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Rohin Dharmakumar
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India and Technology Multinationals – Part 2

“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:

  1. Accenture: Accenture did not provide any responses to Forbes India’s questions, nor validate the following organizational hierarchy put together by Forbes India from publicly available sources: Avinash Vashistha, its Chairman and Geography Managing Director for India reports to Karl-Heinz Floether, International Chairman who reports to Jo Deblaere, COO who reports to Pierre Nanterme, CEO. It is not known which of its senior executives from the last 10 years are still working for the company.
  2. Capgemini: Aruna Jayanthi, Capgemini’s India CEO reports directly to Paul Hermelin, its global CEO. A direct reporting line to the global CEO is unprecedented in our analysis. [Updated on 12th February]: Salil Parekh, Jayanthi’s predecessor, was promoted to CEO, Application Services North America, UK, Asia Pacific, and global Financial Services and continues to work for Capgemini.
  3. Cisco: Jeff White, Cisco’s new President for India and SAARC reports to Jaime Jaime Vallés, President, Asia Pacific, Japan and Greater China who reports to Chuck Robbins, EVP, Worldwide Operations who reports to Rob Lloyd, President, Development & Sales who reports to John Chambers, CEO. Naresh Wadhwa, Cisco’s outgoing President, resigned from the company. The company did not specify if any of its former India heads are still working for it.
  4. CSC: CSC did not provide any responses to Forbes India’s questions, nor validate the following organizational hierarchy put together by Forbes India from publicly available sources: Neeraj Nityanand, CSC India’s Managing Director, reports to Thomas Hogan, EVP & GM, Global Business Services & Regions who reports to Mike Lawrie, its President & CEO. The company did not specify if any of its former India MDs are still working for it.
  5. EMC: Rajesh Janey, President, EMC, India & SAARC reports to David Webster, President Asia Pacific & Japan who reports to Bill Scannell, President, Global Sales & Customer Operations, Senior Vice President who reports to Joe Tucci, Chairman & CEO. Of Janey’s two predecessors during the last decade, Manoj Chugh, is currently the Regional President, Global Accounts-APJ. Alok Ohrie, his successor, quit EMC after a year and is currently is a Vice-President with IBM India.
  6. Google: Rajan Anandan, its India Managing Director reports to Karim Temsamani, President, APAC Sales & Operations who reports to Nikesh Arora, SVP & Chief Business Officer who reports to Larry Page, CEO. Anandan’s predecessor Shailesh Rao quit Google and now works for Twitter, but in an international role.
  7. HP: Neelam Dhawan, Managing Director of HP India reports to Jim Merritt, SVP & GM, ESSN, APJ who reports to Dave Donatelli, EVP & GM, ESSN who reports to Meg Whitman, CEO. A spokesperson for HP India confirmed that none of its past managing directors are still working for the company.
  8. Intel: Debjani Ghosh, Managing Director, Intel South Asia reports to Gregory Bryant, VP & GM, APAC who reports to Tom Kilroy, SVP & GM, Sales & Marketing who reports to Paul Otellini, CEO. Ghosh’s predecessor Sivakumar Ramamurthy, as well as both of Intel India’s ex-Presidents (who headed its development and R&D efforts), Frank Jones and Praveen Vishakantaiah, are both still with Intel in its corporate headquarters.
  9. Lenovo: Though the company said it was unable to respond to Forbes India’s questions, we estimate the following hierarchy: Amar Babu, Managing Director, India reports to Milko Van Duijl, SVP, Asia Pacific & Latin America who reports to Yang Yuanqing, CEO. The company did not specify if any of Mr.Babu’s predecessors are still working for it.
  10. Oracle: Oracle did not respond to Forbes India’s questions, but we estimate the following hierarchy: Sandeep Mathur, its Managing Director for India reports to one of seven SVPs in Asia Pacific (we were unable to verify which one, given Oracle’s smorgasbord of product roles) who reports to Steve Au Yeung, EVP, Oracle APAC who reports to Mark Hurd, President who reports to Larry Ellison, CEO. Two of its former MDs – Bhaskar Pramanik and Shekhar Dasgupta – resigned from the firm.
  11. SAP: SAP did not provide any responses to Forbes India’s questions, nor validate the following organizational hierarchy put together by Forbes India from publicly available sources: Suprakash Chaudhuri, its acting Managing Director, reports to Stephen Watts, President, Asia Pacific and Japan who reports to Robert Enslin, President, Sales who reports to Bill McDermott, Co-CEO. Two of Chaudhuri’s predecessors, Peter Gartenberg and Alan Sedghi, both resigned from SAP.
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I think Rajan Anandan is Sri Lankan, not Indian
Very interesting perspective. Though its known that India country heads have to wade through levels, never knew it was that far from the pecking order. Looking forward to the follow up article on perspective from MD's of companies who generate significant revenues from India.
Rohin you have very nicely brought out the fact that the Indian leadership pool is very shallow and a exit at one company leads to an immediate rippling effect or entries and exits across several other companies and stops only when one of the companies decides to move up a person internally or brings in some one from outside India. This promotes a standard set of steps and ways of operations its like career bureaucrats who have mastered the system and are valued for on how they can operate the system. Another point is that the Indian market has over the years only shown its potential and not delivered primarily due to wrong assessment by research companies and also because in certain sectors the Indian market is charting new paths catching cos on the wrong foot.
Rohin Dharmakumar
"Career bureaucrats" might be a bit too harsh Anthony, because some of the executives have achieved quite a bit. Also, MNCs are notoriously hard organizations to survive in, thanks to their web like reporting structures filled with solid and dotted lines. I'm sure it takes a lot of skills to make things work in such setups :)
"Career Bureaucrats" exactly that describes the behaviour that is exhibited by some of the so called leaders who move from one MNC to the next, a team of "trusted lieutenants" in tow. Yes some of them have a sizable list of achievement behind them, most of which reads like a salesman's resume and would have happened in one of the two "Boom times" (1995-2000 or 2004-2008). I am cynical about what passes off as leadership in MNCs in India, most of the MNCs don't allow their managers much leeway to lead or exercise vision. Its mere execution of template that is expected and those who master that and can still deliver the targets thrive as in get to keep their Jobs
Very interesting, Rohin. What you say about tech companies is equally true of any MNC. And one MNC CEO articulated it to me by saying most MNCs do not consider a country like India as a "new" home market since the market is still relatively small. It changes when you become about 4-5% of total sales. Prof Govindrajan's work on how GE evolved is very interesting in this regard.
Rohin Dharmakumar
I agree. But I think the gist of Mr.Venkatesan's argument was that you could either wait in the conventional manner for India's contribution to reach 4-6% before committing any significant resources, or you could as an organization take an informed punt looking 10-20 years into the future and wondering what you ought to do today about that.
 
