Chapter 1

Globalization and India

1.1 Definition

Globalization is defined by the worldwide movement toward economic, financial, trade, and
communications integration. Globalization implies opening out beyond local and nationalistic
perspectives to a broader outlook of an interconnected and inter-dependent world with free
transfer of capital, goods, and services across national frontiers. However, it does not include
unhindered movement of labor and, as suggested by some economists, may hurt smaller or
fragile economies if applied indiscriminately.

1.2 Effects

The effects of Globalization exert intense influence on the financial condition as well as the
industrial sector of a particular nation. Globalization gives birth to markets based on industrial
productions across the world. This in turn, widens the access to a diverse variety of foreign
commodities for consumption of the customers, owing to the marketing strategies undertaken by
different corporations.

In the world economic arena, Globalization facilitates the formation of a common worldwide
market, on the basis of the liberal exchange of both cash and kinds.

As far as Political Globalization is concerned, it helps in the formation of a world government to

normalize the existing interactions among countries. It also ensures the rights emerging out of
Economic and Social Globalizations.

Promotion of liberal trading activities is perhaps the greatest contribution of Globalization,

acting as a boon to the world economy. Following are the advantages enjoyed by countries
engaged in mutual free trades

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 Considerable reduction in the cost of transportation, especially with the development of
containerization with respect to overseas ocean shipments
 Decrease or abolition of control over capital and the capital market
 Formation of free zones for carrying out commercial activities, against payment of little or no
tariffs at all
 Decrease, abolition or synchronization of subsidies in domestic trades
 Decrease or abolition of every kind of tariffs However, the concept of free trade emerging
from Globalization suffers from limitations as well:
 Restrictions imposed on the supernatural identification of intellectual properties. This means
that the patents granted by a particular nation will by recognized in another country.
 Synchronization of intellectual asset laws across most states are subject to additional
restrictions.

Globalization in India has allowed companies to increase their base of operations, expand their
workforce with minimal investments, and provide new services to a broad range of consumers.
The process of globalization has been an integral part of the recent economic progress made by
India. Globalization has played a major role in export-led growth, leading to the enlargement of
the job market in India.

One of the major forces of globalization in India has been in the growth of outsourced IT and
business process outsourcing (BPO) services. The last few years have seen an increase in the
number of skilled professionals in India employed by both local and foreign companies to
service customers in the US and Europe in particular. Taking advantage of India’s lower cost but
educated and English-speaking work force, and utilizing global communications technologies
such as voice-over IP (VOIP), email and the internet, international enterprises have been able to
lower their cost base by establishing outsourced knowledge-worker operations in India.

As a new Indian middle class has developed around the wealth that the IT and BPO industries
have brought to the country, a new consumer base has developed. International companies are
also expanding their operations in India to service this massive growth opportunity. Notable

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examples of international companies that have done well in India in the recent years include
Pepsi, Coca-Cola, McDonald’s, and Kentucky Fried Chicken, whose products have been well
accepted by Indians at large.

Globalization in India has been advantageous for companies that have ventured in the Indian
market. By simply increasing their base of operations, expanding their workforce with minimal
investments, and providing services to a broad range of consumers, large companies entering the
Indian market have opened up many profitable opportunities.

Indian companies are rapidly gaining confidence and are themselves now major players in
globalization through international expansion. From steel to Bolly-wood, from cars to IT, Indian
companies are setting themselves up as powerhouses of today’s global economy.

1.3 How do successful multinationals approach India?

Foreign companies have been active in India for years, sometimes decades.Hutchison Whampoa,
LG Electronics, and Samsung, for instance have built businesses with more than $1 billion in
annual revenues in just a few years.

Successful foreign companies in India share three characteristics. First, they have invested for
the long term and made a strong organizational commitment by assigning senior managers to
work with established local teams.

One of the biggest mistakes is treating the country as the 'flavor of the month', with the CEO and
senior executives flying in to announce an investment without thinking through the commitment
required for success. Inevitably, top management's attention then wanders off to the next big
thing, and a small group of managers remains to carry on the struggle without sufficient
resources.

Second, the successful companies have adapted their businesses to local conditions rather than
forcing foreign models on India. In general, prices are substantially lower there, so products and
supply chains must be radically redesigned to cut costs. Successful companies also assemble

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national third-party distribution systems to bypass fragmented local ones. This model, when
implemented well, can be a source of long-term advantage.

Finally, multinationals that succeed in India help to create and shape the market. Hindustan
Lever, for example, created a new category for personal hygiene products and expanded the
market considerably by offering single-use sachets of shampoos and other soap products. Unit
prices are low, but prices by volume are higher than those of larger-sized packages.

