Not so long ago, the chief executive officers of multinationals would invariably be citizens of the countries where those MNCs took root. But today, more foreign-born CEOs are occupying the corner offices of multinationals around the world. In 1999, only one company among the Fortune 500 had a non-US native CEO, according to an article published last May by accounting firm KPMG. By 2009, that number had grown to 40, with six from Asia — five from India and one from Pakistan. Two Indian-born CEOs at the helm of US Fortune 100 companies are Indra Nooyi and Vikram Pandit who head PepsiCo and Citigroup respectively.

In what is a select group of expatriate CEOs in Malaysia, Indian-born CEOs are certainly making their presence felt. Among them are Sanjeev Nanavati who heads Citibank Malaysia, following in the footsteps of his countryman Piyush Gupta who is now CEO of DBS Bank in Singapore; Sandip Das, executive director and CEO of Maxis Bhd; M Prakash Chandran, the first Asian to head Siemens Malaysia; Prakash Mallya, country manager for Intel Electronics Malaysia and Brunei; and Prashant Kumar, CEO of Universal McCann.

“While I don’t have precise figures, it is true that India seems to represent the largest group of foreign-born CEOs, who are from Asia,  in MNCs,” Rajeev Peshwaria, CEO of ICLIF (International Centre for Leadership in Finance) Malaysia tells Management@Work in an interview on March 10. Rajeev himself hails from India.

A combination of historical, educational and social factors are behind the strong performance of Indian nationals in foreign workplaces.

When India gained its independence in 1947, its first Prime Minister, Jawaharlal Nehru, was instrumental in the decision to maintain English as India’s second national language and as a medium of instruction in institutions of higher learning. That, combined with an education in India’s premier universities like the famed Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs), make Indian graduates top choices for foreign companies looking to hire.

“The use of English in India’s education has been a great asset,” says Tharuma Rajah, managing director of Hay Group Asean and South Asia, in an interview on March 14. “They are comfortable with the language and by nature, tend to be outspoken and verbally gifted which are traits appreciated in a Western work environment.”

A Malaysian national, Tharuma has worked in India and co-authored The Indian CEO: A Portrait of Excellence. Published in 2007, the book was based on a study commissioned by India’s Public Enterprises Selection Board. “There was a drive for better performance in the Indian public sector so the study, conducted in 2003, looked at the difference in leadership between private and public sector companies,” explains Tharuma.

One of his findings was that as a result of the education system in India’s better schools, where the medium of instruction is English and the curriculum  is based on the Western system, Indian graduates are better able to hold “two worlds” in their minds.

“India’s culture is a blend of East and West and so when the cream of the crop go overseas, they embrace both and are more flexible and adaptable in the work environment. This enables them to rise to positions of leadership, particularly in Western MNCs looking to make a headway in Asia,” observes Tharuma.

Cream of the crop
India’s IITs and IIMs employ a strict selection process that accepts only a fraction of the hundreds of thousands who apply for entrance. This alone, says ICLIF’s Rajeev, has opened doors for their graduates to enter US Ivy League universities and join major MNCs.

“It’s a numbers game — when you take only a tiny fraction, the cream of the crop, the result is a super-brilliant batch of graduates. In many of these institutions, the education system can actually be pretty archaic, but the raw material is stunning and bound for success,” says Rajeev.

According to a 2009 study by global executive search firm EMA Partners International, about 50% of India’s professionals in chief executive or strategic business leadership roles are graduates of IITs or IIMs or both.

“The Indian CEO is a phenomenon of the past decade because it was only in 1991 that India opened its doors to foreign trade. When the MNCs entered they found a ready pool of talent which they drew from,” says Rajeev.

He witnessed the exodus of Indian financial graduates via Citibank. “I was working in American Express India about 25 years ago and all my contemporaries at Citibank have since left and are now holding major roles around the world. Citibank was truly proactive about exporting talent from India to around the world; the group was among the first,” he notes.

