India IT business expansion- Private sector

Even though the major IT companies in India have over the years built great technology and manpower capabilities, the focus is still on India government business. This is because very few of them have created plug and play products. Also, many of them find it more profitable to focus on overseas business where they get higher margins and the sales cycles are short.

The exception is the BFSI segment where core banking, treasury management and indeed the entire banking and financial management suite which some companies like TCS or Infosys have acquired or developed over the years. Success in business acquisition and implementation in the BFSI segment is therefore much higher than in other market segments.

Indian private sector, unlike government is not rule based, looks to plug and play solutions, rapid roll out and efficient post roll out management. Companies that have, over the years, built solutions for the private sector are successful in penetrating the Indian private sector market relatively quickly. Many of them have built long term relationships with their customers are getting repeat orders and are making a good profit.

Private sector selling is also different from government. Consulting capability and sector knowledge play an import part in both business acquisition and delivery.

Private sector is the another way to go in the Indian market.

The next blog will be on inorganic growth.

Business expansion India- Government business

Many large, mid and small companies view government as a key customer in India. This is true. However anyone who has worked in government would know that while deal sizes can be huge, profit margins can be low and companies often bleed during project execution.

Government business is rule based and knowledge of inner working of government that includes the decision making processes, internal dynamics, interplay between the bureaucracy, politician and public all play a critical role in securing this business.

Brokers who sell dreams and offer short cuts abound in this market and many companies look towards them for a quick deal. They often don't understand that the deal that they have finally secured would have been secured even without the broker.

Business acquisition in government requires substantial networks within the system, large deals in particular require intense multi level engagement with decision makers and patience. In the era of RTI, informed competition and active media the government business mine field has to be tread with care.

Niche solution providers with unique product line can look at win win strategic partnerships with other companies to secure and/or execute government business. Deal qualification and business execution models can make all the difference between your making a profit or a loss in government.

Government is a great customer to work with if you know how to crack it.

Business expansion in mid sized companies

Mid sized companies that have stagnating or below par growth require innovative handling to re-ignite them into a high growth path. After all, such companies were at one time start ups. They succeeded in establishing them in the market, competed and became mid sized. Most of them were lead by entrepreneurs with vision and dynamism. The market over the years has changed and the owner/ entrepreneur finds himself unable to sustain the growth that he once had. This is a typical story of many IT mid sized companies.

I advised a couple of them over the past year or so and found that the biggest challenge that they faced was leadership. Employees from top notch companies were hired by them to provide direction, assist in formulating new growth strategies. Success continues to be elude these companies inspite of substantial investment and high cost of manpower.

Employees from top notch companies, may be great strategists but are unable to understand the entrepreneur mind set and come up solutions that are financially not suited to stressed balance sheets. They try and bring in practices from their previous companies without realizing that entrepreneur lead mid sized companies require different solutions.

The answers lie in innovation, low cost experimentation, implementing growth strategies that are acceptable to the owner, open dialogue, consensus building, team work and building on successful strategies.

Turnaround is possible.

Business to business relationship between China and India

During the course of my  work to help build this relationship with special focus of bringing global businesses into Nanjing, I am coming to understand how critical the role of attitude in venturing into new markets. The industry bodies in India who are supposed to be lobbyists for industry living in the socialistic world of India of yesterday. They seek to represent small and medium industry although they have no hesitation to nuzzle closer to the big boys because that brings them credibility. It is not surprising that the big industry groups tend to ignore the industry bodies when it comes to building business to business collaboration.I think this is true on both the Chinese and the Indian side but perhaps more so on the Indian side. 

Clearly there is immense potential of business to business collaboration between China and India but the way to go will not be through industry body lead delegations but direct one to one contact. Most Chinese provinces encourage foreign enterprises to come and explore business opportunities and one can easily make that connection.

This collaboration is at a very early stage of development and has huge potential for rapid growth. Early birds will reap huge benefits.

Collaboration between emerging markets

As the world gets out of the global recession, recovery patterns are clearly emerging. India and China are clearly on the forefront of recovery while the US is slowly coming out of the depths of financial despair. Europe continues to be a laggard with real recovery some distance away in parts of that continent. The economic battles between the US and China will become more and more frequent with the rhetoric going up and down. While the US will jostleg for continued pre-eminence in world affairs China will position itself and its companies in the world market aiming to get a larger share political and economic.
While there will be an increased business to business collaboration between India, the US and Europe mainly on account of better perceived governance structures in India, I think the future will lie in collaboration between China and India.
China and Indian companies will interact more and more vigorously with the former being nudged by the government. There will be turf wars and collaboration happening between the two emerging markets and we are likely to see more of this in the media.
As business people we will need to watch for opportunities that will emerge across the globe. The future for India and China business looks bright.

Google threat and the changing world

Google's threat to walk out of China because attempts to hack Chinese dissident mail accounts is symptomatic of the growing tensions between Western thinking and the emerging China. China this month has overtaken Germany as the world's biggest exporter of manufacturing goods. In a few years China will become the largest global economy. Peace within China's borders is critical to the Chinese to achieve its vision of global greatness. Its multiple ethnicities and huge land mass make it particularly vulnerable to voices of dissent. These if unattended can lead to chaos in that country.
While I do not personally subscribe to curbs on individual freedom, but that is my view which has been nurtured in the free and democratic system of India. This however does not mean that I should be insensitive to Chinese system of governance. Google is mixing business with politics. This is dangerous for a corporate. It will inevitably lead to its downfall, its no expertise in the area. Competition will overtake it and others that are willing to work within a country's system of governance will emerge. The intolerance of democratic societies to other systems is as undemocratic as the systems that they oppose.

Global economics

Inspite of the fact that the global recession has hit US and Europe particularly badly and China has continued to grow apace, Western based analysts cannot resist the temptation of criticizing China's attempt to restructure its economy against the steep fall in demand for their goods and services. Banks were instructed not to reduce availability of credit to Chinese companies. This has prevented lay offs on the one hand but has lead to rise in inventories. Analysts expect that this will lead to piling of bad debt with banks resulting in failure of the banking system as has happened in the west. This analysis stems from lack of understanding of the Chinese system of economic management. People are unable to figure out that how an export economy like China can continue to grow when the importing western economies are in a bind. They expect the Chinese economic bubble to burst in the future with massive global shock waves.
I somehow cannot subscribe to this theory. The Chinese policy making is based on realpolitik and has shown to be highly adaptable to changes. The change from a pure play socialist model of development to a command and control based capitalist model of development has happened seamlessly. New changes being implemented will result in greater and greater demand for goods and services in the Chinese domestic market space. The inventories will slowly be consumed locally and a new growth model will emerge. I am afraid western analysts fears on a Chinese implosion will not come true and they will have to get used to the Chinese economic resurgence in the future.