Cue in to what Bhanu Chopra, Founder & CEO at RateGain, has to say about going global…
Why do you encourage Indian companies to go global?
Since the evolution of modern trade, commercial activities between countries and across the seas have been an integral part of our society. While earlier, it was all about access to spices, cotton and precious minerals, today it is primarily about getting a larger share of the pie.
India’s domestic market with a population of over 1.2 billion is huge and it draws many from outside the country to look for operations here. However, it is obvious that a large majority of the Indian population still continues to live on the fringes and the numbers can be misleading. Another way to look at it is that the world population, at about 7 billion, is any day a much larger market to operate in.
Being global also changes a company’s perspective. By being global you are exposed to the best in the business and often face stiff challenge from your competitors. Standards and quality controls in western countries are specific and stringent and by going global, Indian companies have to adhere to them. This in turn improves quality, ensures better controls and also translates to the adoption of best practices.
I would also encourage Indian companies to go global because it builds brand – both for the company and the country. Barring the Tata’s, there are a very few global brands that one can talk of from India. We have some great companies within the country that have the potential to operate in any part of the world. A company that can operate on a global scale and is successful at it, creates a lot of goodwill and brand name.
What kind of companies should think global?
There is no set criterion on what works globally and what does not. If the company solves a real pain point, the chances of it working across the globe are very high. A company on the other hand that provides a service or product in a significantly better way, also has a chance of doing well globally. To click on a better stage a company has to be stronger, better, faster than others.
India has a unique set of problems that need Indian solutions. Generally solutions and services from the western countries do not work here and this has led to a whole new generation of startups – especially in the sector of social enterprise and companies catering to the Bottom of Pyramid. Many problems that India face is similar and common to what many countries in the African continent and other developing countries face. There is now a steady stream of companies that look to tap these markets with their offerings. Going global does not mean only looking at the west – it can be countries in Africa, the Middle East or even South East Asia.
Does it help to relocate your operations to the UK or US?
Relocating your operation to the UK and the US can make sense as the ease of doing business is comparatively better in these countries. The US and the UK have also fared better when it comes to physical infrastructure and facilities. Other benefits that have arisen are primarily on account of the startup or angel tax in India. Startups, of late, have changed their domicile to offshore countries to ensure that they are not under the ambit of section 56(2)(viib) that was introduced in the year 2012. The other reason why startups would want to relocate to the US or UK is when they feel that the product or the service, especially in the technology domain, will be appreciated more outside India. Yet another reason some may want to relocate to the UK or the US is when these countries are the primary market.
Having said that, India still continues to be the land of opportunities. India may not fare well in ease of doing business, but its huge market is ready to reward any entrepreneur that has the grit and passion to carry on. India continues to have some of the best talent, especially in the technology segment, and an entrepreneurial ecosystem that is maturing fast.
What should startups and early-stage companies do to plan a global play?
The first step to being a global player is to have the right mindset. The entrepreneur should have a mindset that wants to go out and conquer the world. Other steps would include a careful diligence of the targeted market, finding the right team, getting to know the prevailing laws and capital required to go global.
Today, it is easier than ever before to go global primarily because of the support system that is available for startups. Accelerators, incubators, startup associations, angel investors, VCs, PEs, all contribute immensely to the support system. Over the past decade, the ecosystem has matured to nurture companies with global ambitions. For a startup, it helps to be an active part of this ecosystem. There are great mentors and professionals who already have the experience of operating in a global space and now devote a lot of time and effort in helping young companies with global ambitions. Associations like iSpirit, Nasscom and TiE have also contributed immensely in making a real difference. These associations provide intelligence, mentoring and have made vital connections to help startups operate globally. Initiatives like the Great Tech Rocketship, that looks to catapult a startup to the global stage, is yet another stellar effort from the ecosystem and the entrepreneurial community to push deserving startups into the global scene.
What are some of the watch-outs for companies going global?
One of the biggest watch-outs for a company going global is to do their homework well. It is never easy operating on foreign soils and one must be very sure of the laws and rules of the land. Often getting a good consultant, a great legal firm and a savvy banker on board irons out the process. One must also set aside adequate capital to fund the expansion. Operating in a new market and getting a foothold is almost equivalent to starting from scratch and often takes a considerable amount of capex. It always helps to get local talent on board so that the company has a better understanding of the intricacies involved.
Even a great product takes time to make a mark and penetrate a global market. An entrepreneur needs patience and must be prepared for the long haul. The most important aspect of a company aspiring to go global is to find its first customer. If you can locate your customer before you make the journey across borders, it would go a long way to instill confidence. Whenever I have expanded to a new country, I have always enjoyed the experience. It is a lot of hard work no doubt, but in the end, it’s all about getting to visit a new place, getting to know a new culture and a new way of life. Going global has the potential to make you rich – both economically and experientially.
