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Ten tips for Indian CEOs going West

May 30, 2006 12:15 IST

The South Asian tiger is all grown up. India [ Images ] is no longer just an outsourcing destination for US and European companies. Homegrown Indian firms are now expanding beyond their country's borders. Indian multinationals have invested $522 million in the US, according to Department of Commerce figures from 2004, the most recent year for which data were available. That's an increase of 80 per cent from 2003's investment level of $286 million.

Mumbai-based Mastek exemplifies this shift. The 24-year-old technology firm, which had sales of just over $100 million in 2005 and is traded on the Bombay Stock Exchange [ Images ], began as an outsourcer but now works on complex technology and public works projects in Asia, the United Kingdom and the United States. Recently, Mastek developed software for London's [ Images ] anti-congestion initiative, a high-tech traffic system that monitors cars driving into the city center and automatically charges a toll.

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In late 2004, however, CEO Sudhakar Ram realised he had a problem. While his UK and Asian units were posting consistent growth, the US division had been flat for two years. Ram decided he couldn't solve the problem from his office in Mumbai [ Images ]. Last April, he moved to Edison, NJ, to learn more about the US and oversee operations at MajescoMastek, the American division of his firm.

The strategy worked -- his US unit has grown about 50 per cent since he arrived, so he's planning to stay for two more years. Forbes.com asked Ram what advice he'd give to other Indian CEOs seeking to enter the US market or boost their existing States-side business.

Why did you decide to spend two years in the States?

We've done very exciting projects in other parts of the world, but in the US we've always been limited to services. So I thought I'd personally move here for a couple of years to understand the market and see how we can expand our core business, which is developing high-tech solutions for large corporations.

Would you recommend such a move to CEOs from other countries?

Definitely. What you see as a visitor to the US is very different from what you can actually see, learn and build when you stay here. I wish I had made the decision earlier in my life. You just can't imagine…in India, there's little understanding of what it takes to succeed in the US.

On a personal level, what has surprised you about the U.S?

When you move here late in life and you arrive without an American credit history, even getting a credit card is very difficult. On a personal level it was a strange experience, to be very well known in India and never have any issues obtaining credit. Then here, you suddenly do.

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What surprised you about doing business in the United States?

There's always this image of American companies as high tech, as advanced users of technology and so on. But when I started speaking with the CIOs and CEOs at large corporations here, I found that one of the biggest issues facing corporate America is the whole problem of technological legacy.

Many U.S. companies were early adopters of technology. That has its advantages. But as technology advances, companies with older systems are less able to capitalize on what's new. It's like the cell phone technology in the U.S. The rest of the world has moved to the Global System for Mobile Communications, which allows people to cross national borders and still use their cell phones. The US, for the most part, is still stuck with Code Division Multiple Access, which makes it impossible to use your cell phones when you travel abroad.

It takes a lot of investment and a lot of personal courage on the part of a CIO to get out of this legacy and upgrade the systems within the organisation. That was definitely an eye opener.

What tips do you have for Indian CEOs looking to do business overseas?

Some Indian companies seem to think you can send people from India and they'll be able to figure out the ropes and operate in the market. I don't think it's so easy to break into the existing relationship structure here. You need locals with strong American contacts and industry expertise. Otherwise, it's very difficult to succeed.

Has it been difficult to navigate the US regulatory structure?

The rules are fairly well established here. If you get the right audit firm and the right legal firm, they will tell you exactly what you need to do. You don't need to discover so many things for yourself. In India, the regulatory system is not so well established, so there will always be surprises down the line.

Was it hard to adjust to American communication styles?

A lot of US conversations revolve around sports that are not even played in India. There are a lot of metaphors like "hitting a home run." When you are an American, you don't recognise that these are probably metaphors and phrases that the other person might not understand.

Hannah Clark, Forbes  

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