 "There is far greater learning in failure than in success: Arvind Thakur")
Once it learns from a mistake, a company will not have room for it, Thakur
NIIT Technologies has made strategic acquisitions and joint ventures to boost its offerings in its chosen verticals. What are the top three points that companies should keep in mind while expanding in overseas markets?
The first thing to remember is that no one size fits all. The approach needs to be based on the culture and practices in business markets, good research and proper business plans. What we have found is that where business cultures are similar, say, markets such as the UK and Australia, one has the option of researching thoroughly and setting up ones own operations. However, where the culture and language is different in many parts of Europe, China and Japan, for instance it is best to think of local partners and assets that can be acquired. If you look at the US, it is a homogeneous market and everyone speaks English. So you can service it by getting people to work from India. But if you look at markets like Europe, the countries are unique, the cultures are different; it is more appropriate to seek out companies that can be acquired and engaged with your own company. So the approach is different for different markets.
Yes, roughly 70 per cent of the partnerships fail according to research reports but that does not mean that joint ventures and partnerships can be ignored. When you partner, you need to understand a few things: the target audience has to be shared, you cannot be focusing on one thing while your partner or the JV company formed is doing something else. While expanding through local partnerships, it is important that your partner should already have some customers in the market. Most importantly, both partners have to be committed and passionate to move the business forward. For example, in the US, where we wanted to look at media-related businesses, we did a JV that provided us with the understanding of the segment and the ability to access customers.
In my view, the key partners have to stay away from day-to-day operations and allow the managers and senior employees to collectively handle that. At the end of the day, people drive businesses, and in cross border JVs since people come from different cultures, it is important to create a common company culture that is relevant to the market and to the business. In Japan, for instance, we found that going on our own was not a very good idea. We had started our expansion plan solo but quickly realised we needed a local partner to go ahead. The market is different culturally and local companies have long-term relationships with customers so attempts to go on our own didnt quite work.
Local system aggregators were needed.
While international expansion presents a considerable opportunity to drive the top line, it can also be a costly affair. Barriers to entry vary by market and each country must be assessed on an individual basis to determine the most appropriate route to grow. What are the key lessons NIIT Technologies has learned while expanding beyond Indian shores?
Entering into new markets requires careful planning, thinking and time. Let me explain what we did. We began our expansion plans gradually but with a lot of thought and care. We first went to the US because that is culturally most aligned. Our experience with the US market taught us crucial lessons in expanding businesses overseas. In Germany, we realised that it was impossible to do business unless we had the local people as a part of the set-up. So we acquired a company in Germany and, thereafter, we did another acquisition in that market. In each of these markets, every experience was valuable. We realised that we were not ready for markets beyond France and so we looked at Spain where again we made acquisitions to establish our footprint. It has taken us eight to 10 years to move forward and this has not happened just overnight. Even now, we are learning, we are innovating.
Every company in every industry is talking of innovation these days. Why is innovation so difficult? Is innovation only possible with unique individuals, or can it be developed into a companys corporate culture?
Innovation is essentially creativity and it is important to distinguish between what is creative and what is urgent. Transformational creativity requires focused attention and I think that is where it is important to pause because it is a conscious process of stepping back in order to actually move forward. Continuous transactional improvement is a process that does not require you to pause but transformational innovation is creative innovation. Continuous improvement and breakthrough thinking is where one has to pause and build thoughts and it is important to take time to clarify the things that you want to build. One need to listen to the thoughts and cut through the clutter.
The best innovation is failure because only when one takes the risk and experiment, great learning comes. There is far greater learning in failure than in success. At NIIT Technologies, failure is not treated as a threat; taking risks is important to innovate. Innovation needs to seep everywhere, it is not just for a group of people. It can happen when you create a healthy environment. Our values and beliefs mission document articulates that employees can make mistakes as long as they contribute to organisational learning. Once you learn from the mistake, the organisation will not have room for that mistake.
The other business buzzword at the moment is CSR or corporate social responsibility. Everyone understands CSR is not going to solve the worlds problems. So why should companies become involved in CSR?
I would say that CSR is the part and parcel of any business. It has to be integrated in the growth plans of the company. CSR thinking is based on the principle that organisation should focus on other stakeholders and set aside funds to support innovations. In our company, the use of technologies is the core strength and we have integrated that in our CSR plans. Our hole in the wall project is based on the principle of minimally invasive education technology encourages learning through self-exploration, by providing children in the slums unsupervised access to computers.
The CSR plans of companies require funding and commitment. So, in a sense, this is an area where one has to move beyond economic benefits. The thought process of CSR has to support the stakeholders, people and the environment where the companies are expanding. It is not CSR alone, a lot of expansion strategies can work if you identify the right partners, do the right planning and find the right people to work as a team for the company.
Technology man
* As the CEO and joint MD of NIIT Technologies, Thakur has helped grow the software business at NIIT and positioned the company among the top software providers from India
* In 2012 he was conferred the prestigious global Gold Stevie award as Executive of the Year in the computer services category
* Thakur is also a director of an innovative venture, Hole-in-the Wall Education Ltd, enabling technology to be deployed for educating the masses, and serves on the Board of Management of NIIT University, a not for profit institution.
* He believes the key differentiator for the Indian outsourcing industry is changing from cost arbitrage to value addition. In todays world, he says, customer expectations are changing from doing what you are told to do to proactively suggesting opportunities for value addition. This he says, requires transformation that embraces new models of service delivery, platforms and investment in IPs
* Thakur graduated in engineering from IIT-Kharagpur. Thereafter he pursued post graduation in Industrial Engineering and started his career with BHEL, before joining NIIT in 1985.