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 Chapter 2

Welcome to OMNITECH SYSTEMS

2.1 Who is OMNITECH?

Omnitech is an ISO 9001-2000 certified company committed to empowering global business and
industry with leading-edge software and world-class support. Omnitech is a premier Software
Development and Consulting Services provider located in the Washington D.C. Metropolitan
area. Omnitech was established in 1999 as a minority-owned small business by professionals
who had gained diverse experience in the field of Software Development and Software
Consulting for fortune 500 companies.

Since their inception, they have evolved into a Managed Service Provider par excellence, with
competencies related to Business Continuity and Availability. These include Performance
Management, Remote Management, Infrastructure Management and Disaster Recovery - not to
mention Software Development and independent Software Testing.

Through alliances with world leaders like IBM, CA, VERITAS, Cisco, Microsoft, Oracle, HP,
Citrix, APC, and Intel they are able to deliver contemporary solutions. Value-added solutions
that help organization achieve higher efficiencies, to prevail and prosper in the competitive
digital age.

Keeping in perspective with its goal of "Integrating Human Dimension with Technology",
Omnitech has grown significantly which can be attributed to a high level of client satisfaction
and the dedicated and relentless efforts of a highly motivated team of professionals. Omnitech
has been able to achieve this feat by employing professionals who have versatile experience in
the field of Information Technology.

Services provided by the company encompass the broad spectrum of information management in
the areas of Software Development, Software Consulting, Technical Support, Network and
Hardware support and Business Process Re-engineering.

They build custom-fit solutions for leading international and U.S.-based organizations to drive

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performance and ensure success. Their solutions provide the best tools to help employees get the
best results. To this end, they have partnered with a number of companies to develop solutions
that integrate human dimension with technology.

2.2 Business Availability & Continuity Services

Infrastructure Management
  Remote Management
  Facilities Management
  Monitoring
  Technical Helpdesks
  Datacenter Management
 
Technology Services
  Strategic Consulting
  Independent Testing
    Performance
    Functional
    Automation
  Training
  Application Management
 
Managed DR
  DR Consulting
  DR Solutions
  Workplace Recovery
  Availability Services
 
Enterprise Solutions
  System Integration
  Server Consolidation
  Connectivity Solutions
  Migration Solutions
2.3 Omnitech and India

Technology has brought the world much closer together. This means that people of different
cultures find themselves working together and communicating more and more. This is exciting
and interesting, but it can also be frustrating and fraught with uncertainty. How do you relate to
someone of another culture? What do you say, or not say, to start a conversation off right? Are
there cultural taboos you need to be aware of? Building connections with people from around the

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 world is just one dimension of cultural diversity. You also have issues like motivating people,
structuring projects, and developing strategy.

Wishing to set up a subsidiary company in India, the U.S. based Omnitech must take a number of
factors into consideration. Before the Human Resources issues are taken into consideration, the
culture differences must be taken into account first. Once the culture is understood, Omnitech
will have better understanding of the people and they will be able to effectively manage their
Indian Human Resource. Because no matter what technology a company may posses, their
people are the most important assets.

2.4 Using Hofstede’s Cultural dimensions on India

Omnitech can use Geert Hofstede's (1980) research to give an insight into the Indian culture so
that they can be more effective when interacting with the Indian people. If understood and
applied properly, this information should reduce their levels of frustration, anxiety, and concern.
But most important, Geert Hofstede will give Omnitech the 'edge of understanding' which
translates to more successful results.

Hofstede Identified four important dimensions of national culture, namely individualism, power
distance, uncertainty avoidance and masculinity/femininity, to which he later added a fifth
dimension long term orientation (1991).

Fig 1: Hofstede’s five dimensions of culture

INDIVIDUALIST

The interests of the individual Individualism

Collectivist
take precedence
Interest of the group takes
Relative importance of the interests
precedence
of the individual vs. the interests of
the group.
LARGE POWER DISTANCE
Power distance 7
SMALL POWER DISTANCE
Authority is inherent in one’s
position within a hierarchy.
The appropriateness of Individuals assess authority in view of
power/authority within the its perceived rightness or their
organizations personal interests
Source: Adapted from Griffin and Pustay (1996)

The table on the next page shows the difference between the scores of cultural dimensions
between the USA and India

Table 1: Scores of cultural dimensions between USA and India (

COUNTRY INDIVIDUALIS POWER UNCERTAINITY MASCULINITY

M DISTANCE

USA 91 40 46 62

INDIA 48 77 40 56

Source: Adapted from Hofstede and Hofstede 2005

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The Geert Hofstede analysis for India shows a large power distance society and all other
measures are relatively moderate. This would be indicative of the fact that India is in the midst of
change. The traditional caste systems has been outlawed, however the large power distance score
indicates that the attitudes still remain.

