The IT-led globalization, which has been propelling India's growth, has certainly taken a beating owing to recession in US. Did we see it coming? Of course we did. How do we get out of the rut then? Well, before we actually delve into possible solutions for future course, let's see how we benefited from the onset of IT-led globalization? At the outset, the low-wage workers entered the global economy -- initially through their involvement in export production and eventually evolving as a new class of consumers. Secondly, the proposition benefited rich nations of the developed world -- where consumers expanded their standard of living by buying low-cost, high-quality goods from poor countries and where workers were to gain from being involved in the production of more sophisticated products exported to increasingly prosperous developing economies.
The first benefit is hard to dispute. India's standard of living, for example, has more than doubled during the past 15 years. The problem is with the second benefit. A sense of economic insecurity is creeping rapidly up the occupational hierarchy -- from software programmers and engineers to medical and legal professionals -- a palpable sense of shock is spreading rapidly into the knowledge-worker occupations that have long been shielded from economic adversity. This loss of confidence in the second benefit of globalization has led countries to swing from the theoretical promises of globalization to the self-interest of individual countries -- in essence, "localization."
What India is witnessing today is perhaps a result of the onslaught of localization. Wages could go up and corporate profits could come under pressure. Moreover, localization could also spell heightened risks of protectionism -- especially if the global economy slows and unemployment starts to rise. In this scenario, localization could ultimately give rise to accelerating inflation, higher interest rates, greater volatility in financial market etc. And, of course, the protectionist ramifications of localization could prove equally challenging for the beneficiaries of globalization's first win -- dynamic new companies in the developing world and the employment growth they generate.
No wonder then that we see companies making local announcements on the lines of investing in India for India. With a huge population of youth, India is a promising market and global companies don't want India to slip into a protectionist mode. Consider this, Generic Electric announced its focus on localized medical equipment for India; Philips stressed on localized products for India; IBM said it will lower center of gravity in India. An increasing number of companies are focusing on responding to local needs, languages and cultures to deliver variety of high quality goods and services, thus offering consumers more choices and better quality. For these companies, localization is not an option, it is an imperative. An examination of the revenues of just 2006 Global Fortune 500 companies that is known to be actively localizing their products or services yields annual total revenues of approximately $5.9 trillion (with profits of $365 billion).
Huh! So, what is in store for us? For starters, the phenomenon opens a window of opportunity for India as a country. As a leading CEO of a global PR consultancy puts it, transnationals need to make their brands relevant in ways that are faithful to the core attributes of the brand, yet flexible enough to accommodate diverse trading patterns, differing consumer tastes and behavior, and a variety of businesses, media and political cultures. The real challenge for PR is to help organizations bridge that which is global and that which is local. Unfortunately, there is no magic template for doing this. What there is, instead, is a steadily growing body of wisdom that comes from doing it, day in and day out, in numerous markets around the world.
People like us have been involved in doing such things day in and day out and the potential for us is enormous. Let's work towards building more bridges…
