: Titling.  Most of the people commenting about this are not screaming about money, they are talking about titles.  They are talking about how they have a different title from peers — and shouldn’t –and they are talking about how new titles have been inserted between an existing one and the next one they hoped to get to slow down their process to get the title they strive for.  And this is the part that US HR managers should really look at because in the US, titles don’t matter as much as they do in India.

In the US titles such as Program Manager are extremely vague.  If you meet 10 Program Managers from 10 different companies the level of responsibility and pay will be different.  Program Mangers might be running budgets of millions of dollars while others may be expert negotiators managing foreign M&A activities while others may be running one project like a project manager.  This kind of job title ambiguity is accepted practice in American organizations.  This is NOT the case in India.

When you enter a business environment in India the first thing you do — exchange cards — results in a long look at your card to determine two things:

1. standing in organization
2. your education

While in America, a business card exchange is much less focused and may happen AFTER you spend a considerable amount of time talking with someone and DECIDE to ask for the business card.  It would be highly unusual in India to hear someone say “oh I don’t give out my business card” or “I don’t have cards” like you here in the US.

What can HR managers learn from this?  A few things.

1. Indians may be OK with a time length maturity model on promotions but its unclear if this works for the IT industry in India which competes on a daily basis for talent.
2. Titling is very important in India and may be more important than pay.  make sure you assign titles that are accurate and denote levels of authority.
3. A separate structure for India is probably needed.  Trying to incentivize groups that live in a group based culture verses an individual culture is difficult at best.

About 25,000 people submitted design suggestions and the government expects to decide and implement this new symbol next year.  There were 5 designs selected as finalists…but it seems now these designs have been passed over and there is an uproar on the process as a whole with charges of mismanagement.

In any event, I am sharing the finalist’s designs.  The complexity and creativity of this process illustrate the stuggles India is undergoing to emerge as a global player.  (picture: trak.in)

UPDATE:  And…right after I publish this the new symbol is announced – litteraly 32 minutes ago.  Here is the final selection:

The goal of the symbol is to combine the Devanagari ‘र’ and the Roman capital ‘R’ without the stem to represent the ethos of India: combining its traditions with those of the world.

In the past year just about every large pharamaceutical company in the world has taken a strong investement in India.  Abbot Labs, GlaxoSmithKline, Bristol-Meyers Squibb, SanofiAventis, and Pfizer just to name a few of the companies that have purchased firms in India outright or invested in existing operations.

According to Sujay Shetty, an associate director with PricewaterhouseCoopers in Mumbai pharmaceuticals has been “an incredibly arrogant industry that has never outsourced,” But over the next several years, he predicts, “everything in the value chain will move to different parts of the world that are cheaper,” with India a major beneficiary. (quotes from the NYTimes)

India has two major strengths when it comes to the pharamacy vertical.  First, there are fears about China’s ability to produce consistent safe product.  In the past China has run into issues related to plastic, milk and other materials that were deemed harmful.  Second, India has a long history of being part of the medicinal marketplace.  It is the home of Homeopathic and Ayurvedic medicine.  For centuries India has maintained a long standing tradition of chemists who mix herbs into supplants.  It is thought that the traditional Indian diet keeps Indians from having diabetes, heart disease and thyroid conditions.  Doctors in the US recommend many things from the typical India diet such as Turmeric and Cinnamon to curb these problems in Americans.

This history has created schools that produce top chemists and pharmacists that have training beyond older prescriptions for health.  These workers, combined with India’s laws previous to the 2005 patent law change, created a breeding ground for generic drugs copying.  Facilities were built and approved by many countries and India was seen as a salvation to countries seeking cheaper AIDs medications like Africa.  The entire industry is now in transition.  They have strong skills to offer but need to transition into either making generic drugs in conjunction with the patent holder or turn to pure development.  Both is happening…but you see that the merger/acquisition strategy is working very well for Western firms who are seeking talent and capacity.

The story at this point is not all positive: India has also had its share of quality problems at multiple labs that have sparked the US FDA offices to create an office on Indian soil to monitor and track product being exported to the US. Time will reveal how things will grow and shape — its an exciting time to be part of the pharmaceutical industry in India.

The IRC measures 4 specific competencies: Building Commitment, Managing Uncertainty, Intercultural Sensitivity, and Intercultural Communication.  It also measures action vs understanding, a key component to measuring cultural competencies.  If you do not have action, its difficult to lead a team or project to success. More on the test and how we offer it.

Here are the four pillars examined in the assessment:

Intercultural Sensitivity

The degree to which a persona takes an active interest in others – their cultural background, needs and perspectives and how they express themselves.  Scores capture to what extent people reflect about their own culture, how it may have included their values, norms and perspectives, and are willing to consider different cultural perspectives as equally valid.  They also indicate how actively people seek information about others’ thoughts and feelings, i.e., by paying attention to verbal and nonverbal signals when interacting with them.

Intercultural Communication

The degree to which a person actively monitors own communicative behaviors. Scores indicate to what extent people listen actively out of concern for how others may be affected by what they say, and how they say it.  People with high scores tend to be patient communicators, cautious in how they bring across difficult messages, and willing to take more time before responding if necessary.  This attitude makes it more likely that they will adjust their behavior to the needs of their listeners.

Building Commitment

The degree to which people actively try to influence their social environment, based on a concern for building relationships and integrating different people and concerns.  The scores indicate to what extent a person focuses on the different people with whom he or she is interacting; knows how to engage them and get them committed to a shared goal.  People with high scores invest into developing relationships and building strong and diverse networks.  They constantly seek to understand the needs and interest of different stakeholders, and feel confident that they can create flexible solutions to meet those needs.

Managing Uncertainty

The degree to which a person appreciates the uncertainty and complexity of culturally diverse environments as an opportunity for personal development.  Scores o this dimension indicate the degree to which a person is curious about cultural differences, and feels confident and motivated to deal with unfamiliar groups, and unexpected, changing requirements.  The scores also reflect how much a person is motivated to explore new approaches, and feels stimulated by diversity as a source for learning.

Outcome of an IRC Assessment

Participants receive personal feedback with constructive and practical suggestions on how to develop their competencies.  They are able to develop competence-specific action plans based on this feedback and are no longer unsure how to improve their cultural competencies.  The organization can use the results of these assessments as a framework for employee growth.

Organizations can receive group profiles if 20 or more participants are tested.  For larger groups data can be divided by teams.  Group feedback can illustrate areas of focus for an overall training program and can be used to develop benchmarks for the organization.

I am very excited to be offering the IRC to our clients and am confident the results will be valuable to all test takers.  If you are interested in trying the IRC please contact us at info@indiathink.com.  Soon we will have an application on line available to purchase the product.