India has Power Distance (PDI) as the highest Hofstede Dimension for the culture, with a
ranking of 77 compared to a USA’s 40. This Power Distance score for India indicates a high
level of inequality of power and wealth within the society. This condition is not necessarily
subverted upon the population, but rather accepted by the population as a cultural norm.

India has Masculinity as the third highest ranking Hofstede Dimension at 56, with USA at 62.
The higher the country ranks in this Dimension, the greater the gap between values of men and
women. It may also generate a more competitive and assertive female population, although still
less than the male population.

India's lowest ranking Dimension is Uncertainty Avoidance (UAI) at 40, compared to the world
average of 65 and USA,s 46 . On the lower end of this ranking, the culture may be more open to
unstructured ideas and situations. The population may have fewer rules and regulations with
which to attempt control of every unknown and unexpected event or situation, as is the case in
high Uncertainty Avoidance countries.

India is predominantly Hindu, with 81% of the population practicing that religion. Next is
Muslim at 12%, Christian at 2%, and all others within the last 5% of the society.

It has been found that in most cultures, there is a correlation between a country's religion and the
Hofstede Dimension rankings it has. There is only one country with over 50% of its population
practicing the Hindu religion – India.

The Hofstede Dimension that correlates most with the Hindu religion is Power Distance (PDI),
the same as Atheists in China and Muslims. All three have a high level of Power Distance as the
highest correlating cultural Dimension with their religions

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Interestingly enough, India has an individualism score above the world average. This score of 48
is much different from China’s 20. However USA’s score is much higher for this dimension at
91. This indicates a much collectivist outlook in India as compared to greater emphasis on self-
reliance and loose bonds with others in the USA.

Chapter 3

Human Resource Management Issues that Omnitech may face.

India has witnessed a revolution in the field of Human Resource; it has gone from being just a
support function to being a strategic partner in the growth of businesses. It has transformed itself
being merely Personnel Management – maintain records and ensure statutory compliances, while

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doing the bare minimum to keep employee satisfaction on an even keel to being an integrated
part of the corporate machinery.

The HR function of 21st century India has made a transition from being ‘behind-the scenes’
support appendage to becoming the critical differentiator in business. Rapid globalization has
made companies realize people are the key to growth, the only strategic resource that any
enterprise truly needs. This has led to companies routinely using their innovative HR practices as
their USP (Unique Selling Proposition) to keep up with the times in the wake of a rapidly
changing labor landscape. Companies now recognize that a ‘Highly engaged employee’ the key
to success, across business sectors.

An analysis of the main HR problems in India could be done based on the certain challenges that
mould the contours of the various sub-functions of HR. The ‘attract, motivate and retain’ mantra
that the HR function seeks to deliver for the organization are based on these HR sub-functions.

3.2 Pay and international Employee relations

To design an appropriate reward strategy for its Indian employees, Omnitech will be required to
take a number of factors into consideration. These will include knowledge of Indian laws,
customs, environment, and employment practices. Familiarity of currency relationships, effect of
inflation on compensation and an understanding of the allowances appropriate to India must also
be studied. India has many as 45 labour laws at national level and close to four times that at the
level of state governments (Kaushik 2006). The table below shows some of the more important
laws a human resource department in India needs to consider with respect to compensation.

Fig2 : Indian employment legislation and reward mechanisms

Labour Law Context

Minimum Wages Act 1948 Prescribes minimum wages for all employees
in all establishments or working home in
certain employment specified in the schedule
of the Act.

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 Payment of Wages Act 1936 Regulates issues relating to time limits within
which wages shall be distributed to employees
and that no deductions other than those
authorized by the law and made by the
employers.
Child Labour (Prohibition & Regulation) Act Prohibits the engagement of children in certain
1986 employment and to regulate the conditions of
work of children in certain other employments.
Apprentices Act 1961 Provides regulation and control of training of
apprentices.
Payment of Bonus Act 1965 Provides the payment of bonuses to person
employed in certain establishments on the basis
of profits or on the basis of production or
productivity. The Act is applicable to
establishments employing at least 20 people.
Maternity Benefits Act 1961 Regulates the employment of women in certain
establishments for a prescribed period before
and after child birth and provides certain other
benefits.
Workmen’s Compensation Act 1923 Compensation shall be provided to a workman
for any injury suffered during the course of his
employment or to his dependants in the case of
his death.

Source: Various including www.citehr.com/80534-labour-laws-india-html

It should be noted that the minimum wage in India is 2.11 GBP while in the USA it is 4.25 GBP.
Therefore Omnitech is getting great labour minded people and high standard of work for almost
half the cost they will have in the USA. It also cost less to insure employees in India (10 GBP)
than the USA (25 GBP).

