India is a land of contradictions and contrasts, with rich and poor, bad government and good economics, tradition and modernization living side by side in Mumbai like the Mercedes passing families tending fires by shanties on the sidewalks. Amidst the chaos and confusion of a country with 765 registered political parties, there is one overriding reality — rapid and relentless growth.

During a Wharton Fellows Master Class in Mumbai (Bombay) and Bangalore in March, Fellows examined the rapidly growing Indian markets at home and the outsourcing industry in IT and other areas serving major companies abroad. The program included "live case" studies with senior leaders of Tata Motors, Hindustan Lever, Infosys, Biocon, and other firms.

Among the many insights from the experience:

• The power of large numbers means we might be speaking Hinglish: By 2012, the largest number of English-speaking people in the world will be in India. Gurcharan Das, ex-CEO Proctor & Gamble and author of India Unbound, said that while the 19th century was the age of British English and the 20th century the age of American English, the 21st century may belong to Hinglish (a combination of Hindi and English).
  
  
• Change is slow — India is not a tiger but an elephant: Das stressed that India will never be another Asian tiger. "The economists tried to paint stripes on India, but it is not a tiger," he said. "It is an elephant growing at a rate of 6 percent per year for 24 years. The path to the future is slow and noisy. The future will be negotiated, and not written by unbridled capitalism. India is more likely to preserve its way of life. It will be the last country to turn to McWorld."
  
  
• Streamlined business models are needed for rural areas: Moving into the villages and serving smaller clients has required a radical rethinking of business models. K.V. Kamath, CEO of ICICI Bank, said they found ways to cut their technology costs to 5 to 10 percent of global banks, eliminating mainframes and IT departments. This has allowed them to go into smaller markets with thinner margins. "Competitive advantage comes from running the business on a very thin top line," he said. "It forces you to innovate." Hindustan Lever executives discussed innovative strategies to meet the needs of India's rural markets and weak infrastructure. In an area of the world in which water is in short supply, the company created the Surf Excel detergent, which saves two buckets of water on every use. It has also created water purifying systems and iodized salt to address health concerns. To take its products to the more than 700 million Indians in rural villages, while empowering women, the company created the Shakti Project to help villagers start small local businesses. There are now 13,000 Shakti Entrepreneurs taking Hindustan Lever products to the smallest villages in India.
  
  
• Low-cost solutions can be exported to other markets: Tata Motors Executive Director Ravi Kant discussed the success of its Indica car around the world and plans to create a $2,000 automobile. Tata is also launching a World Truck in Korea in 2008. Instead of targeting the entire world, they are taking a segmented approach to areas and geographies where they can be competitive.
  
  
• Companies and NGOs need to address healthcare, education, and other infrastructure weaknesses: Infrastructure weaknesses mean that companies often have to bring their own schools and hospitals. Dr. Santrupt Misra, Director of Aditya Birla Group, said the company now operates 23 schools with 1,100 teachers and 33,000 students. While the schools were designed to serve its own employees, 60 percent of the students are from surrounding communities. In addition to education, the company has also had to address health care by supplying its own hospitals. Creative NGOs also are developing innovative solutions to the challenges of literacy and health care in India. A panel of leaders of creative NGOs in Bangalore examined diverse initiatives for increasing literacy, improving schools, providing low-cost health care, and offering microfinancing. For example, heart surgeon Dr. Devi Shetty has used telemedicine to link rural clinics with the best medical experts in the major centers, digitization and local software to reduce the costs of X-rays to almost zero, and a health care plan that offers medical coverage to poor farmers for just 11 cents per month.
  
  
• India is moving up the scale of innovation: Indian companies are moving into higher value-added consulting activities and basic research. IT outsourcing firm Infosys has grown by 30 to 40 percent per year, from just seven employees in 1981 to more than 35,000 today. As it looks for ways to continue to grow in a more crowded market, Infosys is increasingly focusing on end-to-end customer solutions. As Wharton Professor Harbir Singh noted, the company is "conscious of competition and that its margins will be squeezed over time, so it is moving to a more complex, solutions end of the business." Biocon, India's leading biotechnology enterprise, has evolved from an enzyme manufacturing company to a fully integrated biopharmaceuticals enterprise over the past 25 years. While the company's early progress was driven by generic biopharmaceuticals, its future will rely increasingly on new drugs in its laboratories.
  
  
• Culture and politics create complexities: Indians have a very different way of looking at the world. "What seems like apparent chaos to you is perfectly acceptable to Indians," said Dr. Meena Kaushik of Quantum Market Research Private Limited. We believe in duality. Contradictions are the way to define reality. There is no concept of good separate from evil, no concept of light without dark. Achievement and nonachievement are part of the same whole." Economic progress has been separated from political progress. This has led to what Prabhu Chawla, Group Editorial Director of The India Today Group, called the "largest, strongest, and funniest democracy" in the world.

Fellows Director Jerry Wind said the Master Class gave him a deeper appreciation of scale — with Infosys sifting through 1 million employment applications a year to hire 10,000 employees. Wind said he was impressed with "the power of impossible thinking" in meeting these business and social challenges, such as ICICI Bank's technology innovations, Hindustan Lever's Shakti Project, Tata's $2,000 car, and the creative initiatives of NGOs. "These are all based on new mental models," he said.

While India is rapidly developing, Mahajan pointed out that we cannot lose sight of the fact that more than 700 million Indians still do not have access to proper sanitation. Despite the challenges India faces, many Fellows were left with a sense that they had to participate in the growth of this country. "You don't have any choice," said Mahajan. "Trust me, you don't have any choice. The bus is leaving. You have no choice but to interact with these developing markets, and the two dominant countries are China and India."

The next Wharton Fellows Master Class, Working With Government, will take place June 26–28, 2005 in Washington DC.

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