Posts Tagged ‘india’
Tuesday, August 24, 2010 | Written by Erik Rostad
Posted under: International, Total Entrepreneurial Activity |
Tags: bollywood, engineering, IIT, india, india entrepreneurship, indian economy, innovation |
3 Comments
The new dean of the Harvard Business School, Indian-born Nitin Nohria, recently made this statement about Indian Engineers:
Indian companies have always had very strong engineering base, but no major global product yet identified as being developed in India.
This is actually quite astonishing when you consider that India has some of the best technical universities in the world. These IIT’s are so renown that most Indian students hope to get into an IIT over MIT.
In the past, many of these IIT graduates sought greener pastures in the United States and Western Europe. That’s where the jobs were. So the U.S.A. economy and workforce benefited greatly from these educated expats.
But recently, as the economic picture in India has been growing rapidly, many of these engineers have stayed in India to work for or start major companies. The fact that these companies, as Nitin Nohria notes, have not created a major global product may say more about the culture than the skills of the workforce.
In my own experience as a web developer, there have been times where I have relied on Indian contractors for aspects of my work. Now, I am relying on a very small base of workers here, and this could be true for particular workers in any country, but when I asked these Indian contractors to do very specific coding tasks, they excelled. When I asked them to be creative (ie. develop a logo based upon a few ideas), I could never use what they provided because it was that bad. I learned quickly that India is not the place to go for creativity.
Three years ago, I accompanied Jim Beach of The Entrepreneur School and a number of fellow students to India for a two-week trip to study entrepreneurship levels in India. The further goal was to determine if the Indian Government was helping or hurting entrepreneurship. Our conclusion was that the Government was taking some steps in the right direction, but that as a whole, the extensive bureaucratic process was taking its toll on entrepreneurial levels. We were continually told by businessmen and educators that the best thing the Indian Government could do would be to get out of the way.
In our meetings with students, educators, and businessmen, we saw a spark in the Indian people and a big desire to succeed. So, is the bureaucratic process stopping the next big thing coming from India, or is it something within the culture? Indian levels of entrepreneurial activity have been steadily decreasing over the past few years. So if it is a cultural barrier, how do you get beyond the wall?
Perhaps India is already breaking down barriers in another industry. The movie industry. Bollywood. Perhaps innovation in the entertainment industry will spark a cultural shift that will permeate other businesses and industries.
The skilled labor force is there. Venture Capital firms are present in India. The desire to succeed is strong. The missing component here is innovation and thinking outside the box.
What are your thoughts on why we have not seen a major global product developed in India? Use the comment box below to share your thoughts.
Tags: bollywood, engineering, IIT, india, india entrepreneurship, indian economy, innovation | Posted under International, Total Entrepreneurial Activity | 3 Comments
Friday, August 20, 2010 | Written by Erik Rostad
Posted under: Economics, Global Trade |
Tags: american apparel, call center employees, competitive advantage, india, wages |
1 Comment
There were a few interesting news stories the other day regarding wages in the USA. The first story dealt with call center employees and the second story dealt with the apparel industry.
If you’ve had any sort of problem with your computer lately, chances are, when you called the help hotline, you were magically transported to India where a call center employee took your call. With the advent of decreasing phone costs, rapid Internet expansion, and a rising Indian employee base that spoke English, U.S. corporations flocked to India to outsource their menial tasks. The biggest motivator in this shift was cost.
Well, news from this week shows that employee cost in India is rising (10% this year) and call center workers in the USA are becoming cheaper to where they are almost equaling out.
Will we see a mass exodus of these types of jobs back to the USA? Possibly. But what I predict will happen is that these Indian companies will set up shop in the USA. They have grown in their expertise of what it takes to run an efficient call center and will seek to open up offices in the USA. This has already been happening with higher-end outsourcing (BPO – Business Process Outsourcing, Accounting tasks, etc.) So these offices will be Indian-owned, and local workforce run.
In other news, the USA-based apparel company American Apparel announced serious financial woes. American Apparel set themselves apart as having their entire production process located near LA. That’s not Latin America, but Los Angeles. Yes, they were one of the very few USA-based apparel companies that didn’t offshore their production capabilities. They paid USA wages, included health care, and
The advantage was that American Apparel could respond quickly to changes in the marketplace due to proximity. They also appealed to consumers such as college students who were conscious about the working conditions of employees who made their clothes.
In this case, the USA wage is too high. If someone in Los Angeles is making $7/hr to make a t-shirt while someone in Bangladesh is making $0.50/hr, these costs must be recouped in the price of the t-shirt. In a time of economic hardship, consumers will choose the less expensive t-shirt, regardless of where it was produced.
