Category — Communication across Cultures

The Financial Times of London carried a full length feature story (February 6 and 7) on how the Eurofighter Typhoon lost the bid to the French-made Rafale in a contest that has lasted over five years and will cost between $10 billion and $20 billion over the life of the project.  I am quoted in the story as well as in a similar story that appeared in Aviation Week.   FT requires registration for you to view the entire story, entitled “A Dogfight Over Delhi”. The story was also repeated in the Toronto Globe & Mail, click here to read it

…They overlooked Indian misgivings about security of supply for an aircraft built by four countries across a continent in financial turmoil and amid worries about the aircraft’s radar capabilities. “The upside is that Eurofighter delivers you four countries as strategic partners,” says Douglas Barrie of the London-based International Institute for Strategic Studies, but “the down side is they have to negotiate with each other before they negotiate with you”.

. . .

They also underestimated the government-to-government nature of India’s arms dealings; its deep-seated fears over its energy vulnerabilities; and its hunt for a bargain. “Patience is a key aspect of doing business in India, as is price,” says Gunjan Bagla of California-based Amritt Inc, an advisory service. “The Indian approach is that so long as a product meets the minimum threshold of performance, then it seeks the best value for money. This should come as no surprise.”

About the same time Aviation Week carried a headline on its website on February 6, “Patient Dassault Set To Win MMRCA” on the same subject (and printed it on Page 46 as Viva Le MMRCA” I was quoted as below in this story.

But while it is up for debate whether India would have gained more strategically if it chose U.S. fighters, for instance, a Rafale deal at the least consolidates an old and important relationship. “The decision will definitely strengthen France’s relations with India,” says Ajey Lele, who works with the New Delhi-based Institute for Defense Studies and Analyses.

“It would be wise for American OEMs to tone down their typical pitch of technological superiority, which the Indian buyers are already aware of and respect,” says Gunjan Bagla, head of defense and aerospace at California-based management advisory company Amritt. “Hammering it further can be perceived in India as ‘American arrogance’ and does not help to win sales. India’s ministry of defense is not always dazzled with the ‘best’ technology; rather, it wants to specify a certain minimum threshold of performance. Exceeding the technical minimum does not confer advantage.”

Covidien , Inc. a US-based manufacturer of medical devices and pharmaceuticals, and an Amritt client, has set up its first research and development center in Hyderabad, India. Business Line reported.

Randell Frazier inagurates Covidien India R&D Center, Rob Frechette, Anurag Asthana, Arjun Sarker in photo from left

“The Indian healthcare devices market is part of our focus on emerging markets. The Hyderabad center will enable us to improve product time to market and create valued-innovation,”  according to Robert Frechette, Vice-President (Engineering Services).

Stating that the company had over 14,000 patents worldwide, with another 12,000 patent applications pending, Frechette told the  Business Standard that  idea to set up an R&D center in India was primarily to support the company’s entire operations globally. Besides generating ideas from here, filing global patents from here was also on the cards, he said.

“We currently spend 5 per cent of our revenues on R&D, which we plan to increase to about 6 per cent starting this year,” he said, adding that the company had so far launched over 100 new products and expected to launch more than 50 products over the next two years.

Apart from designing products to suit local market needs, the R&D unit would utilise India’s huge talent pool to provide a range of engineering services for the company’s medical products business. The company plans to hire over 350 professionals for the centre over the next two years. Some 30 people are already working at the 40,000-square-foot facility.

Mr Arjun Sarker, Managing Director — Indian sub-continent, Covidien, said the business focus in India would be on surgical solutions and medical devices, though the company is strong in the pharmaceuticals business too.

Aviation Week February 13, 2012, Page 58

The last page of the defense/aerospace industry leading magazine, typically carries a Viewpoint article. In the latest issue, the following article by me is published.

How To Win Indian Business

by Gunjan Bagla, Managing Director, Amritt, Inc.

French President Nicolas Sarkozy and the management of Dassault are elated, as Rafale is the apparent winner of the $10.4 billion Medium Multi-Role Combat Aircraft order for India’s air force. France also has an order backlog with India that includes the Scorpene submarine and $2.4 billion in retrofits to the Mirage 2000 fleet.

Where does that leave U.S. defense companies as India, already the world’s largest importer of weapons, according to the Stockholm International Peace Research Institute, prepares to spend another $50-100 billion in upgrading its military and homeland security infrastructure? Fifteen of the top 20 defense companies are American, and the U.S. is responsible for half of the world’s $1.4 trillion defense expenditure. But aside from Lockheed Martin with the C-130J and Boeing with the P-8I, C-17 and AH-64 helicopter, no U.S. company has come close to a billion-dollar defense order from India.

At some companies, management is hearing what a U.S. aerospace executive once told me in New Delhi,: “India is an acronym for I’ll Never Do It Again.”

This attitude is unproductive and unjustified; it also denies American companies the opportunity to win their share of India’s ambitious upgrade plan. With a few simple adjustments, a dozen U.S. prime contractors could sustain thousands of American jobs and deliver security to the world’s largest democracy.

Some perspective is in order. India is unlikely to terminate its long-standing relationships with Russian suppliers. It will receive additional Sukhoi Su-30MKI fighters and continue joint ventures to develop a fifth-generation fighter as well as its Brahmos cruise missile. Israeli companies will continue to win business in India. U.S. suppliers must compete head-to-head with these internationals to gain a share of this large market.