Besides the financial sector, Indian nationals have a significant presence on the global stage in the technology, academic and medical sectors.
“Until 1991, the only path out of India was through academia so you’ll find that a large percentage of US academics come from India. Then, there was a need for doctors in the US which led to a large migration of medical professionals. Today, about one in 20 doctors in the US is Indian!” says Rajeev. “Finally, the wave of Indian programmers happened in 1999 when, confronted with the Y2K scare, US firms shipped them out by the planeloads to help cope with the problem.”

(In the countdown to the year 2000 or Y2K, fears about massive computer failures when the clocks ticked over into 2000 led to vast sums being spent on Y2K preparation.)

Successful CEOs from India tend to have rather privileged or at least advantaged backgrounds, continues Rajeev. “You’ll find the typical Indian CEO to be from a middle-class background, educated in a top Indian university, then an Ivy League university and finally recruited by an MNC.”

Citibank’s Sanjeev Nanavati fits that description. Sanjeev, who grew up in Delhi, hails from an upper middle-class background and graduated from the prestigious Shri Ram College of Commerce before obtaining a partial scholarship to pursue an MBA in finance at Syracuse University in New York. He spent 12 years with the Bank of Boston before joining Standard Chartered Bank as head of corporate and investment banking in India in 1993. In 2001, he joined Citigroup in New York.

“The selection in Indian universities is indeed very competitive and that does breed a competitive streak into its graduates,” said Sanjeev in an interview with Management@Work last year.

“Competitiveness is a big factor,” says Rajeev. “In India there is no social safety net and thousands compete for jobs. Indians become fighters because they have to and this work ethic helps them when they go abroad. They’re not fat and happy, they tend to be workaholics and it’s ingrained since childhood,” he says.

Staying ahead
For now, Indian expat CEOs are dominant compared with CEOs from the rest of Asia because India has had a “headstart”, says Hay Group’s Tharuma. But it may soon be facing stiff competition from China where millions are dedicating themselves to learning English.

“Whatever China decides to do, it tends to do very fast and very well,” observes Rajeev. “And in terms of numbers, China is the only one who can match India. Now that China aspires to become the world’s biggest English-speaking country, I don’t know how long India will have the advantage. We’re talking 300 million more English-speaking people competing.”

Both Rajeev and Tharuma express concern that success could make India complacent and cause it to lose its current advantage. “Today’s graduates are surpassingly arrogant because of the success of their predecessors and yet, less employable,” says Rajeev, referring to a study released in 2005 by global consulting firm McKinsey which found that only one in four of India’s engineering graduates and 15% of its finance and accounting professionals are “suitable for working in MNCs”.

In the course of researching his book The Indian CEO, Tharuma found that the biggest weakness, particularly in the younger leaders from India, was a lack of soft skills and a “too-ruthless focus on the bottom line” that was undermining their leadership ability.

“Too much IQ, not enough EQ,” he says, “They are so focused on brilliance, growth and competitiveness that they lack succession planning and a long-term view. If not addressed, India could lose out to China in the talent market because the Chinese are given to introspection and self-analysis.”
To address this issue, in 2009, India introduced the Indian School of Integrated Learning  to refine the skills of its graduates. Nicknamed “finishing schools”, the institutions aim, among other things, to improve the soft skills of its graduates.

Nevertheless, India will retain its advantage in the talent marketplace for a while yet, says Tharuma. The nation’s rapid development has seen the talent flow being reversed, and Indian executives are returning home and bringing with them much-needed international skills. “India’s brain drain has reversed itself in one generation and is turning into brain gain,” he adds.

The influx of talent is also raising salaries in India which in turn aids retention. IIT graduates increasingly see India as the best place in the world to work, according to a 2008 study by Delhi-based research firm Evalueserve.

Dharmesh Malhotra, Nokia Siemens Networks’ head of Asia South and country head for Malaysia, believes India’s growth and competitiveness will enable India to stay in the lead. “While China has shown strong growth, they have always traditionally focused on the manufacturing and industrial sectors,” he says. “In terms of executive positions, I believe that India will continue to have significant advantages moving forward.”

This article appeared in Management@work, the monthly management pullout of The Edge Malaysia, Issue 852, Apr 4-10, 2011