In 1990, India had 5 million phone lines in total. Today it adds 5 million per month.
By comparison, US grew only 1.1% in 2008 and is negative so far in 2009At this pace, national wealth doubles about every 10 years.
Back office of the world: If you are in IT, You are in IndiaCisco, Msft, Philips, IBM, GE HealthcareCisco has made Bangalore their second headquarters with half their executive staffIBM has 80,000 employees in India
Companies come to India for the highly-skilled, English speaking laborSlide background is one of the building on the Infosys campus. Many other giant training buildings
Tata bought both Landrover and Jag, Tata Nano (world’s cheapest real family car)Bollywood sold 3.6 billion tickets worldwide in 2005 versus 2.6 billion for Hollywood movies
Poverty means less than $1/dayPoverty rate in orissa and bihar >40%80% live on less than $2 per day = double
TB, malaria, polio, dengue, diarrhea, still major killers. Think about effect of the flu in the US.Absenteeism up to 40% among government healthcare workers
Poor access to health care, high childhood death rates still, high burden of infectious disease – diseases of povertyAmong the middle class and the wealthy, developing diseases of affluence: very high rates of cardiovascular mortality
60m malnourished children – 40% of world’s total
50% of population involved yet produces only 20% of GDPProfessional services 13% of GDP 1.2% of population employed
This is why every Indian IT campus has back-up power generation.
highly variable between states (Kerala 90% lit rate, Bihar 47%)Enrollment in secondary education 36%Of 19-24 year olds,only 9% in college – constraint on ability for IT industry to take on more work.Education funding below level of sub-saharanafrica.
“Understanding” India Jon Terry October 26, 2009
Agenda Modern India The Other India Communicating With India
Why Should You Care? India Matters a Lot Now Western companies do a lot of sourcing with India now That will continue and grow India Will Matter a Lot More Later China & India joining US as economic leaders India’s population still growing - fast You Should Learn as Much as You Can
The Opposite is Also True … Today’s talk is focused on business. Really understanding India includes culture, music, movies, religion, history, geography, etc., etc. This is only a 90 minute talk. It can only hit the high notes even about business You will never meet the “average Indian”. Beware of assuming generalizations apply to individuals
Epitome of “Flat World” Success Second most populous country(1.1 billion) Most populous democracy by far One of world’s best performing economies 12th largest by market exchange rates 4th largest by Purchasing Power Parity (PPP) Middle class quadrupled to 250m since 1990 1% of poor cross poverty line ($1/day) per year
Consistent High Growth, Even Now Indias Real GDP Growth Rate 10 9% Real GDP Growth 8 7 6 5 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year
Indian Exports Surging Merchandise Exports Doubled from $53bn 2002 to $103bn 2006 Service Exports Doubled from $29.6bn 2003 to $60.6bn 2006 Goods/ ServicesExports as share of Rose from 11.6% 1999 to 20.5% 2005 GDP
India Churning Out Tech Grads1,522 degree-granting engineering colleges Annual student intake of 582,000Indian Institutes of Technology 28,000 graduates per yearIndian Institutes of Management 3,000 graduates per yearInfosys Training Campus 50,000 graduates per year
Indian Firms Going GlobalInformation Technology / BPO Automobiles Infosys, WIPRO, TCS TataTelecommunications Film Industry Reliance BollywoodPharmaceuticals Dr Reddy’s, Ranbaxy
World Coming to India for Care 450,000 Medical Tourists came to India in 2007 Projected value of $2 billion by 2012 Very High Quality at Very Low Prices Heart bypass in US $95,000, in India $10,000 including airfare, hotel, and treatment Apollo, Fortis, Max, Wockhardt building US quality hospitals co-branded by Harvard, Johns Hopkins Narayana Hrudayalaya 1,000bed heart hospital, 50-60 surgeries/day Telemed links to 54 sites in India, SW Asia, & Africa
Forty Years of Missed Opportunity GDP of India vs. Korea as percent of US GDP
License Raj, “Hindu” Rate of Growth Labor intensive production restricted to small firms, less than $100,000 in PP&E, in 325 product categories including clothing, shoes, toys, and furniture Big businesses and MNCs limited to few industries. IBM, Coke, and others forced out Permission needed for M&A’s, expansion, new products. Projects more than $2.5 million needed cabinet OK 90% of banks nationalized. Reserve requirements reached 53% of deposits. 40% of lending for small firms Under Indira Gandhi GDP growth averaged 3.2%
Life Expectancy Still Low 80.9 82.5 79.8 71.6 69.7 63.7 64.6 63.1 62.6 55.8 42.8 Norway Australia Sri Lanka China Indonesia India Pakistan Bangladesh Nepal Mozambique NigerAccording to data from 2005 27
Women Still Dying in Childbirth 830 Maternal mortality Rate (per 100,000) 2005 570 450 320 45 58 N.A China India Nepal Pakistan Sri Lanka Bangladesh South AsiaSource: United Nations Development Programme (UNDP), Human Development Report 2007-08 28NA: Not available. Figures shown for India are at variance with the official figures of the office of Registrar General on India (RGI) for Maternal MortalityRate and Infant Mortality Rate. Data shown in the tables are as per the methodology and adjustments made by UNDP
Infants Also Dying at High Rates Infant Mortality Rate 35 30# deaths/1,000 births 25 20 15 10 5 0 South Korea U.S. China India Country
Too Many in Agriculture65.42 56.64 52.06 12.13 12.9 12.62 11.27 11.2 9.1 9.16 9.24 6.98 5.57 4.44 4.06 4.61 2.56 2.88 2 0.66 0.34 0.78 0.67 0.34 1.36 0.63 0.35 1983 1999-2000 2004-05 Agriculture Mining Manufacturing Electricity, Water etc. Construction Trade, Hotels & Resturants Transport, Shortage & Communication Financial Services Community ServicesSource: Various rounds of NSSO survey on employment and unemployment/Planning Commission
Labor Laws Keep Firms Inefficient Firms over 100 workers can’t layoff even under bankruptcy 3 weeks written notice to change any working conditions Laws apply to only 10% of the workforce, yet discourages hiring new workers. Keeps companies small – of 42m companies only 1.4% employ more than 10 people. 88% of labor force informal sector: produces only 44% of GDP
Trade Too Difficult Exporters need 258 signatures and 118 copies of required paperwork. 22 hours to do data entry for required information. Port / Airport Facilities and Procedures Shipping: Mumbai, exporting 3-5 days compared to 18 hour international norm Air freight: New Delhi, exporting 2.5 days / importing 15 days compared to 12 hour international norm
Infrastructure Constrains Growth Electricity unreliable, 35% stolen Rural road building limited to $1m contracts.
