Title: Indo-Canadian small business owners leverage overseas links

Sub-title: For years Indo-Canadian small business owners ignored red-hot economic growth back home. That's changing.

 

New Delhi - Ravi Gupta studied a hunk of metal pulled from a rack adjoining a blast furnace at a supplier’s aluminum parts plant. “Quality is one of our major concerns," said Gupta, vice-president of Powercast Manufacturing. “The equipment here is similar to what we have in Quebec, yet Indian labor costs are lower. That means we can save customers a lot of money if we do business here. But the payoff will only come if the quality measures up."

 

Gupta’s father Chris bought Powercast Manufacturing in 1994. The company produces custom-made parts for the electricity, construction and housing fixtures industries. But in recent years, strong competition from China-based producers has forced Powercast to drive down costs. “These orders are just tests,” said Ravi Gupta regarding the work done at the plant located a short drive from the India’s capital. “But if we can do marketing, product design, storage and distribution in Canada and to manufacture selected products here, it would make our supply chain far more efficient.”

 

Gupta, like many Indo-Canadians, continues to closely follow his home country’s staggering recent economic progress.  Economic reforms are opening up India to increased trade and investment and making it possible for more foreigners like Gupta to consider doing business here. His family maintains close ties with relatives back home and three years ago they bought a three bed-room condominium in the burgeoning New Delhi suburb of Gurgeon, which they use as a base.

 

According to one expert, Gupta’s case is not unique. “Canada has a very strong and vibrant Indo-Canadian community,” said Kenny Zhang, a senior research analyst at the Asia Pacific Foundation of Canada. “And there is a very positive link between Diaspora communities, and increased business relationships between the countries involved.” The reason for this is that newly arrived Canadians don’t just forget about their roots. For example like many of the 900,000 or so Indo-Canadians, Gupta goes back to India every year. As a result, he is able to closely follow differences in the two economies. And for an entrepreneur, differences often signal opportunities.

 

One key difference between Canada and India is in their growth rates. India’s GDP grew by 8.9 per cent during the most recent quarter, more than three times as fast as Canada’s. Furthermore, at the World Economic Forum’s India summit, which was held here in early December, Indian government officials expressed confidence that the country can maintain that pace during the coming years. In fact if India continues to grow at its current pace, income levels there will almost triple and by 2025 the country would become the world’s third largest consumer market. The strong Indian growth has rubbed off on Canadian companies whose exports there have been rising in the double digits during the past several years to $1.7 billion in 2007.

 

That said, experts say that the Indo-Canadian community has not yet been as active in strengthening business relationships with their mother country as the Chinese-Canadian community, which is about the same size. Part of the reason is due to a simple time lag. China began opening up its economy more than decade before India did, a period that many economists use as a yardstick to measures the two countries’ respective economic progress.

 

In fact, according to Maneesh Nanda, a consultant who specializes in India-Canada issues and whose work is increasingly bringing him back in touch with his motherland, things are starting change already. “The composition of Indian immigrants into United States has been far more centered on their educational and business qualifications than it has been in Canada. So naturally the American-Indian community has had a bit of a head start,” said Nanda. “But India’s economy is now becoming so strong that it is lifting all boats.”

 

Ravi Singh, president of Apparel Sourcing, an Indian national who has lived in Canada for the past 20 years, agrees. Singh recently signed a contract to help a European retailer scout opportunities to set up shop in India and will be meeting with several Canadian firms in the coming months to share his experiences. “Many retailers think that India is too poor to support an expansion there, but they are underestimating the size and strength of the country’s growing middle class,” said Singh.

 

In fact demand for retail space in India is so strong, that despite the fact that there are malls popping up everywhere, many companies simply cannot get space. According to Singh, rents in many prime Indian malls are now a staggering $40 per square foot per month, which is what some Canadian malls are changing each year.

 

Gupta is also dazzled by the opportunities. “You know it’s funny. We are sitting here in what will probably be one day the world’s largest economy and we are thinking of importing aluminum parts into Canada. But domestic demand here will make opportunities back home pale in comparison,” said Gupta, from the balcony of his family’s Gurgeon condominium later in the day as he surveyed the slew of high rises, malls and other construction activity that was going on as far as the eye can see. “I have a feeling that the really Indo-Canadian entrepreneurs are the ones who will come back from Canada to invest here.”

 

 

Sidebar: Small businesses get into the outsourcing groove

 

Honey Oberoi walked into the non-descript Pune offices, a half hour early to get ready for her shift which started at 6:00 p.m. “There is a ten and a half hour time difference between Canada and India,” said Oberoi, who overseas a staff of three clerks who handle collections and other accounting functions for Toronto based IT provider Pathway Communications. “If we want to speak to our clients during their daytime, we have to work at night.”

 

Pathway Communications supplies Internet-hosting, network integration and e-commerce services. Three years ago, its president Ashok Kalle, set up the business process outsourcing facility in Pune which is a four hour drive from Mumbai. Pathway’s Pune facility is a perfect example of how the Indo-Canadian Diaspora is facilitating business interaction between the two countries. There was no persuasive reason that the facility had to be located in Pune, however Kalle knew the town well because that’s where he grew up.

 

One of the advantages stemming from that local knowledge was that Kalle was able to quickly line up a childhood friend, Yatin Thaggarse, a graduate of the prestigious India Institute of Technology, to oversee the Pune facility. What is interesting about Pathway’s outsourcing initiative is that unlike many such moves by larger companies, which often involve hundreds of staff, Pathway, was able to profitably set up an offshore facility with just 40 employees.

 

According to Thaggarse, not only does the Pune office save Pathway Communications money and boost customer service, the locale also makes it far easier for the company to hire qualified English speaking staff, than it would be if it were located in downtown Toronto, where demand for workers is much higher.

 

Furthermore employees like Oberoi are often thrilled to be working for Western companies which typically pay more than Indian firms and are more open to hiring women. “I don’t mind the night shift at all,” says Oberoi, a university graduate who left a job at ICICI Bank, (India’s second largest) to join Pathway. “I just want to work hard so I can move my career ahead.”

 

Peter Diekmeyer (peter@peterdiekmeyer.com) is a Montreal based freelance business writer.

 

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