Outsourcing: Raju Reddy, Chairman And CEO Of Sierra Atlantic (Part 7)

By guest author Tony Scott

Challenges in Building a Global Management Team

Tony: If think about how you will grow your company and help software companies by partnering with them to go to China, India, and maybe other countries, do think your management team is up to the task? I look at your management team and it is Indian-centric, but it looks like it’s changing a bit with your CFO Bob Hersch, who is an American, and some of your services leaders.  But do you see the makeup of the top layer change over the next few years to meet the challenges of a truly global business and global customers? And for the next layer down, how do you see it shifting over time in terms of the skills people need to be able to manage and grow the company successfully?

Raju: As I said, as emerging markets become more important, we will need a diverse set of people to serve these markets. For us, emerging markets today and more likely over the next couple of years will be China and India.  We don’t do anything in Brazil, but we have looked at it from time to time.  The Middle East is also on our radar. The management team for these markets more likely than not will be local people. However, we have found that in certain situations where we have Western-educated or Western people as part of an experienced management team, it goes a long way in enabling us to build a successful leadership team and a successful company.  So, I don’t think that’s going to change. Again, North America will likely still be our largest market even five years from now.

So, the composition of the management team is not going to be very different from that of any other Silicon Valley company.  Wherever the best people may come from, we will find them. We take a lot of things for granted, but you have a wonderful system here in America, there’s no question about it, especially here in Silicon Valley. It’s not, though, that we don’t have challenges – we do.

Tony: Yes, it’s a different system. I sometimes have to tell my clients that if they want to hire a really senior person in Germany for example, they need to understand that the company can make him or her have a six-month notice period.

Raju: Exactly.

Tony: Those who haven’t had a lot of experience with hiring in other countries usually say “What you talking about?” [Laughs.] But that’s what the standard is if you are a really senior person in a German company. Technically, they can make you sit at home or go, as they say in the UK, on “gardening leave.” They pay the person, but that person can’t work anywhere else until the notice period is up. That’s a very difficult challenge for U.S. companies or companies coming from more flexible labor markets. It’s also often hard to move people from one kind of role to another in many European countries, so it creates structural inflexibilities. That is very difficult for people here to understand, because it’s much easier for us to make such changes happen. So, on that note, do you find as you’re going into Europe or other countries where the labor laws are more strict or rigid, that this is a challenge for your company?

Raju: Of course, no question. We have been operating in Europe for almost eight or nine years now, and like a lot of other IT services companies from either North America, India, or wherever, we started off in the UK, and that’s where we are still headquartered. The places where we have had more success other than the UK are the Scandinavian countries.

But, for some of the other countries, it really has been a challenge, and we figure that for our scale and potential, right now we don’t have the bandwidth to build up in Europe. I would rather try to build up my China or my India business. But the Scandinavian countries and the UK, those are still large markets, and over time we will have to figure out how to do better in some of the other countries in Europe.

Tony: The Netherlands is also a good place to have operations. They are a very good location in terms of access to educated, multilingual executives, but without some of the issues in other countries.

Raju: In terms of labor laws and such?

Tony: Yes, it’s typically much more flexible in the Netherlands than, for example, Germany or France. That’s where I often recommend my clients go if they need operations on the Continent.

This segment is part 7 in the series : Outsourcing: Raju Reddy, Chairman And CEO Of Sierra Atlantic
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