JOIN USDesi startups on global journey
Not even the most optimistic economist in pre-liberalisation India could have visualised an era of global Indian companies that would see Indian players grab sizeable global market shares. On the contrary, when the economy opened up in 1991, many foresaw Indian companies going bust or being taken over by MNCs. However, in liberalising and opening up the economy, India unleashed an entrepreneurial energy that has become the driver of growth.
A large working age population and a rapidly expanding middle class has spawned an era of innovative Indian start-ups that are redefining the rules of business and service delivery. Having spent several years building up their market value in India, these young, confident, homegrown companies are now looking firmly at making inroads in foreign markets.
Major Indian family-led businesses such as the Tatas, Mahindra & Mahindra, Reliance and Aditya Birla Group have already left their footprint on the global consumer market. The past few years have seen the emergence of a series of new competitive Indian start-ups with long-term vision and resilience. Be it e-commerce, tourism and IT-based business solutions, these new age start-ups are not only building capital but are also changing the way business is done in India.
Bengaluru-based unicorn Ola, the taxi app service, has launched services in Australia, New Zealand and the UK. OYO has already grabbed a substantial portion of the lucrative Chinese market with 180,000 rooms in that country. PayTm is offering different services in Canadian and Japanese markets. Online travel agent ClearTrip has established profitable businesses in the Middle East. Food delivery agent Zomato is operating in Dubai, Melbourne, Istanbul, Prague, Toronto, etc.
A number of factors have prompted this surge of Indian start-ups going global. The quest for expansion and global business domination has propelled this trend. Having built up their competencies in a tough and highly competitive market like India, these companies have acquired sufficient capability to crack other markets.
Make no mistake, India is a very tough market for start-ups with an unwavering requirement of high-quality products and services at low prices. At the same time, the diversity of markets within India has equipped these organisations with the resilience and competitive edge required for entering newer markets.
The presence of a large number of international giants in the Indian space further heats up competition for Indian players. Ola has to constantly evolve its strategies to fend off competition from the global giant Uber; Amazon is constantly breathing down the neck of Flipkart. This not only forces the Indian companies to look for revenue opportunities in international markets that have greater purchasing power, but also prepares them for global dominance.
Challenges and strategies
Yes, India is home to a buzzing start-up ecosystem. However, it is not without its flaws. One of the major shortcomings that bedevil it is low emphasis on innovation. A recent study by the IBM Institute for Business Value found that close to 90% of Indian start-ups fail within the first five years due to lack of innovation. While it is justified to be proud of the achievements of our globetrotting start-ups, it is also important to understand what needs to be done to churn out more such powerhouse companies.
Some 77% of the venture capitalists who took part in the above-mentioned survey believed that Indian start-ups lag when it comes to offering novel technological solutions. This, coupled with outdated business models, lack of skilled workers, inadequate funding and mentoring and a habit of blindly copying Western business models makes it difficult for a majority of them to thrive.
With its large human resource and buzzing entrepreneurial energy, India has a huge potential to churn out more successful start-ups and unicorns. A focus on constant innovation will make that happen. Innovation implies a constant progress or improvement in product models, technology and delivery mechanisms. Creating unique business models that take into account the nuances of every market is another key component of business innovation.
Notably, India filed just 1,423 international patents in 2015-16 as compared to China which filed 29,846 and Japan 44,235. This is an indication of lack of innovation and R&D in the Indian market. China, on the other hand, has strong indigenous companies that blunt global competition. China’s very own Baidu, one of the largest Artificial Intelligence and internet-based companies in the world, rivals Google. Alibaba looks Amazon in the eye.
Local innovations also need to focus on societal problems such as healthcare, education, transportation, sanitation, clean energy and other such pressing issues to have a wider social impact on the economy.
Similarly, it is important to advance to global markets with in-depth homework and readiness to build strategic tie-ups. In 2016, Zomato had to pull out from nine international markets to regain its profitability balance. It is also important to advance with caution, one market at a time.
(The writer is President, International Operations, MK Jokai Group)