When preparing to establish a satellite office in India, these oversights can make the process more difficult and less successful. This article explains how to avoid these missteps.
India has become the favored destination for American companies looking to set up Satellite Offices or Global Capability Centers. According to an EY report, India is home to about 1,550 such offices in 2023, and this is expected to rise to approximately 2,400 by 2030. The primary reason for this growth is the availability of skilled professionals, particularly in areas like accounting and technology where the U.S. experiences talent shortages.
While most organizations have become adept at managing global teams, many continue to make same common mistakes when expanding into India. These missteps, often rooted in cultural and operational nuances, end up creating several avoidable challenges for them in India.
This article aims to highlight these common mistakes, explaining what they are, why they occur, and how to avoid them. Armed with this knowledge, firms can better navigate the intricacies of establishing a successful office in India and unlock the full potential of their new team.
Establishing an office in a new country, such as India, demands a solid grasp of its culture. A common starting point for many companies is to recognize India's prominent cultural customs. For instance, acknowledging that many Indians consider cows as sacred is a key understanding.
While these insights are crucial in building amicable relations with your team in India, they only scratch the surface. To get the desired results from your India team, a deeper comprehension of cultural intricacies is essential.
The key is to understand and bridge the gap between your company's work culture and India's corporate culture. Take, for example, the culture of asking questions in the workplace. In most organizations here in the US, asking questions to leadership is not only encouraged but seen as a sign of engagement. The absence of questions often signals clarity and understanding. Contrarily, in India, the age-old hierarchical norms often deter individuals from asking questions to superiors in public forums, resulting in post-meeting floods of emails seeking clarifications. This cultural quirk inadvertently leads to inefficiencies, misunderstandings, and, at times, even frustration.
It is essential, therefore, to invest time and resources into educating both teams on these deeper-level cultural differences. Equipped with this deeper understanding, firms can ensure smoother communication, reduced friction, and an environment conducive to productivity and mutual growth.
While many organizations looking to open an India office are aware of the challenges tied to employee retention in India, they often underestimate the depth and complexity of these issues. This oversight or underestimation can lead to unanticipated obstacles, even as they tap into India's promising talent landscape.
Three key factors contribute to this:
In summary, while the Indian talent landscape presents challenges in the retention sphere, its potential remains unparalleled, especially when compared with the talent scenario in the U.S. The key lies in understanding and adapting to these unique retention challenges rather than resisting or overlooking them.
Your new team in India is far away. They have different hours, different cultural backgrounds, and different communication styles. It may seem best to continue with business as normal, letting your U.S. team handle core tasks and redirect only the overflow to India. Unfortunately, this is likely to impede your satellite office’s chance for success right from the outset.
Your company is making a considerable investment in getting a new office set up in India. The professionals you're hiring in India bring expertise comparable to your U.S. team. It's essential to acknowledge this and recognize that the very reason you are expanding your offices across the ocean is to leverage exceptional talent.
Assigning trivial tasks to a seasoned professional, especially when they've joined a renowned company, could dampen their enthusiasm. Instead of shielding your new team from the core work, aim to integrate. Including them in your core projects will ensure cohesion across your workforce and result in more efficient training for your new employees. Utilizing this new potential is likely to result in a better return on your investment in a much shorter period.
While setting up operations in a new country, it's natural to maintain the same managerial playbook you've established at home. However, in the initial stages of your expansion to India, this could prove to be a misstep. In the first year, an increased level of supervision is not just recommended but essential.
Such close monitoring achieves multiple objectives. It offers invaluable insight into the processes that resonate with the new team and those that may require modifications. More than just oversight, these frequent interactions lay the foundation for a robust and trusting relationship. They offer ample opportunities for coaching, addressing concerns, and clarifying doubts, thus ensuring that the team feels valued and understood.
Starting with regular check-ins, perhaps daily or three times a week, provides a proactive approach that will enable you to iron out any kinks in the workflow. While this might seem time-consuming initially, the long-term benefits in terms of team cohesion, productivity, and alignment with company goals are undeniable. As the team becomes more attuned to the company's operations and culture, you can gradually reduce the frequency of these check-ins to a pace that aligns with both teams' comfort and efficiency.
While many companies diligently provide fundamental training on client interactions, creating presentations, using designated templates, and interfacing with senior leadership, the limited depth of this initial education often leaves much to be desired. The ins and outs that are second nature to you may not be as obvious to them, and it is important for your entire team to understand this.
Ensure your new employees are fully familiar not only with how your company communicates with clients but also with which communication methods are appropriate for certain situations. For example, your onboarding training should incorporate instructions on when it is best to send an email, phone a client or coworker, or connect through direct messaging.
To further ensure seamless collaboration, explain how to escalate problems with clients, coworkers, or superiors. How does your company navigate building relationships and chatting during work hours? It is possible that what makes your company a good place to work—small talk before meetings, for example, or using nicknames—will be completely alien to your newest employees.
Revisit these points regularly or when you notice any concerns.
Despite a reputation for bluntness, we can become preoccupied with not offending others, especially people from different cultures. Unfortunately, adopting this response with your new team in India can have negative results for the teams in both countries.
