Giants Awakening: The Story of Indian Companies Going Global

Opening Scene: Mumbai, 1991
Picture the CEO of a mid-sized Indian pharmaceutical company sitting in his Mumbai office. On his desk lies a newspaper announcing India’s economic liberalization. “We either adapt or die,” he thinks, looking at his company’s modest export figures. Little does he know that within two decades, Indian companies like his would be acquiring European pharmaceutical giants and competing globally.

This transformation – from protected local players to global challengers – is one of the most fascinating business stories of our time. Let’s unpack how it happened…

Act 1: Breaking Free (1970s-1991)

The Careful First Steps

Think of Indian companies in this era like cautious swimmers testing international waters:

• Small family businesses ventured out first
• They stayed close to familiar shores (neighboring developing countries)
• They preferred having local partners hold their hand (minority ownership)
• Total overseas investment was just $90 million by 1986 – pocket change in global business terms

Why so cautious? There were three key reasons:

1. Government restrictions (like limiting cash transfers)
2. Protected domestic market (why venture out when home is comfortable?)
3. Limited technological capabilities (still learning to compete globally)

Act 2: The Great Leap Forward (1991-2006)

When the Tigers Learned to Roar

The data tells an extraordinary story of transformation. Imagine watching a cautious local player suddenly becoming a confident global athlete. That’s what happened to Indian companies after 1991:

The Numbers Tell the Tale

• From 187 companies investing abroad in 1991 to 1,700 by 2003
• Investment growing from millions to billions ($16.4 billion by 2006)
• The once-timid swimmers were now diving into the deep end of global business

But What Changed?

Scene: Bangalore, Late 1990s A young software engineer at Infosys explains to his parents why he’s moving to America: “We’re not just sending code anymore – we’re building global delivery centers. Indian IT isn’t just about cheap labor; it’s about innovative solutions.”

Three fundamental shifts made this possible::

1. From Followers to Leaders

• Old Way: Making cheaper versions of Western products
• New Way: Creating innovative solutions
• Example: Indian pharma companies moved from copying drugs to discovering them

2. From East to West

• Old Pattern: Mainly investing in developing countries
• New Reality: Boldly entering developed markets
• The Book’s Data: 41% of investments now in developed countries

3. From Partners to Owners

• Then: Minority partnerships (like having a small say in a big conversation)
• Now: Majority control (conducting the entire orchestra)
• The Shift: 70% of ventures had 80%+ ownership by 2001

Act 3: The IT Revolution – From Back Office to Global Leadership

Scene: A TCS Office, 1968
Eight employees working in a small division of Tata Group probably never imagined they were planting the seed of a global IT giant. This remarkable journey is characterized by three acts:

The Three Acts of TCS’s Global Play

Act One: Learning the Ropes (1968-1980s)

• First international client in 1974 (Burroughs)
• Started like a curious student: doing data processing
• Built capabilities project by project
• Opened first US office in 1979 – just a small foothold

Act Two: Building Momentum (1990s)

• Y2K became the golden opportunity
• From student to specialist
• Global delivery model takes shape
• The book shows: Exports became 70% of revenue

Act Three: Global Leadership (2000s) By 2006, the numbers tell a dramatic story:

• Operations in 47 countries
• Revenue: $2.5 billion
• Team: 62,832 people
• Foreign subsidiaries generating 57.5% of sales

The Secret Sauce Key ingredients that made this possible:

1. The India Advantage

• Like a master chef with unique spices:
  • Huge domestic market for testing products
  • Large talent pool at competitive costs
  • English language skills
  • Technical education system
  • Cost advantage

2. Government’s Role Think of it as building the restaurant:

• Software Technology Parks
• Satellite communications
• Tax incentives
• Export promotion

3. Innovation in Business Model Not just cooking Indian food abroad, but creating a new cuisine:

• Global delivery centers
• 24/7 operations
• Quality processes
• Client relationships

4. The Global Opportunity

• Rising costs in developed markets
• Growing emerging market opportunities
• Technology enabling global operations
• Increasing acceptance of emerging market brands

Act 4: The Acquisition Wave – From Buyers to Bargain-Hunters

Scene: London, 2007
Notice a remarkable shift: Indian companies were no longer just competing with global giants – they were buying them. Let’s unpack this transformation through the data:

