The MNC’s guide to understanding India - Part 2

24 Sep 2018

The MNC’s guide to understanding India - Part 2

On paper, India is a dream market with an educated workforce. So why are MNCs struggling to attract and retain the talent they need?

We interviewed India-based executives from 14 multinational companies across a variety of industries for our white paper ‘The Challenge for Multinationals in India’We asked them to identify their biggest challenges and opportunities and to reveal their leadership strategies for the future.

In the second and final extract from the white paper, we focus on hiring the right talent, leadership and the workforce challenges of this unique market.

The Indian MNC leader

What kind of leader is likely to be most successful in this unique and challenging market? The executives we spoke to favoured an Indian executive with global leadership training.

A defence contractor MD observed, “Some MNCs send expat leaders to run their India business but…local leadership is critical.”

The MD of a German industrial services company agreed: “It is imperative for MNCs to have local Indian leaders running their business. Otherwise, they may struggle and take a long time to crack the market.”

Local knowledge is critical, but international management experience is important as well.

Indian leaders without much global experience “can present a dictatorial leadership style and may not have the substance to back up their ambition.”

That sentiment was echoed by a defence industry MD: “Due to the rapid rate of growth in India over the last 15-20 years, many business leaders have been promoted by virtue of the market upswing, not necessarily because of their competence and credentials.”

In terms of leadership style, the MD of a consumer technology company recommends that “the Indian MNC leader adopt a more engaging working relationship with his or her employees—a personal touch is critical.”

The Indian employee

Turning then, to the Indian employee, what can MNCs expect?

In short, a highly educated employee with a commendable work ethic and a hunger for up-skilling, coupled with a willingness to jump ship for better opportunities.

An MD at a defence contractor noted, “The average Indian employee is full of enthusiasm and values the opportunity to enhance their skills and knowledge and to prove themselves.” A partner at a UK-based risk consulting firm concurred: “Indian employees have keen aspirations for growth and…are likely to seek constant opportunities for training and professional advancement.”

While this enthusiasm for up-skilling is a positive trait, it can present a retention challenge.

According to a defence industry MD, “the Indian employee tends to…jump between jobs frequently early on in their careers in search of a higher salary.”

The MD of a large FMCG company expressed it more starkly: “At the junior level, loyalty does not exist.”

This willingness to jump ship in search of a better package typifies the evolution in Indians’ career expectations over the last two decades.

A senior leader at an IT services firm explained: “Indian employees are becoming more confident and are pushing for better benefits. That, plus rising salary costs, are creating a challenge for MNCs’ bottom lines.”

Another paradox of the Indian market for MNCs is that a large, well-educated population does not necessarily mean an abundance of appropriately skilled talent.

The country’s conservative education system “has not yet evolved to produce a multi-skilled talent pool.” The MD of a large FMCG company added, “Even with India’s large population, there is a dearth of skilled talent, especially in the mid-tier and above in sales and marketing functions.”

The manufacturing sector is also experiencing a talent shortage. The MD of a German industrial services company said, “Most graduates today prefer jobs in fancier work environments such as IT, banking and e-commerce.”

As is the case in any rapidly-growing economy, attracting and retaining the top talent is a leading concern for MNCs in India.

Hiring well

The good news is that MNCs have something to offer the best talent in India that sets them apart.

The MD of a consumer technology company explained, “MNCs are considered to be a good value proposition by mid- to senior-level Indian employees seeking future regional and global roles and employee-friendly policies.”

MNCs can also offer the Indian leaders of the future “a sense of ownership” in the business, according to a defence industry MD. “Local leaders should be given the opportunity to translate the global parent organisation’s vision into a local strategy.” This should help improve retention.

The collective wisdom of the executives we spoke to is that India is a tough market to crack. It requires patience and perseverance but offers a huge potential upside.

To increase local knowledge, MNCs should commit to investing in the right talent by offering the opportunity for regional or global experience and career advancement. Then, when regulatory and economic challenges present themselves, an adaptable and resilient local leadership will be ready to meet them head-on.

In the first extract from our white paper, we focused on the regulatory and political complexity of the Indian market and the very particular nature of its consumers.

Read our white paper ‘The Challenge for Multinationals in India':

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