3.3 Performance Appraisals

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Omnitech will need to employ a formalized and systematic approach to assessing an employee’s
performance, highlight potential and identify training and development needs. A comprehensive
appraisal system can provide the basis for key managerial decisions such as those concerning the
allocation of duties and responsibilities, pay, levels of supervision, promotions, training and
development etc.

In India however, performance appraisal is less emphasized. There is relatively coverage of

employees under a formal performance appraisal. India is very seniority based, so that the older a
person, the more respectful and rewarding the work is expected to become, arguably restricting
the perceived relevance of performance appraisal to career progression (Chatterjee, 2007). The
‘reservation system’, which seeks to allocate employment opportunities to specific social groups
( e.g. 15% of jobs must go to scheduled casts) may be another factor restricting career planning
within Indian organizations.

However Omnitech is not an Indian Organization. Therefore it can pioneer the use of
performance appraisals in India. The appendix section of this report has an example of an
appraisal system that can be used.

3.4 International Training and Development

Training and development increases in complexity as a company moves abroad. Type of training
will depend on a number of factors:

 The degree to which management is centralized;

 Type of workers employed in subsidiaries or joint ventures;

 The importance of branding and the extent to which employees are expected to reflect the
brand;

 The cultural expectations of training.

One can employ a centralized based training. This way supplier, employees and distributors
are aware of the brand image that needs to be communicated. A training program can be set

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up centrally, and then translated and delivered to all suppliers, subsidiaries and distributors.
In the case of Omnitech however, a more poly-centric approach should be taken, this way the
training will be far more local and more in line with local culture.

Problems may arise with team working. In a cross cultural context, it is not only personality
that needs to be taken into consideration, but also very real cultural differences and
approaches between team members. Omnitech can deal with is problem by ensuring that
employees sent abroad are fully immersed in foreign culture. An extensive training program
can be designed to teach employees about Indian Culture and customs, work habits, etc. so
that they can interact more effectively with their Indian Colleagues.

Chapter 4

Conclusion

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Obliviously trying to set up business in another country is not as easy as it sounds. In the
case of Omnitech Systems Inc., looking to set up a subsidiary in India can be a difficult
experience if they do not take into account the issues discussed in the previous 2 chapters.

India is very different from the United States in terms of culture, labour laws, and
religion etc. Omnitech must research these aspects properly if they are to succeed in
India.

The advantages however will be of great benefit to Omnitech. The biggest one will be the
large skilled labour force at cheaper employment wages. India has a very large pool of
skilled and knowledgeable university graduates (especially in the field of Information
Technology which is perfect for a data management company such as Omnitech) that
cannot find employment. I honestly believe that Omnitech can attract and keep these
skilled workers and win the hearts and minds of the Indian Skilled Workforce.

Appendix

Example of a performance appraisal Omnitech can use:

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Sample Appraisal Form (to be filled by the employee)

Employee Name
Position/Title
Division
Evaluation Period
Line Manager/Appraiser
How would you rate yourself on the Following

Max
Attributes Score
marks
Quantity of work    
Meeting job requirements on a timely basis   10
Quality of work    
Effectiveness & Accuracy   10
Knowledge of job    
extent to which the employee knows and demonstrates all phases of assigned
  10
work
Team Spirit   10
Decision Making Ability   10
Attendance, reliability and dependability   10
Planning and organizational effectiveness    
Meeting deadlines, managing resources, and balancing tasks.   10
Communication Skills   10
Initiative and creativity   10
Supervisory ability (if applicable)   10

What do I consider to be the important abilities that my job requires?

What are my major accomplishments for the past year?
What have I done for my personal and/or professional development
Employers Comments
Employee Signature/Date
Evaluator Signature/Date
Authorized Unit Administrator Signature/Date (if applicable)

Bibliography and References

Books

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1. Wall, S., Minocha, S., & Rees, B., 2010, International Business. 3rd edition. Essex UK:
Prentice Hall.

2. Wall, S,. & Griffiths A,. 2007. Applied Economics. 11th edition. Essex UK: Prentice Hall

3. Wall, S,. & Griffiths A,. 2005. Economics for Business and Management: a student text.
1st edition. Essex UK: Prentice Hall.

4. Strauss, G,. Styles, L,. 1980 Personnel: the Human Problems of Management. 4th edition.
Essex UK: Prentice Hall

Websites

1. Dass, S,. 2009. Changing HR policies in India

Available at: http://www.chillibreeze.com/articles_various/HR-policies-in-India.asp

[Accessed 12 November 2009]

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