More than a low-cost champion

SWOT

Is there an "Indian" style of management? If so, what does it stand for?

Just as the Japanese taught the world the virtues of value engineering and just-in-time management""the Toyota system is still without peer""do Indian corporations bring anything to the table?

These questions are being asked as Indian corporations acquire companies overseas with increasing intensity. So much so that outward foreign direct investment till October this year is already double 2005's full-year numbers.

That trend has long ceased to be news, but as Business Standard's Weekend cover story on November 4/5, "Globalising swadeshi management," suggested, several Indian acquirers have done much more than just add global companies to their kitty. In many cases they have managed to turn them around.

Whether it is Tata Tea's achievements with loss-making Tetley or Bharat Forge's turnaround of its overseas acquisitions, to name just two of many such examples, India Inc has acquitted itself pretty creditably in the world management arena.

This is no small feat given that Indian corporations have only learnt to compete globally relatively recently and in circumstances that are much more challenging than, say, for Chinese businesses. Indeed, if Indian companies have learnt anything in the past 15 years of economic liberalisation, it is the ability to do more with less.

Despite serious infrastructure shortages, the relatively high cost of capital and rampant petty corruption, Indian companies have been able to deliver measurable value.

Remember, for instance, that India's BPO story began when telecom tariffs were out of whack with global rates and telecom infrastructure was abysmal. Yet, corporations in the West steadfastly chose to overlook the vociferous protests of labour unions and outsource larger swathes of business operations to India because of the sheer value they derived.

Striking evidence of this can also be seen in India's automobile and auto-components industry. Both notoriously uncompetitive in the pre-nineties, they swiftly reinvented themselves when the barriers to competition were dismantled. Today, it is no coincidence that the Big Two of Detroit are looking at the India outsourcing opportunity as a key component of their turnaround strategies.

It is this ability to manage against the odds that has given Indian entrepreneurs a unique skill. Of course, it may be premature to suggest that all of this amounts to a specialist Indian "management style". But it is certainly an invaluable competitive advantage in today's business environment.

Competitive pressures have become much more acute across the world, raising the bar on performance and forcing corporations to look for more cost-efficient business models. In that context, Indian entrepreneurs certainly have an innate "know-how" to offer.

It was amusing to recall that when Indian corporations struggled against the challenges of economic liberalisation in the mid and late nineties, it was fairly common to have many experts attribute deep, mystical skills to Indian entrepreneurs.

This was an era of somewhat muscular business patriotism when indigenous Gurus talked about the management lessons embedded in Indian myths and legends. "Lessons from the Mahabharata" or, more specifically, "Lessons from the Bhagwad Gita" were popular sessions in those days when Indian entrepreneurs were trying to find their feet in this new, insecure world.

Today, you get to hear less of such theories, not least because Indian entrepreneurs have rooted their ability in a solid, temporal reality.

All the same, the question is whether this talent of managing in sub-optimal conditions can be considered a sustainable advantage. Most of India Inc's global turnaround stories are less about stunningly canny strategy as the ability to, say, replace high-cost debt and shave costs off shop-floor processes through value engineering.

Conventional wisdom has it that India Inc is a low-cost champion. But as any expatriate businessman who has worked in India for some years will testify, Indian companies are able to deliver much more than just low-cost goods and services. Whether it is in engineering, IT or service-delivery, Indian managements have almost mastered the art of delivering cost and value.

Though these achievements are admirable, they should only be considered the beginning of the journey up the management value chain. Just as Japan turned its post-war nadir and paucity of resources into an enduring and sustainable world-beating system, India Inc too needs to find a sustainable management USP.

The views here are personal