Jeff Immelt, GE’s chairman and CEO, is in India on one of his regular mid-summer visits, braving as he has done before, 40oC-plus pre-monsoon temperatures. This time though it’s not just the usual round of government ministers and officials, businessmen and journalists because tonight (June 1) he will be hosting a dinner in Delhi to mark the retirement of Scott Bayman, India’s longest-serving expatriate company boss. Bayman has headed GE here for 14 years, starting in 1993 with $100 million turnover and a few hundred employees, and reaching $3 billion and over 13,000 employees this year, with all GE’s global businesses present in the country. He’s handing over to Tejpreet Chopra, who currently heads GE Commercial Finance in India. Last night Immelt said that GE is on track to reach targets of $8 billion for both turnover and assets by 2010.
The story began in 1992 when Jack Welch, Immelt’s predecessor, declared India, along with China and Mexico, a priority GE country. Bayman arrived a year later and says he has “survived two GE Chairmen; six (Indian) governments and five prime ministers.” Through it all, he has remained an optimist. Fourteen years is a long spell for anyone, and it is especially remarkable (if I may say so as a Brit) for American businessmen, whose patience with what Bayman tactfully describes as a “confusing and difficult place to quickly enact change and make rapid progress” usually runs out quickly. But instead of bemoaning the struggles with successive government policies, Bayman says: “You know what? In those years no one – not one prime minister, not one government – has turned its back on liberalization. Sure, each has its own priorities or its own spin, but the general direction and the commitment has not changed.” He’s had great successes and some setbacks. He was in at the start of India’s massive call center and business processing wave with the creation in 1998 of GECIS – “a roaring success from the beginning”. The business was hived off in 2004 and now, known as Genpact, has 27,000 employees in ten countries and has filed for an IPO on the New York stock exchange. In 1993, GE Capital was set up as a non-banking finance company but the government’s unbending banking regulators have prevented it from becoming a full bank. He’s especially proud of GE’s Jack F. Welch Technology Center that was opened in Bangalore in 2004, where 5,000 people are now employed plus another 1,200 in Hyderabad. That has been built, he says, with “great engineers and scientists and people with great capacity for work”. His “greatest disappointment” was GE’s withdrawal from the household appliance market eight years ago when he had to face up to the fact that its products were uncompetitive.
Bayman also had to sort out (with Bechtel) the future of a famously blighted power project at Dabhol in Maharashtra after the collapse of Enron, the lead partner. He negotiated a deal with the Indian government that enabled GE to recover its $150 million equity investment, which may make it easier for him to see the bright side of India’s biggest inward investment disaster. He admits, in a neat under-statement, that Enron “did too good a job at negotiating a contract that was going to be difficult to live with,” but says that the compensation “could not have happened in other countries, where we wouldn’t have got any dollars back.”
Speaking at a business conference last week, Bayman remembered how difficult it was working in India when he arrived. “You never knew if you would have a dial tone when you picked up a telephone receiver. If you had a dial tone, there was a question of whether the connection would be made to the number dialed. If connected, you never knew how long you would stay connected.” Cars were in scarce supply and required a full down payment nine months before delivery. Color televisions had to be purchased on the gray market and were not available in any significant quantity or variety. Computers and laptops attracted high duties and had to be registered in a traveler’s passport when taken in and out of the country.
Now he rates India’s ”telecom revolution” as one of four “big events” that have happened in his 14 years – “a poster child for privatization and deregulation”. His second “big event” is the creation of a new class of consumers, driven by the emergence and growth of software, backroom processing, technology and financial services industries. “Employees in these industries are highly educated and relatively younger than the workers in other industries. Ten years ago, this group likely would have lived in their parents’ homes and been under-employed or unemployed. Today, this group earns a good wage and has a propensity to spend. And, with the opening up of the economy, now has a wide choice of products and services to buy.” Third, he picks Indian industrialists’ massive growth in self confidence about their ability to compete on the global stage. Fourth is civil aviation. “Today, we are experiencing the benefits of open skies agreements with increased non-stop flights from more Indian cities to more cities around the world. Choice has brought competition and the consumer is benefiting.” Here his overwhelming optimism that all is – or quickly will be – well gets the better of his judgment, and he dodges the chaos and massive delays at most of India’s airports, saying: “Watch the impact as public-private partnership goes to work. This is India. We wait for the demand, for the crisis before we respond. Once we strike out on a course of action, we know how to get it done,” he says. Perhaps his optimism comes from the fact that GE plans to invest in consortiums developing the airports.
He hasn’t always been so optimistic. In 2002, he slammed India’s manufacturing industry saying: “Manufacturing is not India’s core competency. Can it be? Probably not, at least in the short run. Let’s face it, there are just too many barriers that all of us cannot control. Don’t get hung up in thinking manufacturing can be a core competence of India. It isn’t going to happen.” He now admits he “was wrong – dead wrong.” Indian industrialists “no longer worry about multinational companies; they are or want to be MNCs…..They no longer talk of level playing fields. They argue for open markets, free trade and view the globe as their marketplace. Indian companies now think globally.” His main lesson? “You need patience and persistence. This is a difficult place to get things done quickly”.