A presentation on the growth of modern India, the challenges that remain for the country, and how westerners can best communicate effectively in a business context

1. “Understanding” India
Jon Terry
October 26, 2009

2. Agenda
 Modern India
 The Other India
 Communicating With India

3. 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

4. Demographics Point East

5. 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

6. Modern India

7. 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

8. Consistent High Growth, Even Now
India's 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

9. Joining the US and China at the Top

10. Indian Exports Surging
Merchandise
Exports Doubled from $53bn 2002 to $103bn 2006
Service Exports
Doubled from $29.6bn 2003 to $60.6bn 2006
Goods/ Services
Exports as share of Rose from 11.6% 1999 to 20.5% 2005
GDP

11. Foreign Direct Investment Soaring

12. India Churning Out Tech Grads
1,522 degree-granting engineering colleges
 Annual student intake of 582,000
Indian Institutes of Technology
 28,000 graduates per year
Indian Institutes of Management
 3,000 graduates per year
Infosys Training Campus
 50,000 graduates per year

13. Indian Firms Going Global
Information Technology / BPO Automobiles
 Infosys, WIPRO, TCS  Tata
Telecommunications Film Industry
 Reliance  Bollywood
Pharmaceuticals
 Dr Reddy’s, Ranbaxy

14. 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

15. Bangalore is Kind of Like Home

16. Neon, Neon Everywhere

17. You See Familiar Faces

18. Are They Learning About US?

19. The Other India

20. Most Indians Still Poor
4th Largest Economy, but 168th GDP per capita

21. Modern India is an Oasis

22. Cows Instead of Cars

23. Forty Years of Missed Opportunity
GDP of India vs. Korea as percent of US GDP

24. 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%

25. Poverty Improving But Still Serious

26. Insufficient Healthcare Investment

27. 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 Niger
According to data from 2005
27

28. 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 Asia
Source: United Nations Development Programme (UNDP), Human Development Report 2007-08
28
NA: Not available. Figures shown for India are at variance with the official figures of the office of Registrar General on India (RGI) for Maternal Mortality
Rate and Infant Mortality Rate. Data shown in the tables are as per the methodology and adjustments made by UNDP

29. 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

30. Too Many in Agriculture
65.42
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 Services
Source: Various rounds of NSSO survey on employment and unemployment/Planning Commission

31. A Difficult Place to Do Business

32. 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

33. 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

34. Infrastructure Constrains Growth
 Electricity unreliable, 35% stolen
 Rural road building limited to $1m contracts.

35. Literacy Rate Lags

36. Conflict Troubles Much of Country

37. Political Violence Claims Thousands
2007 Civilians Security Force Terrorists Total
Personnel
Jammu & Kashmir 164 121 492 777
Andhra Pradesh 55 0 0 55
Arunachal Pradesh 0 0 12 12
Assam 269 19 149 437
Manipur 150 40 218 408
Meghalaya 4 1 13 18
Nagaland 20 0 88 108
Punjab 7 0 0 7
Rajasthan 2 0 0 2
Tripura 10 5 21 36
Left-wing Extremism 240 218 192 650
Haryana 68 0 0 68
Tamil Nadu 5 0 0 5
Uttar Pradesh 15 0 0 15
Total 1009 404 1185 2598

38. 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

39. Communicating with India

40. 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

41. Measuring Cultural Differences
The 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

42. 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

43. Key GLOBE Metrics
Group 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.

44. Key GLOBE Metrics
Power 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.

45. 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

46. 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

47. 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

48. 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”

49. 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.

50. 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

51. 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

52. “Understanding” India
PM Forum
Jon Terry & Michael Garbus
October 26, 2009

53. Appendix

54. GLOBE Metrics
Future 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.

55. GLOBE Metrics
Institutional 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.

56. GLOBE Metrics
Uncertainty 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.