Robert A. Compton
Why Am I Going to India?
November 7, 2005
I get asked that question a lot. The answer is simple: There is an economic tectonic shift taking place and I want to see it up close for myself.
The moment that defined this shift for me occurred about two years ago. The state of Indiana, where I'd lived and worked for many years, awarded a multi-million software development contract to an Indian company called Tata Consulting.
This would not have seemed out of the ordinary, except for the fact that Indiana's economy was struggling and the government went all the way to India to spend Indiana taxpayer money. This in a state that graduates more Computer Science majors per capita than any other.
How could the bid from Tata be so compelling that the governor risked the public's wrath, which rained down on him? And the contract was subsequently rescinded.
I started to research that question and I learned that just because I do know something big is happening, doesn't mean it's not—or something like that.
What I discovered for myself over the ensuing twenty-four months and what Thomas Friedman articulated in his book, The World Is Flat, earlier this year is that in the past ten years India and China in particular and Eastern Europe, South America, Southeast Asia, etc. in general had opened their economies to foreign investment and unleashed a highly motivated, well-educated, and very large “middle class” to compete beyond low-wage manufacturing jobs. In the span of ten years, three billion new capitalists joined the world economy.
The numbers are by now well known, but they were news to me a year ago: China graduating 500,000 engineers annually, India graduating 250,000 engineers; the U.S. graduating about 70,000, a significant number of whom are studying abroad in China, India, Singapore, Taiwan, etc.
In fact, in engineering, science, medicine and even the law India graduates four to five times as many students as the U.S. China alone graduates 1,000,000 more college student per year than the U.S.
Think about those numbers and multiply them by 5, 10 or 15 years and one can get a bit concerned about how competitive the job market is going to be in 2020.
But wait. The news gets worse. Not only are India and China turning out five times as many engineering graduates; the starting salary for Indian engineers is about 20 percent of the starting salary for a freshly minted U.S. engineer. With China, the salaries are about 10 percent.
So are the Indian engineers only 20 percent as smart at calculus? Or do they only work one fifth as hard as a U.S. engineer? That has not been my observation from a distance. It appears that Indian and Chinese engineers are every bit as smart as their American counterparts and actually seem to have a stronger work ethic.
Why visit India and not China? While I believe China will dominate the global economy after 2030— and China is maybe next year's trip— it seems to me that India will be dominant until then.
India has several natural advantages that China lacks for now. For starters, India is the largest English-speaking democracy in the world, with 1.1 billion people. Due to British rule they share the same legal underpinnings as the U.S.—although they haven't discovered the job-creation and wealth-transfer possibilities of the U.S. bar.
India's middle class, which numbers about 200 million, enjoys not only a national primary and secondary curriculum of very high standards (compared to the U.S.); the parents are deeply involved in the child's education and there is a very strong culture to get ahead—get a college degree.
In India, students and parents are held accountable for academic performance. Low achievement reflects negatively on the parents—not on the teachers, or the government, or society. Low achievement also means a child will not be promoted to the next grade. No Failing Child Gets Ahead is India's emphasis, rather than No Child Left Behind.
On Friday nights, when U.S. high school students are at football games with friends, Indian students are at home studying, because Saturday is a school day. When U.S. students head home at 3:00 p.m., Indian students still have two more hours of school. When U.S. students are in their first two months of summer break, Indian students are still at school.
When U.S. students wonder where “American” jobs went, Indian students will be gainfully employed.
So this is what I've read and heard about India. On Wednesday I start the journey to find out for myself: What is going on in India?
Robert A. Compton has had a 25 year career creating, financing and managing new ventures. Entrepreneur, angel investor and professional venture capitalist, he has been active in a wide range of businesses including software, telecommunication services, healthcare services and medical devices. Compton has served on more than three dozen corporate and philanthropic boards, including Allscripts Healthcare Solutions, Interactive Intelligence, Sofamor Danek Group, the Ewing Marion Kauffman Foundation and the Plough Foundation. He holds an MBA from Harvard Business School, a BA from Principia College and an Honorary Doctorate from the Rose-Hulman Institute of Technology. [www.robertacompton.com]
(Book is written in Blog Format and has over 70 full color images)
Indian Salesmanship - The World's Best
Glen and I consider ourselves pretty capable salesmen, but we were repeatedly humbled in the presence of sales greatness in India.
Regardless of city, the Indian sales person has an array of tried-and-true techniques for what I call the Indian structured sales call.
1- People Do Business with People They Like - Shopping is a process, not an event, in India. Every shop we entered insisted we sit, have tea or coffee and some food, and visit a bit before the clerks started selling. After a while I got quite used to this and enjoyed these conversations of getting to know the owner.
2- Entry Level Price Point - Every Indian vendor, regardless of product, starts their pitch with an initially good-looking product one that is priced at a point that sounds very appealing.
3- The Upsell - As one starts to make the buy decision, the “better quality” product, product two, is presented. Now, while product one looked perfectly fine by itself, in comparison, product two puts it to shame.
4- The Best Quality - Having settled on product two, the final, top-of-the-line, best quality product three appears—and you have no choice but to buy it.
5- The "Just for Looking Only" Gambit - This is the hail mary of Indian sales: the vastly superior product four at ten times the price of product three. It is generally introduced as “now this is art, not merchandise.” I never succumbed to this ploy, but my guess is, one out ten times, someone buys “art.”
6 - The Cross Sell - No Indian vendor misses a chance to follow the initial purchase with a companion product—earrings to go with the necklace, fine Kashmiri scarves to go with the sari, a small carpet for your closet to go with the large bedroom carpet. I can attest to the sales uplift this strategy produces.
7 - The Kingfisher Variation - When the customer declines tea, the store offers a glass of the rich, tasty Indian Kingfisher beer. This conveys great hospitality and loosens the customer's purchase inhibitions. I saw this used only once, but to great affect. (Refer to my post Damn, They Sell Carpets in Jaipur Too.)
8 – “Let Me Introduce My Father” - Now they wheel out the BIG GUN of Indian selling: DAD! While you thought you were dealing with the forty-ish owner, the master is about to go to work. Don't worry, it’s over very quickly….
9 - The Marble Sales Inversion - This is important. The only exception to the Indian structured sales call is in hand-cut inlaid marble. Here they start with the largest and most expensive pieces. The reason is, if they showed you the cheap stuff first, which is exquisite, you'd spend a tenth of what you might spend. Ask to see all three showrooms BEFORE you make the first marble purchase. I know what I'm talking about. I have a hand-cut, inlaid marble table arriving any day now.
There are twelve more steps to the Indian structured sales call, which are contained in my new book, My Father Would Like You to Have This Beer.
