Doing business in India: cross-cultural issues in managing human resources

Given the increasing global significance of Indian markets, multi-national corporations (MNCs) are keen to do business here; however, cross-cultural issues can be barriers in managing human resources (HR) in international businesses. The purpose of this paper is to understand how MNCs can successfully do business in India, with special reference to cross-cultural issues and management of HR.

In-depth interviews were conducted with executives working in MNCs and Indian MNCs based in India and abroad. Respondents were senior professionals, working in diverse sectors and had global work experience for about five years. Majority of the interviews were conducted in Delhi and some were conducted in Singapore. Interviews responses were qualitatively analysed.

Findings reveal that MNCs wanting to do business in India need to have a long-term business focus, a well-defined expatriate policy and deep pockets to experience growth and payoffs on investments. In order to be successful, they need to understand India culturally and geographically, build trusting relationships with HCNs, partner with local players who are familiar with domestic challenges and localize the best practices of the west. Attrition and retention being the major challenges in India, compensation alone is not enough to attract and retain talent. Understanding Indian psyche and offering individuals a unique value proposition such as challenging roles and professional growth is imperative for creating an attractive employer brand in order to win the war for talent.

Though sample size is small, this research has implications for MNCs operating in India or planning to set up Indian operations.

Inferences have been drawn out of primary data collected from senior executives who were handling core MNC operations and sharing their wealth of experience. The findings give fresh insights into the whole issues of MNC management involving cross-cultural and HR issues.