Pankaj Ghemawat, Professor of Business Administration at the Harvard Business School in his book Redefining Global Strategy has come up with three compelling arguments why the world is far from being fully globalised yet. The first two are purely economic – Foreign Direct Investment is still less than 10 per cent of the total gross fixed capital formation and the total amount of money invested in real assets, and the stock of first generation immigrants in the world is less than three per cent of total global population, both indicators of the fact that cross border flows of people and capital are still far less than what a truly global or flat world situation would indicate.
His third argument is based on an estimate that less than 20 per cent of the bits that flow on the ubiquitous Internet actually cross national borders which seems to indicate that even information flows are more within countries where the information originates. The implication of all this for all of us who are building global companies is that we need to be acutely aware of cultural differences and learn from the lessons of multinationals like Coke who have adopted what Prof Ghemawat calls, 'a middle way of globalisation between extreme standardisation and extreme localisation'.
For the IT and BPO industry in India, which has thrived on the speeches and best selling book The World is Flat of the famed columnist Tom Friedman, the decline of the dollar and the continuing impact of the sub-prime crisis has accelerated the thrust to look at new markets outside the US and this sage advice from Prof Ghemawat may well be extremely useful. Our own experience at Zensar in systematically addressing the Japanese market through a full local sales and support team and a recent acquisition in the high end Wireless and Video server applications market has shown that it takes years of investment in understanding the cultural nuances of doing business in the country before significant growth targets can be set and achieved.
In Continental Europe, small successes in the Benelux and Nordic regions to supplement the significant business that most of us do in the UK has proved to be no guarantee for success in the DACH region (Germany, Switzerland and Austria). Countries like Italy, Spain and France are still remote when it comes to propensity to outsource software or business processes services in any significant manner.
In recent times, manufacturing majors like Tata Steel and Bharat Forge have demonstrated that the principles of caring leadership and concern for all stakeholders can lead to successful acquisition and integration of businesses in new markets. But as business becomes more and more global, it would be presumptuous to assume that the 'flat world' will permit uniformity of business strategy and market access everywhere — some countries are more 'local' than others and it will take precision and sensitivity in planning the activities in each country as global delivery platforms blanket the world, and build success for entrepreneurs in the industry and the country.
Deputy Chairman & MD, Zensar Technologies