NIIT Technologies has made strategic acquisitions and joint ventures to boost its offerings in its chosen verticals. What are the top three points that companies should keep in mind while expanding in overseas markets?
The first thing to remember is that no one size fits all. The approach needs to be based on the culture and practices in business markets, good research and proper business plans. What we have found is that where business cultures are similar, say, markets such as the UK and Australia, one has the option of researching thoroughly and setting up ones own operations. However, where the culture and language is different in many parts of Europe, China and Japan, for instance it is best to think of local partners and assets that can be acquired. If you look at the US, it is a homogeneous market and everyone speaks English. So you can service it by getting people to work from India. But if you look at markets like Europe, the countries are unique, the cultures are different; it is more appropriate to seek out companies that can be acquired and engaged with your own company. So the approach is different for different markets.
More From This Section
Are acquisitions and buy-outs the best way forward? Joint ventures can be tricky, after all.
Yes, roughly 70 per cent of the partnerships fail according to research reports but that does not mean that joint ventures and partnerships can be ignored. When you partner, you need to understand a few things: the target audience has to be shared, you cannot be focusing on one thing while your partner or the JV company formed is doing something else. While expanding through local partnerships, it is important that your partner should already have some customers in the market. Most importantly, both partners have to be committed and passionate to move the business forward. For example, in the US, where we wanted to look at media-related businesses, we did a JV that provided us with the understanding of the segment and the ability to access customers.
In my view, the key partners have to stay away from day-to-day operations and allow the managers and senior employees to collectively handle that. At the end of the day, people drive businesses, and in cross border JVs since people come from different cultures, it is important to create a common company culture that is relevant to the market and to the business. In Japan, for instance, we found that going on our own was not a very good idea. We had started our expansion plan solo but quickly realised we needed a local partner to go ahead. The market is different culturally and local companies have long-term relationships with customers so attempts to go on our own didnt quite work.
Local system aggregators were needed.
While international expansion presents a considerable opportunity to drive the top line, it can also be a costly affair. Barriers to entry vary by market and each country must be assessed on an individual basis to determine the most appropriate route to grow. What are the key lessons NIIT Technologies has learned while expanding beyond Indian shores?
Entering into new markets requires careful planning, thinking and time. Let me explain what we did. We began our expansion plans gradually but with a lot of thought and care. We first went to the US because that is culturally most aligned. Our experience with the US market taught us crucial lessons in expanding businesses overseas. In Germany, we realised that it was impossible to do business unless we had the local people as a part of the set-up. So we acquired a company in Germany and, thereafter, we did another acquisition in that market. In each of these markets, every experience was valuable. We realised that we were not ready for markets beyond France and so we looked at Spain where again we made acquisitions to establish our footprint. It has taken us eight to 10 years to move forward and this has not happened just overnight. Even now, we are learning, we are innovating.
Every company in every industry is talking of innovation these days. Why is innovation so difficult? Is innovation only possible with unique individuals, or can it be developed into a companys corporate culture?
Innovation is essentially creativity and it is important to distinguish between what is creative and what is urgent. Transformational creativity requires focused attention and I think that is where it is important to pause because it is a conscious process of stepping back in order to actually move forward. Continuous transactional improvement is a process that does not require you to pause but transformational innovation is creative innovation. Continuous improvement and breakthrough thinking is where one has to pause and build thoughts and it is important to take time to clarify the things that you want to build. One need to listen to the thoughts and cut through the clutter.
The best innovation is failure because only when one takes the risk and experiment, great learning comes. There is far greater learning in failure than in success. At NIIT Technologies, failure is not treated as a threat; taking risks is important to innovate. Innovation needs to seep everywhere, it is not just for a group of people. It can happen when you create a healthy environment. Our values and beliefs mission document articulates that employees can make mistakes as long as they contribute to organisational learning. Once you learn from the mistake, the organisation will not have room for that mistake.
The other business buzzword at the moment is CSR or corporate social responsibility. Everyone understands CSR is not going to solve the worlds problems. So why should companies become involved in CSR?
I would say that CSR is the part and parcel of any business. It has to be integrated in the growth plans of the company. CSR thinking is based on the principle that organisation should focus on other stakeholders and set aside funds to support innovations. In our company, the use of technologies is the core strength and we have integrated that in our CSR plans. Our hole in the wall project is based on the principle of minimally invasive education technology encourages learning through self-exploration, by providing children in the slums unsupervised access to computers.
The CSR plans of companies require funding and commitment. So, in a sense, this is an area where one has to move beyond economic benefits. The thought process of CSR has to support the stakeholders, people and the environment where the companies are expanding. It is not CSR alone, a lot of expansion strategies can work if you identify the right partners, do the right planning and find the right people to work as a team for the company.
Technology man
* As the CEO and joint MD of NIIT Technologies, Thakur has helped grow the software business at NIIT and positioned the company among the top software providers from India
* In 2012 he was conferred the prestigious global Gold Stevie award as Executive of the Year in the computer services category
* Thakur is also a director of an innovative venture, Hole-in-the Wall Education Ltd, enabling technology to be deployed for educating the masses, and serves on the Board of Management of NIIT University, a not for profit institution.
* He believes the key differentiator for the Indian outsourcing industry is changing from cost arbitrage to value addition. In todays world, he says, customer expectations are changing from doing what you are told to do to proactively suggesting opportunities for value addition. This he says, requires transformation that embraces new models of service delivery, platforms and investment in IPs
* Thakur graduated in engineering from IIT-Kharagpur. Thereafter he pursued post graduation in Industrial Engineering and started his career with BHEL, before joining NIIT in 1985.