What does this mean? India is the modern country described in the first section of this presentation with a bright present and even brighter future But it is still the other, older India with a lot of serious problems to solve. Respect Indians for what they have accomplished in a very short time Understand they may see things very differently because they come from a different background
Who are we talking about? Indians living in the US do adapt - to a degree Indians visiting the US may not Eating Pizza Hut doesn’t make you American They go home to India Once again, be careful of generalizations
Measuring Cultural DifferencesThe GLOBE survey Scientifically-designed, controlled survey 10 years 17,000 managers Asked to describe their company culture 62 societal cultures Including India and the US
Comparing US & Indian Culture Institutional Collectivism 6 5 Humane Orientation Group Collectivism 4 3 2 Uncertainty Avoidance 1 Gender Egalitarianism 0 Future Orientation Assertiveness US India Performance Orientation Power Distance
Key GLOBE MetricsGroup Collectivism +28% The degree to which individuals express (and should express) pride, loyalty, and cohesiveness in their organizations or families.Assertiveness -14% The degree to which individuals are (and should be) assertive, confrontational, and aggressive in their relationships with others.
Key GLOBE MetricsPower Distance +10% The degree to which members of a collective expect (and should expect) power to be distributed equally.Gender Egalitarianism -7% The degree to which a collective minimizes (and should minimize) gender inequality.
To Save Face, You Can’t Openly disagree with a superior Publically correct a superior Criticize someone or their idea directly Directly challenge another’s statement Say that something requested is not possible Admit lack of understanding Admit failure Ask for help
The Indian Yes “Yes” by itself just means “Uh huh, I hear you” Beware head movements True agreement will always be more than “Yes” Indians want to agree so, when they do it is enthusiastic and whole hearted
Not “No”, Just Not “Yes” Absence of Yes No-response Changing the Subject Postponing an Answer Repeating the Question Asking what YOU want A qualified response
Suggesting Bad News You won’t hear “We are going to miss the date”. You may hear “This is an aggressive schedule” You won’t hear “That’s not possible”. You may hear “That might be possible” You won’t hear “I need help”. You may hear “This task is taking longer than I expected.” You won’t hear “That’s a bad idea”. You may hear “That’s interesting. I like X part of the idea”
This Is Not Evasive Indians are not avoiding conflict, just direct conflict Indians are not trying to mislead They are being direct - in their way that another Indian will clearly understand.
What Can You Do? Be sure you REALLY got agreement Listen for subtle implications of difficulty Find ways to ask for feedback privately Consider suggesting your own concerns or questions to elicit theirs Keep learning to increase understanding
Continued Learning The World is Flat, Thomas Friedman The Post-American World, Fareed Zakaria India: The Emerging Giany, Arvind Panagariya Speaking of India, Craig Storti In Spite of the Gods, Edward Luce Economist.com, search India’s Economy
“Understanding” India PM Forum Jon Terry & Michael Garbus October 26, 2009
GLOBE MetricsFuture Orientation The extent to which individuals engage (and should engage) in future-oriented behaviors such as delaying gratification, planning, and investing in the future.Humane Orientation The degree to which a collective encourages and rewards ( and should encourage and reward) individuals for being fair, altruistic, generous, caring, and kind to others.
GLOBE MetricsInstitutional Collectivism The degree to which organizational and societal institutional practices encourage and reward (and should encourage and reward) collective distribution of resources and collective action.Performance Orientation The degree to which a collective encourages and rewards (and should encourage and reward) group members for performance improvement and excellence.
GLOBE MetricsUncertainty Avoidance The extent to which a society, organization, or group relies (and should rely) on social norms, rules, and procedures to alleviate unpredictability of future events. The greater the desire to avoid uncertainty, the more people seek orderliness, consistency, structure, formal procedures and laws to cover situations in their daily lives.