Global Aspirations

As the world turns into a global village, more and more people are looking at
setting up their businesses abroad. The IT industry has already taken a giant
leap in this direction and every other company, irrespective of its size, is
keen on exploiting global opportunities. The IT solution providers (SP) are not
far behind in the race and with their businesses growing from strength to
strength, many have already started eyeing opportunities abroad. While the
larger SPs have already forayed into countries like the US, Canada, Australia,
China and the European countries, the smaller ones are yet to take this bold
step forward.

The global venture

The first step towards setting up any enterprise abroad is to realize one's
own potential and core area of strength. This is followed by strong market
research and knowledge about the target customer. Hence, visiting the market you
wish to explore and consulting local legal advisors in garnering relevant
details is key to ensuring security and safety of business. On the basis of the
above strategy, one can go ahead with the concerned market.

Bimal Raj, CEO of Mumbai-based Allied Digital Services reiterated that the
safest practice is to seek professional advice both from legal experts and HR
consultants. Besides, seeking advice from a good accounting firm is yet another
option that helps in understanding the monetary issues.

“In the first place one needs to study the market thoroughly and then take a
decision. It is recommended that an SP go with a couple of strong offerings and
see what he can offer best,” he added.

A leading system and network integration company, Allied Digital Services has
designed, implemented and managed network infrastructure for many Indian and
global companies. It has its presence in Sri Lanka through a JV and has
partnered with a Singapore-based company for security solutions. Besides, Allied
Digital Services has offices in West Asia and Thailand and has forayed into the
US market as well.

Delhi-based Team Computers and Netlink Business Systems, and Mumbai-based ALL
E Technologies are names of a few other SPs who have dared to venture abroad.

Legal matters

According to KV Jagannath, CEO of Hyderabad-based Choice Solutions, “Before
entering into partnerships or extending goods on credit, always establish
clarity on payments and other terms and conditions. There have been numerous
occasions when the party has delayed payments only because the payment terms and
conditions were not laid down right at the beginning.”

Countries such as Australia have quotas and a points system. What business
you do will depend on whether they want you to do it or not. On the other hand,
in the European Union you're free to work anywhere you like. Thus, each country
has different laws and understanding the terms of employment law, finance and
accounting law, pension law, import and export law, bankruptcy law etc is of
utmost importance. Therefore, it is always advisable to take an experts advice
on any of the above matters.

Bimal Raj CEO, Allied Digital Services, Mumbai	Sanjiv Bhavnani MD and CEO, Visesh Infotecnics, New Delhi
Unless one is financially stable they should not think of venturing into global markets. It isn't easy to chase late payments when you're thousands of miles away	Don't venture into a market with wrong services, and always look at hiring experienced people who are aware of the market and understand its dynamics

Jagannath further mentioned that one should always plan investments and keep
the taxation aspect in mind. A country that has low tax regimes will offer
maximum chances of growth. One should also have enough working capital to fund
the recurring expenses. Beside debts and loans should not be taken to fund
short-term needs. “There is no point earning 20 percent margin in a country
where one ends up giving 30 percent tax for every project/transaction
completed,” he elucidated.

Choice Solutions has already forayed into the USA and is working with
government agencies, Fortune 500 companies and small to medium enterprises.

HR practices

In order to achieve the desired results, it is mandatory that one appoint
skilled employees. Clarity on HR policies is key to setting up successful
enterprises abroad. Hiring HR consultants abroad helps in understanding the
various implications of the HR laws in the country. In addition neither SPs nor
their employees should share crucial information and data with any outsider.

Sharing his experiences, Raj elaborated that it is always advisable that a
local sales and marketing staff is hired as a part of the marketing strategy.
This will ensure that the customers are well taken care of and will help in
further establishing credibility and comfort level with the client.

“It is advisable to hire employees on a contract basis with all the terms and
conditions mentioned very clearly right at the beginning. With the consultants
advice one can clarify several issues related to appointment letter, nature of
work, payments and other relevant issues,” Raj said.

Jagannath agreed saying that in the UK and the US it is always advisable to
keep people on contract basis. Hiring people through a consultancy is also an
option. Taking manpower on contract basis ensures that the employee does not
become a long-term liability and does not leave the company in a lurch during
the peak time. Seeking a consults advice ensures that the right candidates are
hired for the completion of the desired project.

Be flexible

Another issue that is of extreme importance is that of scalability. A client
may all of a sudden ask you to deliver more than had been initially decided upon
and hence it is extremely crucial for SPs to be flexible and ready to take up
challenges as and when they pop up.

