In June, the $163.4 billion (about Rs6.6 trillion) General Electric Co., the world’s second-largest corporation, decided to hand over the reins of its India operations to an Indian.
From the day it set up shop in India in the early 1990s, GE had been led by the company’s global veterans. For the past 14 years, it had been managed by Scott Bayman, an old GE hand who had spent 30 years with the company in different roles and locations across the world.
Bayman’s mandate had been to strengthen the firm’s roots in a market that was quite challenging, yet crucial. During his tenure, GE’s business grew almost tenfold, from around $300 million in 1993 to $2.7 billion in 2006, and its interests spread from manufacturing medical equipment to doing high-end research for next generation plastics and aircraft engines. If firming up the company’s roots in a nascent market was the challenge 14 years ago, the task now is to push the business to a new level of growth, especially in a fast-growing market.
GE has a repertoire of talented managers, but it chose Tejpreet Singh Chopra, a 37-year-old Indian, to take its business forward. “In Chopra, we identified someone with the ability to both understand and articulate the opportunities that exist for GE in India, and someone with a deep understanding of GE’s global businesses,” says Ferdinando Beccalli-Falco, president & chief executive officer, GE International. Chopra, who was till recently president and CEO of GE Commercial Finance (India), is excited about his new responsibilities. “GE is a global company with its core values being the same globally. However, being an Indian, I will be able to bring to GE the ability to adapt our offerings and strategy for the local market, and align it to local cultures,” he says.
Tejpreet Singh Chopra, president & CEO, GE India
One month after Chopra’s taking over of GE India was announced, Germany-based SAP AG, the world’s largest business software company, also homed in on an Indian to lead its India business. The company plans to accelerate its India business, decided that Bhubaneswar (Orissa)-born Ranjan Das was the right candidate for the job. So, in July, Das, who had co-founded SAP xApps in the US, took over as president for the subcontinent, replacing Tehran-born Alan Sedghi. The mandate given to Das was to drive SAP’s growth in the subcontinent and double its revenues in the Asia-Pacific-Japan region.
SAP says Das can deliver the goods because not only does he have global expertise in driving its software business, but he also has an understanding of the Indian market. “We found the best bet was to bring the right talent to India to grow and lead the market,” says Geraldine McBride, president and CEO, SAP, Asia Pacific Japan.
Both Das and Chopra are part of a growing trend. More and more multinational corporations are replacing foreigners with managers of Indian origin—and it is not a mere coincidence. It is becoming apparent that India, with its social, economic and cultural variations, presents some unique challenges to the corporate head. These range from different consumer mindsets and varied income groups to an intricate bureaucratic and policy environment.
Ranjan Das replaced Alan Sedghi as president, SAP India, in July
Once a firm’s processes and systems are established and a certain scale achieved, it takes a different set of skills to take it to the next level—someone who could connect and deal with the ground realities more efficiently.
“It is the growth story (that is leading companies to change their style of management). The operations in India that were considered small have now become huge,” says Ravi Uppal, another Indian, who heads the global markets for ABB Group, a $24.4-billion power and automation company based in Switzerland.
Businesses at this stage of growth cannot effectively be managed in the “global” way, and that is why the Indian shift. Besides, Indian managers have had good exposure to running global businesses in local environs. “The learning curve for Indians has been sharp. Indian managers are able to handle scale in a short time,” says Uppal, who was the India head for the European industrial major till June, and has now replaced Dinesh Paliwal—another Indian—on the management board of ABB.
This doesn’t mean foreigners as CEOs are on their way out in every sector: analysts point out that some sectors still need their skills and experience. Moreover, the practice of global companies choosing foreign heads for operations in countries such as India has been an established one for almost a century.
In the early 1900s, when Unilever Plc., one of the leading consumer goods company, and BAT Plc., the British tobacco major, set up operations in India, they chose foreigners to head their ventures. Multinationals such as Motor Industries Co. Ltd, the Indian subsidiary of Robert Bosch GmbH, the German auto component major, Toyota Kirloskar Motor Ltd, the Indian unit of Japanese auto maker Toyota Corp., and Salomon AG, the European company that owns sports brand Adidas, still have foreigners manning their India operations.
“The trend of Indian managers replacing expats is becoming more prominent now, but it is not new,” says E. Balaji, chief operating officer, Ma Foi Management Consultants, an executive search company based in Chennai. Indeed, one of the earliest examples was set by Unilever. In 1951, Prakash Tandon became the first Indian managing director of what was then Hindustan Lever Ltd and later, was appointed chairman. In 1969, Ajit Haksar became the first Indian chairman of ITC Ltd, the Indian subsidiary of BAT Plc.
More recently, in 2005, US car maker Ford Corp. promoted Arvind Mathew, an India-born professional, as managing director and president of the India operations, replacing David Friedman, who set up the India factory for Ford near Chennai. “When Tandon took over, it was a big thing. Today, however, such things are not much talked about. We not only have Indians heading Indian operations of multinationals, we also see a lot of Indians heading global operations of MNCs as well,” says Ma Foi’s Balaji.
Indeed, Indra Nooyi, the Chennai-born chairman and CEO of PepsiCo Inc., the New-York headquartered multinational food corporation, and Arun Sarin, an Indian Army officer’s son who did his schooling in Bangalore and is now the CEO of Vodafone Group Plc.—the Berkshire, England-based mobile phone company with interests across the world—are two much-celebrated examples here.
Foreign CEOs still have a place in India, however. Analysts point out there are many sectors, such as infrastructure, civil aviation and retail, where Indian managers lack the required skill sets and the experience to handle complicated projects. Companies in such sectors, therefore, have no option but to pick up the right candidate from the global talent pool. “The search for a manager (in such sectors) is global. Very few companies differentiate between locals and foreigners,” says Priya Chetty Rajagopal, vice-president, Stanton Chase International, a global executive search firm in Bangalore.
Many companies have also started hiring Indian managers in global roles, and this serves a dual purpose. “Companies are bringing in (into India) Indian managers who have worked in various markets handling complex projects,” says Rajagopal. This presents a win-win situation because such people not only have a good idea of Indian working conditions, but also have the required global exposure to manage the situation.
Earlier, differential salaries and poor working conditions discouraged people with global exposure to take an India posting. But a booming economy and growing prospects have meant a sharp rise in salary levels and improved working and social conditions, and managers are no longer averse to the idea of moving back to India. Increasingly, companies have also started grooming local talent to develop an in-house talent pool to cater not just to local requirements, but those across global markets. “It is a clear objective for our business to develop a local talent pipeline in India,” says Becalli-Falco of GE.
And they seem to have succeeded. Local managers lead most of GE businesses in India, while the company, which spends over a billion dollars every year on human resource development and training, has several senior leaders of Indian origin manning its various global operations.
Pankaj Mishra in Bangalore contributed to this story.