For India Inc, with a traditionally poor record of hiring expatriate CEOs, the passages of people like the French based in Paris Thierry Delaporte (
), the Israeli Erez Israeli (Dr Reddy’s Laboratories), the Briton Jonathan Hunt (Syngene, Biocon), the American Brian Bade (Reliance Retail Digital) and the German Guenter Butschek (Tata Motors) were a real feat. These executives have reversed the growth trajectory of their companies in the field and on the stock market. TVS Motor, a traditional family-owned group, has recruited former Jaguar Land Rover CEO Ralf Speth as a non-executive director on the company’s board to succeed current chairman Venu Srinivasan in 2023.
In what can be seen as signs of change and increased globalization, several Indian companies are responding to the need to have a globalized resource at the top as they prepare to compete globally. Some of them do this by bringing in foreign directors on the board to seek advice.
A few do this by appointing an expatriate CEO of Indian descent while a few get a non-Indian, cultural novice with no baggage, to disrupt for the better.
So, is this a trend worth supporting? It all depends on the level of orientation and ambition of the founders of the company, its culture of governance and transparency, the appetite for strategic disruption and investors’ demand for change. Precedents have already been created.
Some might say that there is enough local talent to choose from. But the ingredients that have made companies the biggest in India may not be the same or enough to be among the biggest in the world. In a largely homogeneous composition of corporate leaderships in India, expatriate CEOs bring a much needed diversity of thought, culture and vision. Their passages shatter the age-old stereotypes that India is a market “too difficult” for a foreigner to understand, and that the levels of governance are too complex for foreigners to form an idea.
The appointments are a plausible sign of improving corporate governance and the maturity of business developers in the wake of a globalized business environment. It also shows that India and its market are now better understood by executives around the world. More importantly, it shows that Indian companies are now willing to pay what is necessary to âpoachâ the best talent available in order to thrive globally, beyond the proverbial pond.
Non-Indian CEOs may have the freedom to make tough decisions, shut down nonprofit businesses, make acquisitions, and define unconventional strategies – a difficult demand for developer-driven management. This culture can even infiltrate to become SOP for the benefit of India Inc, whether or not it is led by a foreign coxswain.
Certainly, most Indian companies are unlikely to follow this expat trail.
In addition, the high cost of compensation deterrent, challenges unique to India – such as trust issues, language barriers, and governance and infrastructure deficiencies – remain. These could still prove to be sufficiently dissuasive for cultural foreigners. Remember that in March Marc Llistosella stepped down from fellow German Butschek as CEO of Tata Motors.
In fact, it will be India’s best-governed, aggressive and ambitious multinationals and new-age companies that, for now, will be keen to tap into the global CEO talent pool.