Indian companies in overseas markets: perspectives, patterns and implications

Abstract

During the previous decade, the nature and dynamics of Indian companies' engagement with the overseas markets have gone through a shift. Overseas expansion and competitiveness are increasingly dependent on firm level capabilities rather than on national endowments in traditional products or commodities. Two meta-trends are driving the presence, growth, and competitiveness of Indian companies in overseas markets. One, the process of liberalization and globalization of Indian economy has led to the development of competitive capabilities by Indian companies and has brought about intensive interaction with global corporations, professionals, capital, ideas, and practices. Two, the transforming impact of information and communication technology (ICT) on the world of business has resulted in the emergence of new types of businesses and new ways of organizing. The context and timing bestow Indian companies with a set of advantages and challenges.

This panel discussion has the benefit of six cogent contributions-from academics who have intimately researched the phenomenon to practitioners who have led their organizations and have created substantial presence in overseas markets. Some of the major patterns and conclusions that the colloquium converges upon are as follows:

From comparative to competitive advantage: With shift towards advantages based on availability, lower cost and skills of the technical and scientific manpower, Indian companies' need to create complementary skills and the success are governed by competencies developed within a company and aspirations of its top management.

Favourable ‘push’ and ‘pull’ conditions for overseas successes: For an increasing number of industries, Indian companies are reaching the point of having global advantages-favourable factor conditions, domestic demand characteristics comparable to that overseas, presence of ancillary and supportive skills, and pervasive confidence for looking beyond domestic markets. On the ‘pull’ side, from the situation of Indian origin being a handicap, the world has come to acknowledge ‘India advantage.’

Three strategy types for Indian companies in overseas markets: ‘Outsourcing,’ where the domestic market is either very small or unattractive; ‘Internationalization,’ where companies are aiming to expand market or balance business downturns and risks of domestic market; and, ‘Multinationalization,’ where companies are aiming to create sustainable competitive position in several geographies.

Differing requirements of the institutional and the retail customers: Joint ventures are generally not viable for institutional customers, while being a useful option for reaching the latter-with benefits related to local knowledge, capital, brand, and distribution.

Organizing for growth and capability building: Structure for the three strategy types is different and a ‘dual-core’ model could balance requirements of risk-taking in new areas with efficiency in stabilized activities. While carrying Indian imprint, the culture will be company-specific and should be allowed to evolve in a directed way.

Critical role of conviction-laden leadership: This is a common element across all the Indian companies that have made overseas breakthroughs and the leadership traits of being clear, fundamentals oriented, and planned need to be supplemented with international orientation and preparedness for longer haul for success in overseas markets.

While the first meta-trend has just started manifesting itself in overseas expansions of Indian companies, ICT positions and embodies them with powerful competitive advantages internationally. The events of last decade are just the beginning towards the emergence of Indian corporations that operate worldwide and, more importantly, hold significant and leading positions globally in a large number of industries