 "We don't want to turn India into an outsourcing hub: Shane Tedjarati")
Over the last 10 years, Shane Tedjarati, president, global high-growth regions, Honeywell, has given shape to the $39 billion (sales in 2013) US energy-to-defence conglomerate’s globalisation strategy, replicating its success in China and India. Non-US markets now account for 54 per cent of the company’s global sales, up from 40 per cent a decade ago. The Shanghai-based president, on a visit to the country recently, tells Sudipto Dey why India desperately needs to take on growing competition for investment from Brazil, Indonesia, Russia and West Asia. Edited excerpts:
First, why do you call emerging markets high-growth regions?
Around three years ago we changed the terminology from emerging markets to high-growth regions. This was not a marketing thing or window dressing. Three years ago, over half of Honeywell’s growth was being driven by what was then called emerging markets. So, these markets were anyway driving most of our growth. Internally also, it re-orients the organisation, looking at these as high-growth priority. After getting China and India right, we picked 10 regions that account for 70 per cent of high-growth regions’ output. We decided to repeat what we did in China and India in these markets.
India has terrific talent and developing technologies from India are terrific. But what we don’t want to do is turn India into an outsourcing hub. (Honeywell has 13,000 employees in India.) Outsourcing creates the same imaginary as emerging markets. When people think outsourcing, they are thinking about cheap engineers. We have people here who are part of a global network thinking of creating new solutions for problems in India and other global markets. We give them an identity greater than outsourcing, where they own the whole problem. India is a dynamic market. Despite all the headwinds in India, we grew our sales 20 per cent in 2013. We look at growth in the sectors where Honeywell is present — safety, security, energy efficiency, aerospace and defence.
These sectors are growing faster than the economy and we are also gaining market share through technology.
Some people see MINT (Mexico, Indonesia, Nigeria and Turkey) markets over shadowing BRICS (Brazil, Russia, India, China and South Africa). What does that mean for global businesses like yours?
From a business point of view, BRICS was never real. Can you really put Russia and China or South Africa and India on the same scale? In fact, if you go back the last 10 years, when BRICS was there, it was all about Crest — China and the rest. This may bruise some egos but that is the reality.
What China did was to disturb the equilibrium of the world that had been there for two hundred and fifty years. For me both, BRICS and MINT are irrelevant. But what is relevant is more people are gaining access to fruits of economic growth after 250 years. I believe we are at the beginning of that journey — from 700 million people getting involved in an active life of humanity to seven billion people.
Given the increasing competition for investment from other emerging markets, what advice do you have for Indian policymakers?
India needs to shake off the image of the past two or three years that it cannot get things done. India’s main competitor is not China. China is China. India’s main competitors are the likes of Brazil, Indonesia, Russia and West Asia.
They are the ones who are going to steal foreign direct investment away from India if people think the country cannot get its act together. Indians needs to shake themselves up and get the dust off their feet.
Inside the company I am doing the same thing. People inside should not kind of categorise it is going to be a period of slow growth, it is going to be tough and bureaucratic. We are growing in India in double digits — that is respectable. But I actually want to accelerate it.
First, why do you call emerging markets high-growth regions?
Around three years ago we changed the terminology from emerging markets to high-growth regions. This was not a marketing thing or window dressing. Three years ago, over half of Honeywell’s growth was being driven by what was then called emerging markets. So, these markets were anyway driving most of our growth. Internally also, it re-orients the organisation, looking at these as high-growth priority. After getting China and India right, we picked 10 regions that account for 70 per cent of high-growth regions’ output. We decided to repeat what we did in China and India in these markets.
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Where does India fit in your scheme? How did you negotiate the headwinds in India?
India has terrific talent and developing technologies from India are terrific. But what we don’t want to do is turn India into an outsourcing hub. (Honeywell has 13,000 employees in India.) Outsourcing creates the same imaginary as emerging markets. When people think outsourcing, they are thinking about cheap engineers. We have people here who are part of a global network thinking of creating new solutions for problems in India and other global markets. We give them an identity greater than outsourcing, where they own the whole problem. India is a dynamic market. Despite all the headwinds in India, we grew our sales 20 per cent in 2013. We look at growth in the sectors where Honeywell is present — safety, security, energy efficiency, aerospace and defence.
These sectors are growing faster than the economy and we are also gaining market share through technology.
Some people see MINT (Mexico, Indonesia, Nigeria and Turkey) markets over shadowing BRICS (Brazil, Russia, India, China and South Africa). What does that mean for global businesses like yours?
From a business point of view, BRICS was never real. Can you really put Russia and China or South Africa and India on the same scale? In fact, if you go back the last 10 years, when BRICS was there, it was all about Crest — China and the rest. This may bruise some egos but that is the reality.
What China did was to disturb the equilibrium of the world that had been there for two hundred and fifty years. For me both, BRICS and MINT are irrelevant. But what is relevant is more people are gaining access to fruits of economic growth after 250 years. I believe we are at the beginning of that journey — from 700 million people getting involved in an active life of humanity to seven billion people.
Given the increasing competition for investment from other emerging markets, what advice do you have for Indian policymakers?
India needs to shake off the image of the past two or three years that it cannot get things done. India’s main competitor is not China. China is China. India’s main competitors are the likes of Brazil, Indonesia, Russia and West Asia.
They are the ones who are going to steal foreign direct investment away from India if people think the country cannot get its act together. Indians needs to shake themselves up and get the dust off their feet.
Inside the company I am doing the same thing. People inside should not kind of categorise it is going to be a period of slow growth, it is going to be tough and bureaucratic. We are growing in India in double digits — that is respectable. But I actually want to accelerate it.