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India attracting major MNC research and technology centres

Today, multinational companies (MNCs) from the USA, Europe as well as the Asia Pacific region are setting up their research and technology centers in India. These centers are mainly focused on research & development (R&D), Business Process Management (BPM) and information technology (IT).

These centers are commonly known as Global In-house Centers (GICs). The primary reason for moving their core operations to India are no longer just cost. “It is digital technology that is bringing companies here”, opines K S Viswanathan, Vice President, Industry Initiatives at India’s leading IT industry association NASSCOM.

India has clearly moved away from cheap outsourcing work to digital-technology areas such as big data, analytics, mobility, artificial intelligence, machine learning, IoT (Internet of Things), blockchain as well as robotics.

India today has more than 1500 GICs, being operated by MNCs like Target, JCPenney, AB (Anheuser-Busch) Inbev, Saks Fifth Avenue, Grant Thornton, Adobe, Fiat Chrysler, GM, Volkswagen, Hyundai, Texas Instruments, GE, Honeywell, Airbus, Boeing, Shell, AON Hewitt, Intel, Qualcomm, Tesco, Petrofac, Novartis and Mercedes Benz.

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6 trends to watch for India in 2019

1. Politics to dominate

Internal politics will dominate India with a general election due in May 2019. The Modi Government won in 2014 with a slogan of “good days are coming” but higher inflation, declining rural incomes and lack of jobs are all hitting government prospects, while the big unknown is the huge number of “first time” voters – India has 20 million young people turning 18 each year which means there will be around 100 million first time voters.

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Modi has so far appealed strongly to young voters. However, state elections show that the Indian voter is now harder to predict. Most predict Modi will be returned but with a reduced majority. But when the world’s biggest democracy votes, politics becomes the theme of the year.

2. Trade deals point to stronger region

India has a growing number of trade deals that place it at a point of influence in the Indo-Pacific Region and there is a growing prospect of countries such as India, Indonesia and Australia leading a stronger Indian Ocean grouping. Of significance is the Regional Comprehensive Economic Partnership or RCEP (a trade alliance currently in negotiation among 16 countries in Asia and Oceania) which India could join in 2019 – perhaps a long shot but one to watch.

3. Fashion, weddings and pride

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National pride has been growing (some call it Hindu pride, but it seems broader) and so we can expect Indian fashion, traditions and weddings to be bigger than ever – the wedding planning industry will be booming but fashion and festivals not far behind. The trend in India is to combine modernity with preservation of the past – a great balancing act. Another result is that well placed local brands – if marketed well – will attract huge consumer interest. And any year now the west will become very interested in “all things Indian” which is good news for Indian fashion, music, films and dance.

4. Economy and shares to grow

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Despite trade and currency wars slowing global growth, Moody’s and others predict continuing Indian economic growth and shares to remain buoyant for 2019. However, keep in mind shares have been booming – the Nifty 50 Index (the largest 50 stocks in India) rose from 7000 points at the end of 2015 to 11,750 points in September 2018. That is a growth of 57% in the market in just three years. It seems the psychological touch point is 10,500 for the Nifty – above that and shareholders will have a good year. Below that and watch out.

5. Business opportunities abound

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Healthcare for India has got to be one of the world’s biggest business opportunities with massive growth prospects for healthcare clinics and online service delivery. When you consider 60% of the people are rural but 80% of healthcare is urban (and not meeting demand there) so there will be a big rural boost. Agribusiness is strong with specific areas to watch – dairy, butter/ghee, strawberries, button mushrooms, salad supplies and alternative production such as hydroponics on urban fringes. But really, growth opportunities are everywhere as domestic demand soars – tourism (domestic and global) and education (including western immersion tours for Indian uni students) are top growth areas.

6. Energy up

India is a global leader in investment in alternative energy and this will gain ground with solar, wind and biomass to surge ahead. All of which makes the proposed and controversial Adani coal mine in Australia more of a mystery.

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To know culture deeply you need to ask the right questions – not just “how are we different?”

To do business we need to have some idea how people will behave. That is why operating globally and across borders requires a high level of cultural awareness.

But if all we do is gain a general idea of the culture and how they differ from us, we are likely to be unprepared.

We are amazed when the person we are dealing with does not fit the culture picture. The American we are trying to impress is in fact quiet and retiring, not brash and out there as we thought. Or the Indian we expected to be incredibly polite and reticent turns out to be brash and in your face.