The Numbers Tell a Story

• 2000: 33 acquisitions worth $896 million
• 2006: 177 deals worth $7.6 billion
• By August 2007: 123 deals worth $32.8 billion

Who’s Buying What? Three main players emerge:

1. Tech Tigers

• Leading the pack with 84% of service sector deals
• Example: Wipro buying Infocrossing for $600 million
• Strategy: Buying customer access and new capabilities

2. Pharma Pioneers

• 30.85% of manufacturing sector deals
• Looking for: Research facilities, brands, market access
• Goal: Moving up the value chain

3. Metal Mavens

• Largest deals by value
• Example: Tata Steel-Corus ($13.7 billion)
• Motivation: Global scale and reach

Where Are They Shopping? The players show a clear preference:

• 76% of acquisitions in developed markets
• USA: The favorite destination (34.2%)
• UK: Second favorite (12.7%)

Why This Matters Three key impacts stand out:

1. For Indian Companies

• Instant market access
• Technology acquisition
• Global scale
• Brand recognition

2. For Host Countries

• Fresh investment
• Innovation
• Competition
• Job preservation

3. For India

• Technology gains
• Export growth
• Management expertise
• Global recognition

Act 5: The Home Run – Impact on India

Scene: A Factory Floor in Pune

The research challenges a common fear: “Will Indian companies going global mean fewer jobs at home?” The evidence tells a different story:

The Employment Effect

The empirical analysis reveals:

1. More Jobs, Not Less

• Companies investing abroad hired more at home
• Created higher-skilled positions
• Generated indirect employment
• Example: For every TCS employee abroad, multiple jobs created in India

2. Better Jobs The research shows new roles emerging:

• Global project managers
• Research scientists
• International marketing teams
• Cross-cultural coordinators

The Export Boost

Like a virtuous cycle, the data shows:

1. Direct Benefits

• Overseas subsidiaries ordering from India
• Market access through foreign presence
• Better after-sales service boosting exports

2. The Numbers Tell the Story Example from TCS:

• 57.5% of revenue from foreign operations
• But driving more exports from India
• Creating trade networks globally

Knowledge Flows

The research identifies a two-way street:

1. Bringing Home

• New technologies
• Management practices
• Quality standards
• Global best practices

2. Building Capabilities

• R&D investments
• Innovation culture
• Global standards
• Competitive strengths

Act 6: The Government’s Role – From Controller to Enabler

Scene: The Finance Ministry, 1992

The book shows a dramatic policy shift: from tightly controlling overseas investment to actively enabling it. Let’s follow this transformation:

The Two Acts of Policy Drama

Act One: The Control Era (1969-1992)

Think of it as parents being overprotective:

• “Don’t take cash abroad”
• “Always have a local partner”
• “Only export machinery, not money”
• “Get permission from multiple departments”

The book shows why:

• Precious foreign exchange
• Fear of capital flight
• Development priorities
• Balance of payments concerns

Act Two: The Enabling Era (1992 onwards)

Like parents finally letting their children spread their wings:

1. The Big Changes

• Automatic approval route
• Cash transfers allowed
• Full ownership permitted
• Higher investment limits

2. The Numbers Exploded

• Investment ceiling: From $2 million to $100 million
• Funding options: Cash, ADR/GDR, foreign loans
• Geographic reach: From neighbors to global

The Support System

The book details two key enablers:

1. EXIM Bank: The Financial Backbone

• Funding for equity
• Long-term finance
• Working capital
• By 2006: Supporting 144 ventures in 45 countries

2. ECGC: The Safety Net

• Insurance for investments
• Protection against risks:
  • Political upheaval
  • Currency restrictions
  • Expropriation

Act 7: The Road Ahead – Challenges and Opportunities

The Missing Pieces

The book identifies critical gaps:

1. Institutional Support

• Loss of Indian Investment Centre (2004)
• No central agency for OFDI promotion
• Limited information support
• Fragmented data collection

2. Strategic Framework Think of it as having GPS but no road map:

• No active promotion strategy
• Limited market intelligence
• Need for coordinated approach
• Lack of dedicated support services

The Three Waves of Change

The book’s research shows how Indian multinationals evolved:

1. First Wave: The Cautious Pioneers

• Family businesses testing waters
• Developing country focus
• Limited technology transfer
• Minority partnerships

2. Second Wave: The Global Challengers

• Professional management
• Developed market entry
• Technology acquisition
• Majority control

3. Future Wave: The Global Leaders? The book suggests emerging trends:

• Innovation-driven growth
• Strategic acquisitions
• Knowledge leadership
• Global brand building

The Final Report Card

The book’s assessment shows:

Strengths:

• Growing technical capabilities
• Cost advantages
• Quality standards
• Professional management

Areas for Development:

• Global brand recognition
• Innovation capabilities
• Support infrastructure
• Policy framework

This transformation story, as the book demonstrates, isn’t just about Indian companies going global. It’s about a nation’s businesses transforming from protected local players to confident global competitors, changing not just themselves but also the global business landscape.

