Amid economic uncertainties, Indian companies with overseas presence have posted better earnings in 2011 compared to entities focused on the domestic market alone, says a study.
The findings come amidst signs of Indian economy, which was less impacted by the global financial meltdown of 2008, slowing down due to various domestic as well as global factors.
The study, conducted by workplace solutions provider Regus among 387 Indian companies, found that 212 companies with overseas operations posted better financials compared to 175 respondents that are focusing on domestic markets.
In addition, among companies already operating internationally 89% of respondents intend to expand further and those operating in home markets alone only 75% plan to expand abroad over the next few years. "...In the current economic climate, Indian firms which have diversified overseas are faring better than those which have stayed with their home markets. This applies to companies both large and small and should act as a wake-up call for those still solely focused on domestic markets to find effective and cost-efficient ways of moving cross-border in order to enhance their earnings and spread their risk," Regus Regional Vice-President (South Asia) Madhusudan Thakur said.
He further said that Indian companies have the US in their sights, with 26% looking to focus on the US for the expansion purpose. In addition, a significant proportion of Indian companies have expressed interest in investing in the Gulf states, particularly the UAE and Saudi Arabia, as well as in the South East Asia, most notably Indonesia and Vietnam. "...More companies expand and diversify outside their domestic markets, the more productive they are likely to be, making a significant contribution to the vibrancy and stability of the global economy," the report noted.
The report said that 58% of firms surveyed consider the biggest obstacle to overseas expansion is a challenge of setting up a physical presence in a foreign country. Another critical factor is to decide whether to deploy a local manager or whether a boss should be shipped in from the home country.
The opinion is split over where senior management for overseas operations should hail from, with 55% respondent favouring a home country manager, and 45% respondent opting for a local manager.