Why do we get this wrong?

We have only asked one question instead of digging deeper. We have asked “What culture do they have and how does it differ from ours” – it is an important question but this is only the beginning of being prepared.

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What questions should we ask in addition to the big “culture difference” one? For this I turn to a global leader in understanding culture, Andy Molinsky,Professor of Organizational Behavior at the Brandeis International Business School. He’s the author of Global Dexterity and Reach. Here are his three questions:

Question 1: What do you know about the region? Just as it is useful to learn something about culture norms when diagnosing your situation, it is good to learn something about region norms. For example, if you were doing business in the United States and assumed that people from the Northeast would be quite similar to people from the South or from the Midwest, you might find yourself surprised. Similarly, you’d be misguided if you assumed that Southern and Northern Italy are identical or that people from rural and urban areas of China tend to act in similar ways.

For India, there are at least four major regional differences (north, south, east and west) but a country with 26 major languages has multiple regional differences.

Question 2: What do you know about the company or industry? Like countries and regions, companies and industries also have distinctive cultures. How you would interact with a boss at Google is quite different from how you would interact with a boss at Microsoft or Intel.

In India, the boss of an established company like Tata Sons is going to be very different from the CEO of the latest startup or the new telco.

Norms for behavior in the advertising industry are quite different from norms for behavior in the agricultural industry, and so on.

Question 3: What do you know about the people? Finally, ask yourself what you know, or what you might be able to find out, about the people you are interacting with. Are you communicating with a 60-year-old senior executive or a 20-something manager?

In India age differences matter enormously – there is a real generation chasm between the under 40’s and the over 40’s. People who are older are often more likely to reflect the norms of the overall society.

It would also be useful to know if the people you are interacting with are locals, born and raised in that particular setting and without extensive travel experience, or if they are cosmopolitans, with extensive travel background. Locals are much more likely to reflect the norms of the immediate region you are in, whereas cosmopolitans are likely to be open to a wider range of potential behaviors.

In many East Asian and Southeast Asian cultures, such as India, China, and Korea, relatively indirect forms of communication are used, especially from a subordinate to a superior — whereas superiors in these cultures are often quite direct with their subordinates.

Finding the answers to these questions before you cross cultures can be tricky, but it is possible. Books and articles will often give you some insight into these nuances, but one of the best ways to anticipate what you’ll encounter is by talking with expats: people similar to you who have studied, lived, or worked in the country in question.

Doing your homework before entering a new culture is one of the keys for success. But unless you ask the right questions, you might end up mistakenly overlooking the real differences that matter.

For India – keep digging, asking, researching – and persevere.

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Adapting to India’s combination of “direct and indirect” culture

Most cross-cultural trainers will tell you India is an “indirect” culture, meaning it does not say things bluntly, goes around the topic rather than directly to the heart of the matter.

This is one of those generalisations that is only partly right – and if you rely on it you will be in for surprises in India.

The reality is that India combines direct and indirect communication.

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At the point of meeting you, Indians can be very direct – “are you married, why is your husband/wife not here with you, what do you earn, can you find me a job, will you distribute my product”. For most westerners this is confronting, because our style of meeting and networking is very gradual.

But at the point of issues arising, this is where Indians can be very indirect.

If there is a problem with what you are wanting or what India promised for you, the communication becomes more obscure. India’s indirect communication can be hard to spot, even for India trade veterans. Some tell-tale signs are when the India side says “we will try to meet your deadline” – this generally is leading to the heart of the problem which is that they cannot deliver.

This indirect communication is not motivated to deceive or make your life difficult. in fact, it is based on the value India places on its relationship with you and a desire to keep that relation intact. This is why Indians rarely use the word “no” – the relationship is more important than the truth.

Chennai now a hot spot for startups and entrepreneurs

Chennai has a well educated population, skilled technical talent and is now emerging as a competitor to Bengaluru for startup and entrepreneurial activity.

Who would have thought? “Conservative and slow” was how Chennai was first described to me. Now it has changed.

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Active angel investors operating in the region, are boosting the change.

But Chennai is not a city to boast or shout – it will let success do the talking for it.

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The region’s economy was earlier more dependent on the automobile industry but has shifted towards information technology sector.

Here are some of the startups – Freshdesk, OrangeSpace, Bharatmatrimony, Zoho and CaratLane – all doing exceptionally well.

