Good Governance and its Impact:
Indian Companies Storming American Frontier


By

Ms. Seema M. Wali
Lecturer in HR
Amity Business School, Amity University
Lucknow Campus
 


ABSTRACT

Good governance helps towards fostering economic development, social citizenship, political socialization and changed mindset.

Globalization has embodied greater knowledge, creativity and technological sophistication. Liberalization process has resulted in integration of the global economic system and large potential for expansion of trade and investment.

There is a recent trend where we are seeing lots of Indian Companies acquiring foreign companies specially US based companies. Indian companies are taking mother of all markets - with their own labels, the phenomena is a result of Indians shedding their inhibitions about 'Made in India' brand.

Indian corporations today have the cash and ability to invest overseas. India is getting ready to open up its banking industry to competition. Indian brands are getting aspiration and want to move out of the artificial territories they created of being within their country. 

* Tata Tea and Tata Coffee have acquired tea, coffee and water brands in the U.S.
* Anand Mahindra has launched his tractors in the U.S, now gearing up to sell utility vehicles.
* GHCL has acquired the third largest player in the U.S home textiles market.
* Banks like ICICI and SBI to start full fledged U.S operations.
* Indian Hotels has got a long term lease with U.S operations.
* TCS is leaving no stone unturned to enhance its presence in U.S. of America..

The rise of nations as economic power has been accompanied with their attempt to capture the mind share and wallet of US consumer, with the consumption contributing to more than 70% of the global domestic product.

Indian companies are now taking their first, although tentative steps towards mother of all markets with their own labels, the phenomena are a result of Indians shedding their inhibitions about 'Made in India' brand.

Indian brands are getting aspiration and want to move out of the artificial territories they created of being within their country. The first overseas impact was made by technology firms, the second will come from physical brands.

Indian IT majors like Infosys, Wipro and TCS have been building their brands in the U.S for more than a decade now. Building a brand in US is arduous, time consuming, expensive and often proves to be very steep learning curve. The US is one of the largest markets no company can afford to ignore.

India is getting itself ready to open up its banking industry to competition by 2009, Indian banks strengthen themselves to face the onslaught of new entrants, and players like SBI and ICICI bank too might look to establish more meaningful operations in US.

Tata Company is eyeing the U.S hotels, the company entered into a 30 year lease deal with Pierre Hotels in New York in July 2005.The Company in five years aims to have a third of its revenues from overseas operations. Company like Indian Hotels, Tata tea, M&M and GHCL are showing    the way many more will follow.

Many enterprises providing the nourishment that keeps America's IT juggernaut in fine fettle is TCS, the company that has helped power India to the top of the software charts. TCS earns a whopping 60% of its revenues from the US market, it is the largest technology consumer in the world, the country has these technology belts that are fed by the universities, where the brightest of ideas are incubated, these are translated into technology apprehensions for business.

In late 1960s TCS has been focused on realizing its ambition of becoming a world class technology organization, one than absorbs, adapt and applies IT for the benefit of businesses and industries. US was naturally and logically its first choice in terms of markets. The company established there in an ere when nobody would  have imagined it possible. In 1979, it became the first Indian company to set up headquarter in New York.

The size of TCS's American operations grown to include more than 50 offices staffed with more than 80,000 professionals .TCS is able to offer end to end solutions to a slew of outstanding companies .TCS is among the few companies in the world to employ an integrated quality management system, it takes special pains to treat the myriad requirement of its various customers in different ways. TCS also has a governance structure for each account, in the form of a pyramid that enables view involving people at different levels within its own rank as also from the client's side.

The company recently lowered an initiative called the 'account excellence program' where the Tata Business Excellence Model framework is being digitized in a manner that the Account Manager knows where she stands in the context of excellence –in a clear measurable way at any given time.

There are officers for excellence associated with an area or a set of accounts in New Jersey, Dallas and Santa Clara, excellence in processes is not the function of any one department but it is on people who are doing a good job. To keep the bar rising it is important to be consistent, standards have to be imagined in employees, there challenges lies in the deployment of all processes, approaches and initiatives to everyone (adding 13,000 people, educating and transferring knowledge and making sure every one follows the same process).

