There are three principal facets to the business engagement between U. K. Companies and India.

The first and the most prevalent is outsourcing.  This took off approximately ten years ago and has been gathering pace ever since. The experiences have been mixed.  Some U. K. Companies which did not pick the cheapest option in the first place and then went on to invest time, money and effort in building strong relationships, have not only managed to reduce costs but also improve the quality of the service to their customers. U. K. companies which took great pride in driving the costs to the bare minimum ended up receiving a rather minimal service in return.  Such companies will almost never provide an excellent service, regardless of location, because either they are in a business segment which competes on price rather than service or they fail to appreciate the distinction between price and value.

It is simply not possible, in the U. K., to find good young graduates to work in a call centre for instance. In India it is.  The issue then is how these graduates are trained, managed and retained by their employer.  A good employer, which will almost certainly not be the cheapest, will have a well trained, managed and motivated workforce, with lower levels of attrition, and which will deliver an excellent service.  With wages in India rising, some companies are now beginning to look further afield to countries like Vietnam in order to find the cheapest deals.

The second facet is investing in India to serve the Indian market.  This market is expanding rapidly and presents a tremendous opportunity.  Some U. K. Companies like Cadbury, Glaxo and Rolls Royce have a long history in India. Others have targeted India in more recent years. One observation which ought to be made is that it is much easier to invest in India than it is to obtain a good return on that investment.  The two principal reasons that foreign companies come unstuck in India are the wrong choice of partner and an underestimation of the political and regulatory influence on their businesses.  However, companies which form an alliance with the right partner and which are adept at negotiating the political and regulatory hurdles end up with very substantial and highly profitable businesses.

The third facet is that of Indian companies making acquisitions or forming joint ventures in the U. K. The well publicised examples have been of Tata acquiring Tetley, Corus and Jaguar.  This trend will rise in the medium to long term even if there are pauses on the way.  An increasing number of U. K. businesses, therefore, will end up dealing with Indian owned companies in the U. K.

A general point to bear in mind when dealing with India is that many of the biggest companies remain family owned and managed.  Therefore, their mindset is somewhat different to that of a professionally managed company.  Whilst a professional chief executive has to be seen to have done a good job in a three to five year time frame, family companies talk in terms of generations and power plays between the various branches of the families.

Overall, there is no doubt that business engagement between the U. K. and India will continue to increase rapidly over the next twenty years and that U. K. Companies with a common language, a legal system based on English law and the historic ties between the two countries are at a tremendous advantage when dealing with India.

Samuel Johar is Chairman of Buchanan Harvey & Co., an executive search and strategic advisory firm.

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