Why Chennai?

Chennai is a home to many investors with deep pockets willing to invest in startups with innovative ideas. Good governance and integrity further make Chennai the preferred city for business leaders.

Add to that good roads, ports, railways and airports as positive factors.

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Chennai is among the top Indian cities with a maximum number of engineering and medical colleges in the region.

Another reality is that the former home of these new ventures – Bengaluru – just cannot accommodate all the new entrepreneurs, so many turn to Chennai.

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Chennai has hosted a number of entrepreneurial events to attract emerging startups and one to watch coming up soon is Pudu Chennai, 2018.

 

10 reasons every business can find a market in India

To understand what a great long-term opportunity India is, consider these facts:

  1. The numbers are on your side:  564 million below the age of 20
  2. The middle class is growing: 600 million growing middle-class, saving rates have tripled in last 12 years
  3. The mindset is right:  adaptability, competitive, entrepreneurial, believes in “learning, earning and spending”
  4. Challenges lead to opportunity:  mainly in areas such as transport and agricultural infrastructure, medical, power generation & distribution, education, healthcare
  5. Eating and drinking is changing: food & Beverages: food processing, food packaging, food warehouse and transport, health drinks
  6. Homes are stylish: home decor products, kitchenware essentials, bed and bath
  7. Paying for Healthcare: diagnostics and testing, medical equipment, health supplements, clean air and water products
  8. Consultancy Services are flat out: engineering, business development, product development, security analysis, accounting
  9. Infrastructure is big ticket: waste management, solar and wind technologies, temperature-controlled warehouses, air and noise pollution control technologies, towing trucks, and automated parking lot equipment.
  10. “Franchising” is popular: Top sectors with franchising opportunities are Education and Healthcare due to a huge mismatch between supply and demand now and in the coming years

Time to find your niche in India?

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What is the “India Stack” and why does it matter?

Aadhaar, which means foundation in Hindi, is the foundation of the India Stack and is an identity program for all residents of India. Despite its opt-in nature, about 1.12 billion have Aadhaar identity cards today.

Indian PM Modi launches extension of Aadhaar program.

The intent of the program, which was initiated in 2009, is to eliminate the inefficiencies in the public distribution system as well as to facilitate the disbursement of cash transfers directly from the government to the intended beneficiaries, cutting out middlemen.

The 12-digit card number is linked to an individual’s biometric and basic demographic data including a photograph, iris scans, fingerprints, name, address, date of birth and gender.

The Aadhaar database containing this information is the largest biometric database in the world and was built using internet-scale technology.

Aadhaar is purely an identification tool, so having an Aadhaar card affords no privileges to an individual; unlike a driver’s license for example,which allows one to drive.

The goal, therefore, is to build an identity platform and allow others to build an ecosystem around it, or link services to it – hence, the India Stack. The Aadhaar database can be queried (or pinged) by a bank to verify a person’s identity: Is this person who they say they are? the database returns a binary (yes/no) response to the query.

The other layers in the India Stack interact with the identity (Aadhaar) layer to facilitate digitisation.

Document or credential issuers can send digital documents such as birth certificates, degrees and diplomas, driver’s licenses and digital medical records to the digital locker which can then be used by an individual (using the consent layer) to share documents with those who may demand them such as health insurance providers.

This removes paper from the system as well as fraudulent documents.

The cashless layer facilitates mobile payments. The Immediate Payment System (IMPS) provides an immediate (and 24×7) interbank funds transfer service through mobile phones using a mobile money identifier linked to a bank account.

The Unified Payment Interface (UPI) is built on IMPS and is an open source platform which uses a single virtual identifier that may be linked to multiple bank accounts as well as mobile wallets.

The India Stack sets up most of the infrastructure required for India’s digital transformation. It provides secure identification to nearly all Indian residents hence eliminating a basic barrier to financial inclusion. It reduces transactions costs as well as fraud and paperwork. However, since it is a platform infrastructure, it’s up to the private sector and the central and state governments to use the open APIs (application programming interfaces) to find use cases and build applications which utilise the platform.

The India Stack is gathering pace – with Telcos and the financial sector leading the charge.

India’s MSME sector to borrow up to USD100 billion

More rapid change in India – borrowing, especially by small business, used to be frowned upon. But a new study reveals digital lending to the MSME sector will grow 15 times to up to USD 100 billion annually in five years.