 
Rohin Dharmakumar
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.
 
 
 
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February 18, 2013 15:58 pm by Bhaskar
"Career Bureaucrats" exactly that describes the behaviour that is exhibited by some of the so called leaders who move from one MNC to the next, a team of "trusted lieutenants" in tow. Yes some of them have a sizable list of achievement behind them, most of which reads like a salesman's resume and wo...
February 18, 2013 11:49 am by Aditya Siddharth
I think Rajan Anandan is Sri Lankan, not Indian
February 13, 2013 09:40 am by Doons
Very interesting perspective. Though its known that India country heads have to wade through levels, never knew it was that far from the pecking order. Looking forward to the follow up article on perspective from MD's of companies who generate significant revenues from India.
Rohin Dharmakumar
Rohin Dharmakumar
February 12, 2013 13:56 pm by Rohin Dharmakumar
I agree. But I think the gist of Mr.Venkatesan's argument was that you could either wait in the conventional manner for India's contribution to reach 4-6% before committing any significant resources, or you could as an organization take an informed punt looking 10-20 years into the future and wonder...
Rohin Dharmakumar
Rohin Dharmakumar
February 12, 2013 13:53 pm by Rohin Dharmakumar
"Career bureaucrats" might be a bit too harsh Anthony, because some of the executives have achieved quite a bit. Also, MNCs are notoriously hard organizations to survive in, thanks to their web like reporting structures filled with solid and dotted lines. I'm sure it takes a lot of skills to make th...
 
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