This article first appeared on 15 Nov 2010 in the print and online edition of The National
One of the pleasures of dealing with a small entrepreneurial business is the energy and enthusiasm that one encounters, particularly from its founders.
The passion on display and the work ethic they maintain is often missing at larger, more staid organisations. Among the challenges faced by small businesses is how to maintain that energy and enthusiasm as they expand in scale, scope, resource and geographic horizons.
And today the opportunity to scale up and become a global company comes knocking on the door of these small enterprises early in their growth cycle. Forces that drive small businesses to create global networks of customers, suppliers and even employees include the cheap availability of communications technology through the internet and services such as Skype.
Communicating globally at low cost was once the preserve of IT directors at large organisations who maintained complicated telecommunications infrastructures such as X.25 networks. For a globally dispersed organisation this was a considerable operating expense and required specialist teams of engineers to interface with the telecoms companies that owned these networks.
Travelling around Delhi this week and the towns that ring it such as Noida and Gurgaon, one sees the imprint left by large global organisations that have outsourced many of their functions to a more than willing and competitive skilled Indian workforce.
Surprisingly, upon closer inspection one also comes across many small enterprises not based in India that have taken the bold step of setting up operations in India and outsourcing work there. The well-documented story of yesteryear has been of the large western organisation servicing call centres and business processes from India. Today one sees their smaller counterparts also treading the same path.
One such small organisation based in the US is G-Biosciences. Dr Aftab Alam, its founder and chief executive, runs this biotech company with 50 employees. A serial entrepreneur and inventor based in St Louis, Missouri, he decided to move half of his operations for channel and business development to India in 2006. His company supplies chemical kits to research firms in the biosciences industry, and one of his most profitable business lines is private labelling for the larger companies in his sector.
Dr Alam is also the inventor of the world's first walk-through child safety gate, which he patented and licenced back in 1984. The success he achieved allowed him to start his current biotech venture. He also happens to be my uncle, and I am intrigued that he decided to bring work back to India, our mutual country of origin. The question which puzzles me is why would a small business from St Louis want to set up in Delhi, other than the fact that its founder is originally an Indian national? There is, after all, a huge time difference between the US and India as well as a significant disparity in business culture. As we all know, Americans are very direct and tell you as it is; whereas in Indian business culture nobody likes to say "no", for fear of losing face and disappointing the inquirer.
"Despite the cultural differences businesses face when they set up in India there is still a huge competitive cost advantage," says Dr Alam. "It's like the Gold Rush, everyone wants to be here and then work out what they need to do once they arrive."
However, he warns that small to medium enterprises entering the Indian market must recalibrate their expectations, because what they thought would take them one year will probably take two. "We only do our low-tech work in India," he says, "whereas the high-tech innovative work is still done in the US because we can be sure to maintain quality and professionalism."
G-Biosciences was able to capitalise on its founder's Indian origins to enter the local market. But this is not a factor that is available to most. What then?
Fortunately the process of helping small firms outsource or build a networked employee base across the world in places such as India has now been made simpler by the British firm Quickstart Global, among others. It makes the process of finding employees who form part of the networked organisation around the world easier. Such companies source and take care of incorporating and setting up offices overseas for primarily small business owners. This was not something they could previously afford to do because of the associated cost and risk.
One of Quckstart's clients is Monumental Games, which makes video games such as Moto GP and Football Superstars. Based in Britain, it used Quickstart's services to hire games developers in India, who can now take part in video conferencing via Skype. These employees are based in Pune, but they are managed from Nottingham in the UK.
Large organisations that have used India as an outsource location have done so for business areas they deem as non-core, such as call centres. Small companies are following suit, with low-tech or low value work outsourced to India, while high-value thinking remains with the founders at the core, since that is where the energy and enthusiasm resides.