India’s rapid shift to digital is transforming MSME sector

Traditional banks will remain averse to lending to MSME’s – the micro, small and medium enterprises – with the new funding from “informal sources”, according to impact investing firm Omdiyar Network and consultancy firm BCG. Lending for this sector is primarily through the non-bank financial institutions.

Several countries, including Australia, are looking at innovative ways to fund this sector.

The study said there are 60 million MSMEs having turnovers of less than US$35 million at present and they are a major contributor both to the country’s GDP as well as to employment generation.

However, the contribution of Indian MSMEs is far below that of their counterparts in the US or even China as they lack access to formal sources of finance and pay interest rates which are 2.5 times the ones charged by the formal sector, it added.

The study stated that 40 per cent of the MSMEs will be receptive to digital lenders.

This will be possible on government policies like introduction of the unified payment interface (UPI) and goods and services tax (GST), massive reduction in costs of data connectivity and also the ‘India stack’ (more on this in next post).

An increasing number of MSMEs are willing to share their data online and 60 per cent believe they will get larger amount of payments through the digital means in the next three years, the study said.

Change– a way of life in modern Indian business.

Study shows which countries are best at preparing children for work

 

An analysis of the latest PISA report (Programme for International Student Assessment), which assesses how 15-year-olds in OECD countries are performing in science, mathematics and reading, has revealed the countries in which children are best at “collaborative problem-solving”.

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Employers highlight the importance of so-called “soft skills”, a suite of attributes that include social abilities like networking, communication, negotiation, team-building and problem-solving. At the root of these skills is how well a child gets on with others.

Asian countries Singapore, Japan and South Korea top the chart, with Canada, Estonia and Finland not far behind. Australia is at eighth spot. Denmark, the United States and United Kingdom also make the top 10.

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Soft skills and hard yards

The World Economic Forum’s Future of Jobs report 2016 argued that by 2020: “Creativity will become one of the top three skills workers will need. With the avalanche of new products, new technologies and new ways of working, [employees] are going to have to become more creative in order to benefit from these changes.”

But, whatever qualifications, experience or technical abilities today’s job interviewees may possess, employers cannot necessarily count on them having the soft skills that are now required as soon as they walk through the door.

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As an article on TrainingMag.com pointed out: “There’s a subtle irony in [the fact that] hard skills are relatively easy to learn, while soft skills are often hard to learn.”

It pointed out that “hard skills are specific, teachable abilities that include technical proficiencies and are easily defined and measurable. You usually obtain a degree or diploma when you have these skills, such as software programmer, mathematician, accountant, tool-and-die maker, forklift driver, etc.”

But it adds that soft skills are less tangible and harder to quantify. “There is no degree or diploma for soft skills. They’re mostly learned through life experience on the job, such as active listening, interpersonal skills, knowing how to recognize people, and demonstrating caring concern.”

Start ’em young

Such skills are likely to be best acquired at an early age and the PISA analysis shows that some education systems are taking steps in the right direction. Finland has already moved to a model where collaboration is part of the regular curriculum and France is eyeing similar moves as it shakes up its education system in an effort to boost economically deprived children.

However, companies will probably have to recognize that while schools and universities should teach core skills, the burden of providing much of the life-long skills learning employees are going to need will fall on them.

As Vishal Sikka, the former chief executive of Infosys, wrote in the Financial Times: “Curriculums should be modernized to encourage creative problem finding and solving, and learning through doing, with mandatory computer science learning as the bedrock for enabling digital literacy.

“Organizations also need to make life-long learning resources available for employees to enhance skills development. Indeed, they should be required to dedicate a percentage of their annual revenue to reskilling staff.”

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Indian universities not preparing students for the workplace – study

Indian universities are losing ground to global competitors when it comes to preparing students for the modern workplace, according to a new “Global University Employability Ranking” study, produced by French HR consultancy Emerging.

Harvard University tops the list, followed by California Institute of Technology and Massachusetts Institute of Technology.

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Leading in India are the Indian Institute of Science in Bangalore, Indian Institute of Technology in Delhi and IIT Bombay.

India still only has three universities in the top 150 for performance in employability.

The report shows that successful universities value soft skills such as collaboration, teamwork and communication. Employers are also increasingly ranking critical thinking skills as very important.

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The capacity to adapt to a changing world and to keep learning are seen as essential.

Most improved this year according to the rankings were universities in East Asia and parts of Europe.

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