Now, American Apparel has been known for shady management decisions, so this recent news may not be completely about high employee cost, but it has something to do with it.
So, with the call center employees, we are seeing reduced wages bringing price equality with India where wages are rising. But in the case of American Apparel, USA wages are still too high for that industry.
The other interesting component of this topic is the increased minimum wage requirements for the USA and USA territories.
My big question here is – if some of these jobs begin returning to the USA, will there be people willing to work in these positions? When I worked for an apparel company and visited factories in the USA, I heard plant managers saying they had job ads in the paper and no one lining up for the jobs because the job was below them. Perhaps immigrants would take the job, but that’s a whole other can of worms.
Tags: american apparel, call center employees, competitive advantage, india, wages | Posted under Economics, Global Trade | 1 Comment
Monday, August 9, 2010 | Written by Erik Rostad
Posted under: Government, International, Total Entrepreneurial Activity |
Tags: china, entrepreneurial success, entrepreneurship, guanxi, india, jugaad, start-up funding |
2 Comments
In 2007, a group of Georgia State students traveled to India to answer one central question – “Was the Indian government assisting or halting entrepreneurship?”
Our findings were that there were plenty of opportunities to start a business in India, that the bureaucratic process often hindered the speed of a start up, and that the Indian Government’s best policy would be to get out of the way.
A recent study on Entrepreneurial levels in India and China confirm these findings and added some very interesting information:
- Major motivation for Indian entrepreneurs is to be their own boss.
- Major motivation for Chinese entrepreneurs is to make more money.
- American entrepreneurs generally follow the Indian motivational factor of being their own boss.
- 23% of Chinese entrepreneurs say they are using training obtained in school to start their business.
- Only 9% of Indian entrepreneurs say the same about school.
- Family expectations were stronger in India compared to China (21% to 9%, respectively) as a motivation to start a business.
- Inspiration from entrepreneurial friends & family were cited as the reason 27% of Indians started their business and just 18% of Chinese.
- For Financing, 49% of Indians rely on start-up funding from Friends, Family, and Fools (the 3 F’s).
- Only 25% of Chinese entrepreneurs sought family funding.
- 49% of Chinese entrepreneurs obtained funds from banks.
- Only 27% of Indian entrepreneurs obtained funds from banks.
- As for the reasons for success for a new start-up, 93% of Chinese say “Guanxi” is the main reason. Guanxi is the personal relationships necessary to navigate China’s political, legal, and regulatory climate.
- 81% of Indians say “jugaad” is the reason for entrepreneurial success. Jugaad is the ability to be creative and innovative in getting around governmental regulations.
As we saw in our 2007 trip to India, entrepreneurs in India say getting around the government’s hefty bureaucracy is the is the main key to success. For the Chinese, it appears that the ability to navigate within this bureaucracy is the key to success.
What will happen as China’s middle class demands more protection and less government? How will this shift entrepreneurship in China? And what happens if India’s government truly begins to get out of the way? What successful traits will then be necessary to build a successful business in India? These are questions we will continue to monitor in the rise of India & China.
Tags: china, entrepreneurial success, entrepreneurship, guanxi, india, jugaad, start-up funding | Posted under Government, International, Total Entrepreneurial Activity | 2 Comments
Sunday, December 6, 2009 | Written by Erik Rostad
Posted under: International, Venture Capital |
Tags: angel investing, india, india venture capital |
No Comments
The average amount of funding for India’s new ventures varied between US$2.5 – $5 million in the last 18 months. This differs sharply with amounts funded before the economic downturn (US$1.5 – $2 million). These estimates come from the Indian Venture Capital Association (IVCA).
The Times of India has predicted an even higher average amount by the middle of 2010.
The biggest reason for this increase is that venture capitalists are becoming more discriminating in their choice of businesses to fund. In the economic downturn, only top-notch business plans are being considered. These businesses are usually in the IT sector and require more start-up funds that other industries.
Angel investing and early-stage funding deals have decreased in number as they do not meet the financial needs of the IT start-ups.
Estimates are that VC deals in India reached as high as $600 million from January – September of 2009. That is higher than the $500 million during a similar pre-downturn period.
The number of deals is also down during this same period to 150 compared to 250+ before.
In related news, Infosys co-founder N R Narayana Murthy recently started a new Venture Capital firm in India with an emphasis on funding businesses in nutrition, education, and basic healthcare.
