Companies looking to expand to India will notice a striking difference between standard business practices in North America and those of India. Areas of special note include labor force issues related to literacy rates and child labor, cultural differences in regards to the the Indian caste system, and business etiquette differences.
Labor Force Differences
Businesses operating in India have a different relationship with their work force than American businesses. Unlike the U.S. or Canadian work forces, the Indian labor force is largely agricultural. Roughly two-thirds of India’s work force is employed in agriculture or rural industry. Around 9 percent of the total Indian work force is employed in an organized business sector. The remaining 91 percent of employees are self-employed or work as casual wage laborers. Non-contractual casual laborers (day laborers) have a close connection to labor market on a nearly daily basis. Businesses that use day laborers have little social responsibility to workers, benefits and Social Security are not provided, nor the guarantee of a paid day's work tomorrow. According to the U.S. Federal Research Division of the Library of Congress, as of 1991 the Indian labor force included some 55 million children, not including children that work for their parents.
Indian society functions within a rigid framework of hierarchy based on Hindu tradition and the caste system. This hierarchical system defines a person's prospective roles and status. Constant obedience to this system can cause situations that seem unusual or frustrating to Americans. According to the website Kwintessential, a good example that can occur in any office is the simple task of moving a desk. It may take many hours to move a desk across a room because nobody employed in the office holds status low enough to move a desk. Therefore, employees must wait for a person with appropriate status to be available to perform the task.
In the North American business world, efficiency, adhering to deadlines and similar habits are considered normal business etiquette and are expected. In India, assertion or aggressiveness can be interpreted as disrespect. Indians are considered very good hosts and may invite you to their homes and indulge in personal talk. This is considered relationship-building, and is a part of doing business in India.
American supervisors doing business in India need to be aware of their management style. Criticism about an employee's ideas or performance needs to be done carefully and constructively. Supervisors in India are expected to monitor employees closely and it is the supervisor's responsibility to meet work deadlines. Do not expect Indian employees to have a time management system in place, or to be aware of deadlines unless they are told to do so.