Business Today

Hire local, act global

A clutch of multinational corporations has replaced expat CEOs with Indians.

K.R. Balasubramanyam        Print Edition: Jan 9, 2011

When 3M, the American multinational famous for its relentless innovation, landed in India in 1988 to launch its subsidiary, it brought along its own man - Will Scrivens - to head the operations. In the next two decades, five more executives from the global conglomerate came in to head the Indian business.

But in October 2008, 3M opted for an Indian, Ajay Nanavati, who had been with the company, both in India and abroad, since 1988. For 3M, which markets 5,000 products in India, has a modern R&D centre in Bangalore and earned Rs 1,087 crore in revenues in last fiscal, India is a long-term play.

Cut to global auto major Volvo, which, four years after entering India in 1997, brought in Swede Ulf Nordqvist to head operations. As it began to make headway in the domestic market, the company split into separate legal entities, all three of which are now headed by Indians - Akash Passey (Volvo Buses), Siddharth Lal (Volvo Eicher Commercial Vehicles), and A.M. Muralidharan (Volvo India Pvt Ltd).

Volvo and 3M are just two of a host of multinational corporations that are opting to have local managers at the helm of their Indian operations (see Indians at the Helm). It was not always this way, and one explanation could be that India traditionally has been better known for its technical skills than its managerial talent.

Sanjay M. Correa, MD, GE India Technology Centre
Sanjay M. Correa
But much water has flowed down the Ganga since the days when bringing in a manager from the head office was par for the course. Today, Indian subsidiaries and affiliates are contributing more to their parents' top and bottom lines, as growth picks up pace in emerging economies even as stagnation rules in the developed world.

Consider the banks. Standard Chartered India's contribution to the British bank's overall profits is the highest at a little over 20 per cent. For HSBC, India is the seventh-largest contributor to group profits and the third-largest in the Asia-Pacific region after Hong Kong and China.

Small wonder then that Naina Lal Kidwai, Country Head, HSBC India, was inducted into the bank's Asia-Pacific board in August this year. Kidwai succeeded Niall S.K. Booker, as country head in May 2006. "An Indian's level of comfort is higher than that of an expat," says Kidwai. Foreigners - along with their families - have to adjust to cultures, languages and deal with issues like children's education.

But it is not as if Indians get the top job at MNCs just because they are more at home in the local milieu. In fact, it helps when the Indians have led businesses in other markets before heading domestic operations.

Consider, for instance, Sanjay M. Correa, a veteran of 28 years with General Electric. In February 2010, Correa was named successor to Guillermo Wille, Managing Director of GE India Technology Centre.

Correa is the first person of Indian origin to lead the Centre. But before coming here, he had held many leadership positions across GE Global Research and GE Technology Infrastructure. "Indian-born and educated professionals have had multinational and cross-functional assignments to an increasing extent over the last couple of decades.

These experiences along with their familiarity with the culture have made them a natural choice for leadership roles. I see that trend continuing,'' says Correa.

Back home, meantime, managerial talent is burgeoning - and this talent is young and keen to prove itself. The situation in the developed world is the reverse. "The population in countries such as Germany, Japan and Europe is ageing, and if organisations have to continue to grow rapidly, they will need to create a pipeline of talent in countries like India,'' says Vasanthi Srinivasan, Associate Professor, Organisational Behaviour and HR Management, at Indian Institute of Management, Bangalore.

A number of multinationals seem to be undecided about what works better - an Indian CEO or an expat. Perhaps such changes are driven by circumstances and strategies prevailing at a certain time. Consider Hindustan Unilever Ltd, or HUL, an MNC that has been in India for so long (since 1888) that many consider it more Indian than Anglo-Dutch like its parent. At end-2005, after decades of having Indians at the top, it brought in a Unilever lifer, Doug Baillie, as CEO. But it did not take long for HUL to revert to an Indian CEO when in early 2008 Nitin Paranjpe took over the reins.

Similarly, at Citi India Mark Robinson, a New Zealander who was heading Citigroup's Russian operations, replaced Sanjay Nayar as South Asia CEO. This happened a couple of months after Lehman Brothers went bankrupt and sent Wall Street into a tizzy. But earlier this year Citi fell back on an Indian CEO when investment banking head Pramit Jhaveri replaced Robinson.

Clearly, an Indian at the helm makes constancy and continuity less of a challenge. And as Indian affiliates start becoming more vital for multinationals, the country has to respond by ensuring it has enough homegrown managerial talent to help MNCs make India a key hub of their global operations.

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