The Biz of Coding

Managing India Centers of Software Companies – International, Multinational, Global, or Transnational Model?

by Ujwal Tickoo on July 14th, 2008

India Development Centers (IDCs) of Software firms like Microsoft, Yahoo!, Adobe, Google – are basically run on a Global firm model. IDCs are  steeped in the philosophy of making and selling “the same thing, the same way, everywhere”. After all Microsoft Windows, Google Search, and Yahoo! Messenger are globally used homogenous products, so IDCs would be primarily focused on developing such globally deployable homogenous technologies.

Secondarily, the India Development Centers also do some local modifications such as Indian language versions of portals (Google Search in Hindi), content, fonts, user interfaces (Microsoft Office in Indian Languages - Microsoft Bhasha site) etc.

The revenues from Indian operations for such firms such as Microsoft, Yahoo!, and Adobe are so small that they are not reported (trying Googling for Microsoft India Revenue); thus giving subsidiaries any more than limited independence would perhaps be not feasible.

For IDC employees there is a tradeoff between working on "Globally Impactful" products and having a long term career on Leadership and Management Tracks. There are negative fallouts for IDC employees of being a part of a subsidiary that is primarily "headquarter managed":

As I had mentioned about Global organizations in my earlier post there is a strong need to centralize strategic leadership and decision making at the "headquarters" and for Software firms like Microsoft, Google etc these are in the US:

Global
This kind multi-nation firm emerges from an approach of making and selling “the same thing, the same way, everywhere” as popularized by Theodore Levitt.
The approach could be an evolution from the second stage of  being a “Multinational” firm or it could result directly from a core internationalization philosophy. A good example is P&G. where even the actors in Ads don’t “speak” any language – thus the same Advertisement for the same product is displayed world-wide with just voice-overs and text captions.
On the other hand as an evolutionary step the multinational firm finds itself very responsive to different national markets but finds inefficiencies creeping up. Proliferation of products designed for local markets leads to losses of efficiency in design, manufacturing infrastructure, logistics, distribution and other tasks.

Relationship between foreign and home-country operations
These companies think about creating products for a world market and manufacturing them on a global scale in a few highly efficient plants, often at the corporate center. Global efficiency rather than local responsiveness is the decisive theme.

Management of foreign operations
Foreign operations are subservient to Headquarters. Headquarters become the center of strategic thinking and planning with considerable centralization of R&D, marketing planning, management etc.

POSTED IN: Globalization