There is considerable ground for optimism, however. Only 10% of Indians have an unfavorable view of the U.S., according the Pew Center. This compares with 77% of Turks, 41% of Mexicans and 28% of Israelis. Most Indians in influential positions have a family member living in the U.S., including Prime Minister Manmohan Singh. Pallam Raju, junior minister in-charge of defense production, graduated from Temple University in Philadelphia, and India’s powerful home and foreign ministers are U.S.-educated.

While there are technology-transfer restrictions imposed by Washington on U.S. companies, the situation has improved. In November 2010, the Obama administration removed several limitations that prevented certain Indian entities from buying U.S. products.

Freed from these restraints, what can American executives do to transform India’s goodwill into business?

•First, they must take time to understand and respect India’s Defense Procurement Procedure. While the DPP is complex, it is being implemented with increasing rigor and consistency. The Rafale win is a testament to this; the DPP 2008 stood robustly resistant to domestic and international political pressures. This is a stark contrast to a scandalous past, such as New Delhi’s infamous Bofors howitzer procurement.

American executives should not assume that Pentagon practices or State Department pressure will curry much favor in New Delhi. In fact, using some Beltway lobbyists can be counterproductive. Although they understand American procurement, they do not appreciate the cultural, political and socioeconomic nuances in India. India is an open and transparent, albeit confusing, society. U.S. suppliers can improve their odds dramatically if they invest deeply in understanding India.

•Second, many Indians react negatively to what they perceive as “American arrogance” when an executive harps on the technical and functional superiority of U.S. equipment. Even the most westernized Indians say they often feel jarred, even belittled. Understated confidence backed with a broad cultural understanding of India’s geopolitical and historical situation is crucial to American success in defense and homeland security.

•Third, some western corporate and political leaders express a sense of entitlement in India, which can be the kiss of death. The most recent example is David Davis, the British member of Parliament who insinuated that India should have ordered the Eurofighter instead of the Rafale because, “We give many, many times more aid to India than France ever did.” The Eurofighter lost narrowly since its lifetime cost of ownership will be higher than the Rafale’s. Sulking only aggravates the customer.

•Finally, there is no substitute for patience and persistence in India. If you send an executive for a one-year assignment to India, he or she may not only come back empty-handed but will often make it harder for the next person to interest a serious audience.

I am privileged to host three good friends at the February 15 meeting of TiE Southern California, The Indus Entrepreneur.   The event, at the Sheraton Cerritos hotel promises to be a unique treat and  I encourage you to register right away since seating is limited.  Register at www.socal.tie.org

My friend and client, Mark Masten who left a brilliant career at General Electric to become  Vice President of Global Sales & Marketing at Paramount Farms International and increase their sales by 300%. Mark will talk about his amazing intraprenuerial journey to selling California pistachios in India. Mark is the keynoter for the event.

My buddy, Ravi Chatwani who is co-CEO of an Inc. 500 company, Prosum Inc. a 300-person IT services provider whose clients include DIRECTV, Levi Strauss, and Warner Bros.  Chatwani, will share his street learning about leadership, things he wishes he had known 15 years ago.

Finally, a co-alumnus of IIT Kanpur like me, Ravi Renduchintala, will share his story as an entrepreneur and an outline their current breakthrough model defines an alternate asset class to revitalize single-family homes for both investors and tenants.

I have known each of these terrific  individuals for more than five years and you will enjoy learning from each of them.

Agenda for Wednesday, February 15, 2012. The Indus Entrepreneur, Southern California

Cerritos Sheraton, 12725 Center Court Dr, Cerritos, CA, 90703

5:30 PM                Registration Begins
5:45 PM                General members Cocktail & networking hour
6:45 PM                Doors open for dinner
7:30 PM                Talks begin, Keynote by Mark Masten; followed by the two Ravi’s
9:00 PM                Adjourn

Register at $35 at http:// www.socal.tie.org I look forward to seeing you

Gunjan Bagla

Managing Director, Amritt, Inc, www.amritt.com

The India Specialists, www.amritt.com

Blog at www.theindiaexpert.com

The focus for captive R&D centers in India has gone up this year and expected to grow between 12-20 per cent in 2012 depending on the source of the estimate.

The country is an emerging destination for automotive R&D;  Renault- Nissan, Suzuki and , Honda have recently set up their engineering centers in India.   In R&D hiring, pharma and defence are the better -paying sectors.  R&D is witnessing large investments not only from foreign companies operating in India but but also from domestic players.  In domestic companies, pharma and automobile have realized that in their ambition to globalize their operations, they have no recourse but to spend on R&D, according to a report in Silicon India.

Meantime, India’s largest information technology (IT) services provider, said it had so far made campus offers to 43,600 engineering freshers for 2012-13, higher than the 37,800 offers made this year. The Business Standard said these numbers represented the offers made to only engineering students at Indian campuses and the final hiring target for 2012-13 would be announced by the end of March. The target will include hiring from foreign campuses and lateral (experienced) offers. The ratio of campus hiring to experienced staff was 70:30 in the  previous quarter.  In FY 2012 TCS will end up hiring around 66,000 employees.

What this means

Career prospects for young professionals look disproportionately bright. If I was an HR professional anywhere in the world, I would want to look at working in India, the experience of hiring more than 10,000 professional people in a year is not something that many companies can offer. In India there are over a dozen company hiring over 10,000 a year. These include TCS, Wipro, Infosys and some other large service providers but also in my estimation western entities such as IBM, Accenture, perhaps Oracle/SAP/HP.