Ensure your communication openly discusses both the positives of their job performance and any areas where it is lacking. The employees cannot fix problems with their performance or work style if their supervisor is vague about these problems for fear of causing offense.
Some stumbles during the first months are normal, and not being straightforward about these issues will lead to frustration on the U.S. side and confusion on the other if the problem continues. Trust that your team in India wants to hear how they can improve, and ensure your team knows they are free to give constructive feedback.
Inevitably, most correspondence with your satellite office in India will be through email, messaging, and phone or video calls. However, the ease with which we can communicate across the miles does not discount the importance of being on-site once in a while.
If your office in India employs more than 10 people, someone on your leadership team should visit in person once a year. Visiting the office in India will provide a firsthand view of how your investment is progressing. Is the office space suitable? Are the employees building their own supportive culture? How does the workday in India differ from the workday in the U.S., and how can that inform future policies?
Making the trip to also solidifies your dedication to this extension of your office—your overseas team will feel like part of the company, not just a distant add-on. This improves morale, dedication, and retention. The advantages to regular visits are numerous and should not be undervalued.
When venturing into a new market like India, it's tempting to assume that tried and tested policies from your home country can simply be duplicated. However, not localizing these policies can lead to unintended consequences. The need for localization goes beyond mere compliance; it's about ensuring that the policies not only meet legal requirements but also effectively achieve their intended goals.
Take, for instance, the common U.S. practice of mandating reference checks for all new hires. Such a policy might seem standard, but in the Indian context, it could prove problematic. There have been instances where disgruntled employers provide unfavorable references simply to deter an employee from leaving. Should you rigidly stick to this familiar policy in India, you might find yourself struggling to build a team.
A more effective approach in the Indian context would be to implement a probationary period for new hires. New employees undergo a 60- or 90-day probation, during which they can be released for any reason, be it poor performance, cultural misalignment, skill mismatches, and more, all without the associated legal liabilities. This probation period serves as the equivalent to the "at-will" employment common in the U.S. and has been successfully adopted by many top-tier U.S. companies operating in India.
Such necessary modifications aren't limited to just one or two policies. Many of your existing guidelines might need adjustments to fit the Indian landscape.
The process of registering an entity and ensuring all ongoing compliance requirements are met can quickly become the most exasperating part of the India journey. The compliance framework in India is not just multifaceted, but it is also ever-evolving. Moreover, the risks are high. Missteps, even unintentional ones, can lead to substantial penalties and severely damage a company's reputation. This is not just about monetary costs but also the time and resources diverted from core business functions.
With a team of fewer than 25 members, the benefits may not even outweigh the complexities and costs associated with meeting these requirements.
For businesses looking to avoid these pitfalls, partnering with an Employer of Record (EOR) in India can provide an excellent solution. Using an EOR eliminates the need to register your own entity. They handle all compliance intricacies and assume liability for any missteps. While there's a fee involved, the peace of mind and reduced administrative burden often justify the cost.
The TBI model involves four steps: starting with a small team, using an EOR instead of setting up your own entity, renting space in a co-working space instead of spending on your own space, and getting consulting support. The first three steps make sure your capital expenditures are kept to a minimum, as well as your legal liabilities. The consulting support ensures you get the advice you need to navigate the legal, cultural, and operational complexities of India to get the desired results.
The solutions highlighted in this article can help navigate potential pitfalls organizations are likely to encounter in India. However, your firm’s success depends on a formula that is as unique as your organization. This is a complex initiative with a lot of moving parts, and that is why we highly recommend adopting the test-before-you-invest (TBI) approach.
The TBI model advocates for a phased, low-risk entry into India. It emphasizes starting with a modest team, utilizing an Employer of Record (EOR) rather than creating a new entity, leveraging co-working spaces to minimize overheads, and seeking expert consulting guidance. This approach ensures minimized capital expenditure and legal liabilities. Moreover, by tapping into consulting expertise, you're better equipped to address the unique legal, cultural, and operational nuances of the Indian market.
Employing this pared-down business model for the first two years enables you to confirm that an India office is the right choice for your company, all without overextending your comfort level or resources.
To delve deeper into the intricacies of the TBI strategy and its potential benefits, consider exploring our detailed article: A Low-Risk, Low-Capital Method to Test If an India Office Will Work for You.
The pitfalls we have outlined above make it clear that there are many challenges to launching a satellite office in India. Attempting to navigate the strategy on your own means dealing with a complicated collection of vendors in India and online advice that is likely to result in a mishmash of accurate, contradictory, and entirely false information and no way to determine which is which.
When you’re delving into a new pursuit, it makes sense to bring in experts who understand the intricacies of that niche. To most ensure your success in this promising endeavor, it’s best to find a single knowledgeable source that understands the corporate culture of both the U.S. and India.
Working with June15 Consulting means working with experts who can advise and modify the strategy to perfectly suit the unique intricacies of your organization. Our individualized, focused approach will help simplify the entire process.
Our on-demand model means we’re available to weigh in on and remedy all the small details that can go wrong. We will guide you through the initial set-up and hiring processes, as well as the daily nuances of running your satellite office. Reach out to our team to discover how our expertise can fine-tune your foray into India.
Have a question about our services? Talk to us today to find out how an India office can help your organization.
