After relatively underutilized degrees in computer sciences engineering and an MBA followed by a decade of tangential career choices ranging from technology outsourcing to public relations, I realized my passion lay in connecting the dots between market opportunities, technology, entrepreneurs and the ecosystems that bind them together. A big fan of underdogs and of possibilities, I try my best to tell stories the way my brain sees them.
"There is a difference in a company being a multinational, and being global. Technology companies may be incredibly multinational by operating in more than a hundred countries, but that doesn't mean they operate with a global mindset," says Ravi Venkatesan.
Given that during 2004 and 2011 Venkatesan was the chairman of Microsoft India, arguably one of the best-known and largest technology multinationals in the world, the statement sounds a bit confusing, doesn't it?
But first, a bit of context.
Last month we decided to take a look at how some of the leading technology multinationals in India were treating their India operations and CEOs in their global organizational hierarchy. An initial analysis seemed to show that India was often multiple levels removed from the C-suite in these organizations, with reporting structures wading through 3-4 levels and across multiple geographical groupings (India to South Asia, to Emerging Markets, to Sales, to Operations, to the CEO).
On first glance, it appeared as though India, for all its economic growth during the last decade, still remained a minnow for most of these companies. And the India CEO role was in some ways, a glass ceiling, beyond which growth wasn't that easy.
We also promised to do a follow-on post analyzing the "reasons" why this was so. Hence Venkatesan's quote.
"Most technology multinationals see India as just one more market to sell their products, therefore they replicate the same model, pricing and operating procedures like in any other country. It's a very sales-oriented approach with a a mid-level sales guy in charge who reports to APAC which in turns reports to the worldwide head of sales who reports to COO who finally reports to the CEO. Every major decision has to be taken outside India. In such a setup India and, say, Austria are the same because they both produce the same revenues. They don't see that India could have 100 times the current potential," says Venkatesan.
Venkatesan is currently writing a book, "Conquering the Chaos: Win in India, Win Everywhere", due out in a few months, in which he warns multinationals from following such an approach.
But the fact still remains that India is a rather insignificant market for most technology companies, with the revenue contribution ranging from just around half a percent (Oracle) to around 6-7 percent (SAP).
Big on talk, small in revenue
"India is a key growth market, but it is still relatively small at present in terms of both the market size and margins. Which is why even firms like Infosys still don't do that much business in India," says Rajiv Kaul, CEO of domestic IT services and outsourced business services firm CMS Infosystems. Interestingly, Kaul too has worked at Microsoft. During his decade long career at Microsoft he also spent 5 as the managing director in India between 2001 and 2005.
Most large technology multinationals are listed, and are therefore answerable to shareholders on a quarter-to-quarter basis. In that kind of a scenario its almost impossible to justify spending inordinate amounts of money or management talent on India today, when investing the same in a proven market like China would be much more beneficial.
So India ends up becoming one of the countries in the "Asia Pacific" organization, just like Brazil (another long term country) ends up falling into the "Latin America" one.
"But these are just timezone-driven groupings. In Asia Pacific for instance, there's nothing common between India, Vietnam, Australia and Singapore. Across all these countries a one-size-fits-all approach is then applied," says Venkatesan.
Instead, he says, high potential countries like India, Turkey or Brazil (China is far too advanced in its own right to not be treated individually today by any company) should be spun off into a "high growth markets" business unit, with a common president. And that president, says Venkatesan, should ideally be reporting directly to the company's global CEO, to be able to draw enough influence and power to make a difference.
“I agree that grouping India along with APAC may not make sense, but bunching it together with other emerging markets like Brazil and Russia is also tough. All these countries have different dynamic and very different with little in common. Also, where will a person who manages these countries be based out of? But if and when they are bundled together, the idea should be to drive new innovation business models and structures while fostering stronger competition between them,” says Kaul.
Big fish, small pond
When CEOs of Indian operations are promoted beyond India, they usually transition into senior middle management roles in multinationals.
To answer the question why they don't seem to grow as rapidly subsequently, Kaul suggests turning the question around on its head - could it be that Indian CEOs might not be interested in moving beyond India?
"That's not an easy switch - You were earlier the boss of a country with in depth understanding and a lot of independence and now need to work daily with peers and prove yourself all over again in a broader role. And because you did well in India doesn’t mean you will do well in, say, Europe or Indonesia," says Kaul.
Which is why there is the peculiar issue of MNC CEOs in India who keep jumping from one company to the other, in sort of an incestuous closed-loop.
“If you are in a senior role in India and are earning well, you want to stick here given the growth opportunity and career potential. Combined with the dearth of senior talent this leads to the issue of “revolving doors” among senior leadership positions in multinationals,” says Kaul.
How then, do companies like Intel, manage to have a significantly larger proportion of Indians in its senior management ranks then?
R.Anish, the head of HR for Intel India says it ultimately comes down to the guiding corporate philosophy of each company. Intel, he says, has a strong philosophy of rotating its leaders across multiple geographies and functional areas. It would be easy to dismiss this as standard corporatespeak, if not for the fact that both of Intel India's previous presidents were rotated in from international locations, and after their India stints, went back to the US with Intel itself.
Finally, Forbes India asked all the companies mentioned to validate our research and to tell us how many of their erstwhile India heads from the last 10 years were still working for the company. Here are their responses: