By Sheila Khatri
April 12, 2012
Many companies are leveraging the dynamic market in India to fuel growth - top and bottom line. The World Bank predicts the Indian economy will grow at 6.5 percent in 2012. But whether you are selling into the marketplace or expanding there to tap into the dynamic workforce, your human resources can be a limiting factor in how fast your company grows.
Despite India being a land of 1.2 billion people, India suffers from a shortage of skilled labor. Companies in India cite high employee turnover as a major problem. Recruiting and retaining a skilled workforce can be a big challenge. Luckily, multinationals that have a solid reputation tend to attract quality talent, but smaller firms or ones less known tend to have to aggressively recruit. Recruiting can be complicated but it’s a good warm-up to the extensive training the workforce typically needs. And once you’ve trained your team just right, the key challenge is to entice them to stay.
To deal with the shortage, many Indian companies are choosing to create institutions where they train their own talent. For a foreign firm, setting up a school and a business in India may not be an option.
If you are exploring India as a growth strategy, expect to make an investment in your workforce. Also, when building your workforce, be aware there is a large cultural gap in doing business between the U.S. and India. Based on my experience in developing the state of Maryland’s India Trade Office staff and creating an incubation service for U.S. companies seeking to do business in India, I’ve compiled nine workforce tips and facts to keep in mind as you strategize an India market-entry plan.
1. Build your brand in India before you ramp up your workforce.
Brand recognition helps if you need to build a workforce. Top people want to work for solid companies. Indians generally are risk averse, and employment with an unknown entity is considered high risk. If you don’t have brand recognition in your industry sector in India, attracting talent will require an added incentive like higher pay.
2. Invest time in hiring your top people.
Getting good top people is important, because influential people often bring their staff with them when they switch jobs. Employees tend to follow good managers. The investment made in a top manger will yield good results in terms of the staff that follows, contributing to a well-functional team.
3. Go to the workforce.
Research the universities that have programs with the skill sets you need most and establish your operations as close as possible to your talent pool. India’s workforce is young, so expect to provide in-house training of technical and soft skills.
Beware that many young professionals chose to move back “home” after reaching personal milestones such as getting married or becoming a parent. So setting up your India operations near your workforce could save you from high and costly attrition.
4. Don’t skimp on the interview.
It is very important to have multiple rounds of interviews for all job levels. Include oral and written components in the hiring process. Don’t rely on just a phone interview. Videoconference is a minimum.
Despite the use of English as the business language in India, the gaps in business culture between the U.S. and India are huge. Many companies have fallen into this pitfall. Use the interview process as a multi-faceted filter to ensure a good fit.
5. Be patient and have perseverance.
The promise of India is its young workforce, but don’t expect it to behave maturely. Expect some young hire will accept your job offer, and then unexpectedly not show up on their first day because they’ve accepted another position for a small salary increase.
Basically, cash is king. Development programs are nice but not a key factor in accepting a job or staying with an existing employer for most young employees.
However, an opportunity abroad is important for mid-level management, and can compensate for perceived deficiencies in salary. A job based in India for 12 months, then abroad for two months, could be an attractive on-site development opportunity for mid-level managers.
6. About salaries.
Wages generally consist of (1) salary; (2) flexible component: may include a home rent allowance, driver allowance, gasoline allowance (if the employee doesn’t use it, it doesn’t effect the employee’s salary but the employee may be expected to pay taxes on it); (3) bonus; (4) health care.
Salary hikes in some sectors are expected every year.
7. The perks.
Common perks offered by Indian companies include subsidized or free: transportation to and from work, breakfast, lunch, Indian tea or coffee breaks, and liberal policies for home emergencies. Home emergencies can include visits from unexpected out-of-town guests.
Typically, Indian companies have Monday to Saturday work schedules, but most multinationals have Monday to Friday hours.
8. A big culture gap.
Be clear on what your India operation is intended to be. Is it a support center for the parent company or a true extension of the company in India?
To transfer the corporate culture, officials from the parent company should set-up the Indian entity and transfer the corporate culture. But do not send someone from the parent company only because he/she is of Indian origin. For example, the IT guy who has worked for your company for the past 25 years may not be the best ambassador for the parent company. The business culture in India has undergone a rapid change from 20 years ago. It is sometimes more efficient for someone, with no preconceived notions about the work environment in India, to help your Indian talent adapt to the parent corporate culture.
9. The title.
Titles in India are important. Especially when dealing with a young workforce.
For example the title “Manager” adds credibility in the marriage market - everyone wants this title for social significance. A promotion to manager doesn’t necessarily require a salary increase.
The above nine tips and facts highlight some of the common issues and questions we’ve heard and dealt with in helping companies enter the large and lucrative Indian marketplace. Many of these challenges can easily be avoided with good planning, patience and perseverance. In addition, I highly recommend having an employee on the ground in India in the very early stages of establishing your market entry plan. The long-term pay-off can be huge.
The most common reasons companies choose not to put someone in India is cost and risk - but both of these reasons can be mitigated by utilizing an employment surrogate. A surrogate allows you to engage a person on the ground as if they were your employee, but transferring the administrative and legal role to an entity in India. With such a resource, your company can generate critical business intelligence, develop strategic relationships and obtain valuable feedback. Knowing who the thought-leaders are in your market and what they are saying, knowing how your company ranks among your local competition, and knowing where your workforce is being educated are basic things that can play a significant factor in helping you build a strong workforce and ultimately succeed in India.
Sheila Khatri is president of Moti International, which offers employment surrogate services in India. Moti helps incubate U.S. companies sell goods, services, and technology into India’s growing marketplace. While Moti focuses on business-to-business opportunities, it opened and managed the state of Maryland’s trade office in Bangalore. She can be reached at [email protected].