Apart from the size of the Indian market, the relatively low salaries and immense potential of highly skilled employees in the technology/IT industries are key pull factors. So why can it be more promising for startups to become active in the Indian market than for MNCs? The Indian market and business practices are often extremely dynamic, which requires companies to be flexible and agile. Startups, which often still have more flexible structures, are better at responding to short-term changes than large enterprises. Many things are improvised and changed at the last minute in India, which means those who are willing to adapt their approach will have an easier time. In addition to flexibility, being properly prepared is also a crucial factor for success.
Be prepared…
Many who do business internationally and have been active in other Asian countries expect to encounter structures in India that are similar to the rest of Asia. But that’s not the case! A lot of things are done differently in India. That makes it all the more important to be properly prepared and to develop a clear idea of what’s possible in the country. It’s not without reason that even giants like Ikea, which already had access to an extensive supply chain in India, needed more than ten years to launch activities there.
One of the factors that has a major impact on preparation is the broad diversity of the country. This diversity is both cultural and linguistic, and there are also considerable differences between urban and rural settings. Depending on the line of business, you may work with target groups where there isn’t much of a difference in terms of working culture when compared to the US or Europe. But in the next meeting, you might encounter very conservative individuals who find it extremely important to observe foreign cultural customs. This makes it important to know who you will encounter and the context in which you find yourself in India.
The requirements of India’s market are also a factor. The companies that are most successful in India are those who address the market and the existing needs while also developing clear objectives for their activities. Setting clear objectives is the only way to overcome potential chaos. India offers many routes to take, and with them many opportunities to take a wrong turn.
How to make a deal?
Especially when it’s a matter of entering into negotiations, this is something you will have to think about. India was a trading nation for hundreds of years, which means there is a very good chance that you will encounter skilled negotiators. Moreover, how facts are presented can often be quite different from what is expected from a western European perspective, for example due to the flowery descriptions that are common in the country. For long-term collaboration, it is of particular importance to establish relationships before beginning serious negotiations. In a context with many unknowns, the question as to whether you can trust your business partner and rely on them, as well as the extent to which you can accept their conditions, are decisive factors for deciding whether to go into business.
In the end, it is always about creating a “win-win model” for both parties. It is only after good personal relationships have been established, and here it is beneficial to involve the family, that you have an environment where it is also possible to point out controversial views and challenges. It’s also possible to gain this sort of understanding of circumstances through a cooperative partner who is familiar with India. Which is why the recommendation is:
Never walk alone!
Just as it can be beneficial for startups in Germany to work in teams to get the necessary competence “on board,” you should never try to conquer a market in India alone and without regional knowledge or local partners. India is not self-explanatory. With an increasing number of Indian university graduates in Bavaria, for example, there is a good chance of finding partners for your own startup’s activities in India
There are some initiatives that, just like the Bavarian-Indian Centre for Business and University Cooperation (BayIND), serve to build bridges to India. This includes Bavarian representation in India as well as the German-Indian Business Forum (GIBF), which is held once every year in Munich and offers different programs for startups as the German-Indian Startup Connector. Furthermore, the German Indian Startup Exchange Program (GINSEP) offers consultation services and events for startups that are interested in India. Support in India is offered by the “startupindia” initiative and various incubation centers that can now be found in all larger cities.
And finally, daily business…
For decision-making processes in Indian companies, structures – which are generally very hierarchical – play a major role. Regardless of how positive your contact partner may be, you can’t count on their suggestions being relevant until they have been approved by the uppermost level of hierarchy. At the same time, the pronounced hierarchies in many companies hinder indirect communication and a functioning feedback culture. Because the decisions made by lower levels have little impact, there is a tendency to bypass levels of hierarchy in daily business to increase efficiency. This can mean that the uppermost level ends up wasting time dealing with minor issues.
In daily business in particular, communication and availability play a central role. Many problems and questions can be answered with a phone call or on WhatsApp, which means it is essential to be available to make sure processes run smoothly. Concepts such as free time during the weekend and set working hours are relatively rare.
This rather flexible notion of “time” can also be applied to the topic of punctuality. The non-stop traffic congestion and general understanding of time mean that delays are a daily occurrence. An example of this different understanding of time is demonstrated by the word “kal,” which can mean both “yesterday” and “tomorrow.” Nevertheless, German punctuality is well known in India, which means it may be expected of you even if Indian partners do not consistently do the same. In any case, mobile availability is of key importance. It is always worth checking a day ahead of time and right before an appointment to see if the meeting is actually going to happen and if the other party will be on time.
With a bit of preparation and reliable partners, it is possible to conquer this challenging market. Take advantage of the opportunities that India has to offer, particularly in the rapidly growing IT sector.