Citing one of his experiences Jagannath mentioned that his team was once
working on a project for a US-based pharmaceutical company and was prepared to
deliver the services for 100 seats only. However, all of a sudden the company
asked to offer the same service for 500 seats.

“We could not scale up and meet their demands then as we were not prepared to
deliver more at that point of time. We lost the deal but we learnt that one
needs to be flexible enough to meet client expectations,” he added.

Money matters

There may be times when your project is a success and there may also be
occasions when your venture may emerge as a complete failure. Hence, one should
be extra careful when tying up with venture capitalists and companies who are
willing to fund projects.

This aside, venturing into a foreign location also implies that you'll need a
bank account in the country you're going to and this can take months to set-up
in some cases. You need to organize it well before you go, before the operations
commence.

Raj added that unless one is financially stable enough to support his/her
business they should not think of venturing into these markets. Many clients may
backtrack and prove unreliable when it comes to money. It isn't easy to chase
late payments when you're thousands of miles away. Hence, monetary issues should
be taken care of.

Some countries have their own regulations with regard to the amount of money
one can borrow from them. Cuba and South Africa are good examples of the same.
This needs to be particularly bourn in mind if you want to leave at any stage.

Countries worth trying

Once you are clear what expertise you can extend in your bid to set-up a
global venture, you must decide the markets you want to explore. A look at
countries worldwide suggests that the US and Canada offer maximum scope for
business. Again, the tax laws and regulatory norms in the two countries are not
as stringent as compared to other countries. However, countries like China,
Singapore and parts of European countries throw opportunities.

Raj elaborated that the US is the most investment friendly destination in
terms of opportunities. In Middle East however, the situation is slightly
different and one needs to look at specific partnerships and tie-up with local
partners, if they want to set-up offices there.

“If a SP is looking to set-up a subsidiary company abroad, developing
economies like China and Thailand are markets that offer immense scope,” he
opined.

Sharing his thoughts on the global ventures, Jagannath expounded that the US
market is the largest and the best market in terms of opportunities.

“In the US, people place a lot of trust in any company they assign the job
to. They want delivery on time and there is zero tolerance on that front. Most
of the projects are done on contract basis and one has to make sure that they
fulfill the expectations of their clients under all circumstances.”

European countries are not very open-minded and there are several legal
regulations that one needs to be keeping in mind when working with companies
there.

Sanjiv Bhavnani, MD and CEO of New Delhi-based Visesh Infotecnics mentioned
that countries like China, Thailand and Malaysia are amongst those Asian
countries that offer significant opportunities for growth and expansion.
However, these countries offer a replacement market and there is a scope for
offering solutions and services around network support market as well.

Trends and opportunities

In terms of trends and opportunities, SPs can delve into services such as
that of remote infrastructure management and set-up BPO/KPOs facilities abroad.

Bhawnani mentioned that the US is offering a lot of opportunities around
outsourcing. Again, there is a lot of scope around onsite Faculty Management
Services (FMS). Thus SPs can look at designing efficient models of delivery so
that it allows users to cut down their costs.

In 2007, Visesh Infotecnics added new customers to its list-UK-based OMV,
Living Media Group, US-based Echo Star and Sify. The company also made some
global acquisitions and expansion in the BPO/KPO and telecommunication services,
and added new services to its portfolio. The company increased its manpower base
from 168 to 750, in order to expand its capacity in the BPO/KPO sector.

Even remote network management, telecom and handset space offer a lot of
scope to set-up businesses in foreign locations. “One can enter these markets
directly, through joint ventures or strategic partnerships and hence it is very
important to develop relations and contacts in these markets,” he added.

Raj on the other hand was of the view that virtualization offers a good scope
for business but one also needs to bear in mind that they do a thorough analysis
of the cost at which they are willing to offer the services and whether they
will be able to scale and meet the expectations of customers.

Right timing

In the midst of all this talk about expansion, one must also note that
inflation is at an all time high. So is it the right time to take the giant
leap?

According to Bhawnani, “This is not the most opportune moment to set-up
operations globally. Even vendors and SPs in companies abroad are under pressure
because of inflation and current economic slowdown. The launch would not yield
good results for them and hence at the moment they can concentrate only on
consolidation and should keep their aspirations on hold.”

Initially, SPs should be prepared to struggle for at least two to three
years. For this they need to do proper fund planning. They should also bear in
mind the quality and cost of delivering the service.

Simply put, the time is ripe for you to have global aspirations but before
you take the plunge it is mandatory that you seek a specialist's advice. All
major banks abroad have overseas business advisers and branches. Corporate
lawyers have overseas experts too, and there are plenty of agencies that will
help you from start to completion. So gear up and don't miss the global bus.

Pooja Sharma

poojas@cybermedia.co.in