Tags: angel investing, india, india venture capital | Posted under International, Venture Capital | No Comments
Thursday, November 5, 2009 | Written by Erik Rostad
Posted under: Entrepreneurship Stories, General Thoughts, International |
Tags: diversification, entrepreneurship, ethics, india, microfinance |
No Comments
While studying entrepreneurship in India just a few years ago, our group of graduate students noticed three major themes in nearly all of our entrepreneur meetings. They were the role of microfinance for entrepreneurship, the necessity of dealing ethically as an entrepreneur, and the importance of diversification within an entrepreneurial endeavor. These ideas continue to be reinforced in daily news stories of the importance of small micro loans to countries around the world, the importance of ethics and reputation, and how some of the most successful companies i n the world are almost always the most diversified. Read an excerpt below from our trip blog:
“So far in our Indian travels, there have been a number of topics that have come up in many of our company visits, university forums, and individual entrepreneurial interviews. The great thing about this trip is that trends begin to emerge while visiting so many different groups of people in a number of different cities. We would like to highlight a few of these recurring topics.
The first word we keep hearing is microfinance. Microfinance has been a recent phenomenon based upon a theory developed by Dr. Muhammad Yunus who won the Nobel Peace Price in 2006. The idea has a strong basis in personal initiative and entrepreneurial action. Dr. Yunus believed that by providing minuscule loans to the world’s most desperate poor, they would in turn use the money to purchase raw materials for a particular trade and thus begin the process of lifting themselves out of poverty. Today, more than 250 institutions have implemented the microfinance concept in nearly 100 countries and the payback rate on these loans is at an amazing rate of 98%.
The reason that we keep hearing about microfinance is that many people believe this is the way to have the economic growth in India reach to the furthest rural areas. The Indian government is well aware that it cannot maintain such a high level of economic growth in just a handful of urban centers. The poor in the rural areas will also need to play their part. Charity does not have a history of encouraging personal initiative. But being given an opportunity and being held accountable for the results has helped break the cycle of poverty in thousands of lives across the world.
Here is a description by Dr Yunus himself:
“I firmly believe that all human beings have an innate skill. I call it the survival skill. The fact that the poor are alive is clear proof of their ability. They do not need us to teach them how to survive; they already know how to do this. So rather than waste our time teaching them new skills, we try to make maximum use of their existing skills. Giving the poor access to credit allows them to immediately put into practice the skills they already know – to weave, husk rice paddy, raise cows, peddle a rickshaw. And the cash they earn is then a tool, a key that unlocks a host of other abilities and allows them to explore their own potential. Often borrowers teach each other new techniques that allow them to better use their survival skills. They teach far better than we ever could.”
Another word we keep hearing is ethics. So far, both entrepreneurs that we have met in our in-depth interviews have stated how much a good reputation has been a key to their success. These were serial entrepreneurs stating that one must conduct business at the highest ethical standards at all times. This may seem to be an obvious point, but there seemed to be a strong level of personal ethics in the successful people we encountered.
A third word we have heard a number of times is diversification. A number of the entrepreneurs have stated that without the diversification of their business, they would not be around today. In the fast-changing Information Technology sector, this seems to be a key strategy in building a business in India.”
Tags: diversification, entrepreneurship, ethics, india, microfinance | Posted under Entrepreneurship Stories, General Thoughts, International | No Comments
Thursday, September 24, 2009 | Written by Erik Rostad
Posted under: General Thoughts, International |
Tags: entrepreneurial activity, india, peru, the poor |
No Comments
I have taken a few trips overseas for the sole purpose of studying entrepreneurial levels in particular countries. The professor & leader of these trips let us in on a clever way to determine basic entrepreneurial activity in a country within the first 5 minutes of leaving the airport.
Look at the poor.
Are they begging with their palm extended? Or are they offering you a service in exchange for your spare change? The service could be as simple as playing a musical instrument or offering some small trinket.
Peru has one of the highest entrepreneurial rates in the world (25.6% in ’08). I lived in Peru for 4 months and only came across one person in that entire time who had their hand extended begging for money. But how can this be? The CIA’s World Factbook puts the level of Peruvians below the poverty level at 44.5% So there are clearly poor people in Peru. And I did see poor people in Peru. But they were either offering a service or a trinket.
On the other hand, India has a relatively low rate of entrepreneurship (6.9% in ’08). While traveling around India, the poverty is overwhelming and most people I came across did not offer a service but rather begged with outstretched hands.
Now, this clever test will not show the overall big picture of entrepreneurship in a country, but it will offer a quick glimpse into the attitude of the population. To be fair, India has seen great advances in business startups and entrepreneurial activity, but this still only includes a small portion of the population. Also, Atlanta, the city in which I reside, most of the poor beg with outstretched hands, yet Atlanta had the highest 2008 entrepreneurial rates of any other US city.
“He becomes poor that deals with a slack hand: but the hand of the diligent makes rich.” – Proverbs 10:4
Tags: entrepreneurial activity, india, peru, the poor | Posted under General Thoughts, International | No Comments
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