TCS works overtime to minimize (eliminate) the culture shock its people are confronted with, it helps its newcomers to America settle in and has mentors to guide them:

* The first thing TCS do is to nominate a Relationship Manager who guides all the employees who come to site.
* There is an induction programmed to share the details of the project.
* HR Office has discussion and project meetings with the associates.
* There are checklists and the consultants are taken through all the process.
* Employees are put through an intensive 12 weeks training at the TCS Development Centre in Baltimore.
* Orientation course is held (integration issues) that highlights the differences in the Indian and American approach to problem solving.

Such courses are significant for the flow of the culture from both sides, as TCS has an aggressive policy for local recruitment. The company has about 350 American on its rolls and is looking to increase this number to 1,000.Earlier the hurdle in the recruitment of locals arose from the fact that Americans did not know much about TCS, this has changed ,while attracting local talent there has been no major downsizing, there is an opportunity for growth and training.

Talents are attracted, TCS scores over other companies on the parameter of exposure to technology and options available for career growth. In –TCS-people mature into other roles over-horizontally and vertically. TCS is particularly mindful of aggressive employment and immigration laws in the US. According to Satya Hedge, General Counsel (Heading TCS's American Legal Department) says that customers always consider the company responsible for errors of omission and commission committed by company employees.

What has helped TCS improve its standing as a transparent organization?

* The listing exercise it went through in 2004(American companies look for transparency before outsourcing their work).
* On the corporate social responsibility (not to be known but to be just and fair…….  'we has to be good corporate citizen in the American context too…..')

TCS has been involved in community initiatives in Buffalo and Columbus.  (Buffalo- TCS has participated in an initiative by Senator Hillary Clinton and Confederation of Indian Industries helping establish a training centre that aims to turn the region from a manufacturing base into service hub. One of the factor that distinguishes a good business from a mediocre –is the belief that improvement is not a destination, but a journey.)

There is always a full agenda of things to talk about because the companies operate in a climate such rapid growth and technology. TCS American adventure looks on course for new discussions from learning and a whole lot more of fantastic growth.

Reliance communications Limited, company with a customer base of over 35 million including over one million individual overseas retail customers' ranks among the top 10 Asian Telecom companies by number of customers.

Indian companies now hope greater power to raise money in US capital markets because investors have grown more familiar with businesses in India.

By synergizing Flag and Yipes, Reliance is poised to become the global leader in Ethernet, a Rs.100,000 Cr($25 Bn) market worldwide by 2010.This is the largest acquisition that Reliance Communication has every made, it derives forward the strategy to offer the most  sophisticated ,cutting edge data communication products and services, specializing in application and context distribution, spanning development and emerging markets.

Yipes is the leading provider of managed Ethernet and application delivery services for the global enterprises. Ethernet is the fastest growing segment of the data communication market. Reliance Communication vision is to be a leading provider of sophisticated data communication products and services.

Indian IT majors like Infosys, TCS, Reliance have been building their brands in the US for more than a decade (of the cumulative 306 outbound acquisition tracked by FICCI from January 2000 to July 2006).

The Indian Textile industry is trying to make inroads into the $30 billion (Rs.1,41,000 Crore) US and EU home textiles markets by aligning its low cost manufacturing base with US based  brands GHCL( Gujarat  Heavy Chemicals Ltd.) has chosen a different path by acquiring Dan River (the third  largest player in the home textiles market).

India is to open up its banking industry to competition by 2009 and Indian strength themselves to face the onslaught of new entrant s SBI and ICICI Bank is establish more meaningful operations in US.

Tata Company is into a 30 year lease deal with Pierre Hotels in New York. In June 2006.  Tata Coffee paid $ 220 million to buy Eight O'clock Coffee a venerable U.S brand. Tata Tea paid $677 million for a 30% stake in Gleceau – a maker of Vitamin Water in Whitestone, New York.

The recent liberalization process in integration of the economies with the global economic system, Indian companies have large potential for expansion as they are acquiring foreign companies specially US based companies. Good governance is an essential ingredient of durable development.

The important issue of the mentioned companies is the governance which had developed and managed consistent, cohesive policies, processes and decision rights for the responsibility. The steering or governance of the companies internationally aim to assure a worthwhile pattern of good results while avoiding an undesirable pattern of bad circumstances.
 


Ms. Seema M. Wali
Lecturer in HR
Amity Business School, Amity University
Lucknow Campus
 

Source: E-mail April 16, 2008

          

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