Final Act: Lessons and Legacy

The Big Picture: What We’ve Learned

1. The Evolution Pattern The book shows how Indian companies transformed:

• From cautious exporters to global acquirers
• From low-cost providers to innovation leaders
• From minority partners to controlling owners

2. The Sectoral Success Stories Like different athletes excelling in different sports:

IT Services: The Sprint Champion

• First to go truly global
• Built global delivery model
• Created strong brands
• Example: TCS’s transformation from small division to global leader

Pharmaceuticals: The Marathon Runner

• Started with generics
• Built research capabilities
• Acquired global assets
• Moved up value chain

Manufacturing: The Power Lifter

• Later to globalize but making bigger moves
• Major acquisitions
• Scale advantages
• Global production networks

Impact Assessment

The book’s research conclusively shows:

1. For India

• Positive employment effects
• Export growth
• Technology gains
• Management expertise

2. For Host Countries

• New investment sources
• Fresh competition
• Innovation
• Cost-effective solutions

3. For Global Business

• New competition models
• Innovation approaches
• Cost structures
• Market access

The Book’s Final Message

The rise of Indian multinationals represents:

• A new model of globalization
• Emerging market capabilities
• South-North investment flows
• Global business transformation

As the book shows, this isn’t just an Indian success story – it’s a blueprint for how companies from emerging markets can become global leaders while contributing to both home and host country development.

Academic Abstract:

The emergence of Indian multinationals on the global stage has been a remarkable phenomenon, with their presence growing significantly over the past few decades. Since the early 1960s, Indian companies have been active in the world economy, but it is in the last fifteen years that their number and scale of operations have expanded rapidly. Faced with increasing global competition due to extensive liberalization measures, Indian firms have strategically embraced outward foreign direct investment (OFDI) as a key component of their business plans. By engaging in both greenfield and brownfield OFDI to establish new ventures and acquire foreign companies, respectively, Indian enterprises are enhancing their potential for growth and global competitiveness. As a result, India has emerged as a major developing source country of FDI, with Indian multinationals poised to make a significant impact on world development.

This book provides a comprehensive analysis of the rise of Indian multinationals, examining both the macro-level factors and firm-level corporate strategies that have driven this phenomenon, as well as its implications for India and host countries. The authors undertake a detailed investigation of Indian overseas investment flows and stocks from sectoral, regional, ownership, and motivational perspectives, offering a rigorous long-run coverage of Indian multinational firms from the 1970s onwards. Critical attention is given to the role of innovation, entrepreneurial skills, business scale, productivity, and government policies in explaining the emergence of Indian multinationals. The book’s comprehensive approach, combining quantitative analysis and case studies, offers valuable insights into the behavior and impacts of these new global actors on their home and host countries.

The findings and discussions presented in this book offer a wealth of lessons for policymakers, business practitioners, researchers, and students interested in the growing influence of Indian multinationals. For home countries, the book highlights the importance of supportive policies and institutional frameworks in fostering the global competitiveness of domestic firms. Host countries can gain insights into the strategies and impacts of Indian multinationals, helping them to devise appropriate policies to maximize the benefits of inward FDI. Finally, Indian enterprises aspiring to become multinationals can draw valuable lessons from the experiences of their predecessors, learning how to navigate the challenges and opportunities of international expansion.

With the growing global interest in Indian multinationals, this book serves as an important and timely resource for anyone seeking to understand this transformative force in the world economy. Its comprehensive and multidisciplinary approach makes it an essential read for policymakers, business leaders, academics, and students alike.

Learn More:

Full citation: Pradhan, Jaya Prakash (2008), Indian Multinationals in the World Economy: Implications for Development, New Delhi: Bookwell Publisher.

Learn More:

• Link to Full Book
• Download PDF