Hindustan Lever's announcement last week of its new CEO, Douglas Baillie, interrupts a 45-year tradition of Indian managers heading India's premier FMCG company, and is the latest addition to a long list of expatriate managers at the top of Indian companies. These include not only local subsidiaries of global corporations but also companies with a predominantly Indian shareholding or a domestic promoter base. From sectors like aviation, hotels, information technology, consumer durables and banking, to even manufacturing segments like automobiles, expatriate CEOs are more in charge than at any time since the Indianisation of sterling companies became effective in the 1960s. Even though in many multinational FMCG companies like Colgate and Procter & Gamble (P&G), there have usually (but not always) been expat CEOs, in others like Coca-Cola India and Hindustan Lever the leadership has moved back from Indian managers. | |
| There are several reasons for companies in India to look for expat leadership. One, there has been a thinning out of top management talent in Indian operations as new sectors have (like telecom, insurance and aviation) opened up and demand for qualified good managers has grown. With many fast-growing Indian companies and family business groups like Bharti, Reliance, the Tatas, and the Birlas willing to pay global compensation to attract the best talent, there has been an outward movement from the top echelons of MNC subsidiaries. Second, there are fewer restrictions and more favourable tax and other government policies that enable the hiring and retaining of expat managers. Third, with India and China emerging as the future growth markets for MNCs across the world, a stint in either is a must for those who aspire to get to the top. This is a far cry from the sixties and seventies, when a stint in India for an expat manager was often considered a relegation. Multinationals are also aligning their Indian operations, strategies and human resource plans with international templates and feel that expat managers can lead this integration better. |
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| This is a strategy change for many MNCs from the nineties, when many of them were establishing their operations in the country and wanted those who were familiar with the local environment to start the new operations. The same logic led to entry through a joint venture with a local partner. With the market developing and the local operations stabilising and churning out profits, many companies feel that their Indian operations are not that different from those in other geographies. In companies like Coca-Cola and Hindustan Lever, recent experiences with Indian managers have also not been entirely satisfactory. Fourth, industries where the private sector has newly entered, like aviation, are not only plagued by a shortage of trained manpower at all levels, the new entrants want to quickly go international. These companies need to have a truly global culture and service standards and may find expat CEOs the best bet for successful delivery (though some of the chosen expats have tended to leave before operations even got started). Then, companies like Jet Airways and Ranbaxy are going international and expat managers can bring in a greater understanding of international markets. Further, many Indian business groups now operate on a global scale or have major overseas acquisition plans and are therefore able to attract foreign talent. |
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| Finally, this trend is a manifestation of the internationalisation of top talent and the obverse of the trend of Indian managers heading global corporations, like Arun Sarin at Vodafone and Indra Nooyi at Pepsico. It is now becoming a two-way process, something that is likely to continue as the search for talent as well as corporate functioning become truly global. |
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