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Press about Auriga

Dec 16, 2002

Advice from Overseas

Mass High Tech,
We asked executives overseas and in New England who conduct global business to comment on some of the issues facing technology companies as they look for global partnerships, joint ventures and outsourcing projects. Here are their observations and their advice.

When choosing a partner in Russia, select only companies with a certified quality system and those with a strong customer base and long offshore development history.

Trust your impression of top management more than papers you get. If you do not feel comfortable at the first stage, do not expect the situation to get better.

Start with a pilot, noncritical project. This way you will test many aspects of future business relations such as quality of service, abilities in problem solving, quality of documentation, remote communication aspects, etc. Always use RFPs with formal criteria.

Create a joint team for the project — send some people overseas and have some people from the Russian partner company on your premises at least during the project launch period.

Build long-term relationships that will bring benefits in both business and technology aspects.

Victor Weinstein is the general director of Aplana Software, a software services company in Moscow.

The first problem is that not many U.S. companies want to do business overseas, since the U.S. market has always been pretty big and close. Only global names like Sun, Intel, Motorola, HP, Cisco and Microsoft had set up their sales offices and R&D teams and programs in Russia. Many smaller U.S. companies have some Russian software contractors.

In the high tech area, I believe the major U.S. issue is “not invented here,” so Spirit has been more successful selling high tech and technology to Japan than to the U.S. Japanese are open to license technology and patents to build better and cheaper products using it. In the U.S., Spirit has had success only with its ready-to-go software products, not raw technology.

Andrew Sviridenko works with Spirit Software, a digital signal processing company in Moscow.

In choosing a U.K. partner, the U.S. technology company needs to identify the following:

  • Key market segment strengths and the related proposition using the U.S. technology for that market
  • Value-add through the U.K. partner, perhaps in the form of professional services
  • Complimentary product sets

Where U.S. companies have encountered difficulties in the United Kingdom, it has often been due to assumptions — for example, assumptions that the U.K. public sector operates in a similar way to the U.S. government sector. It is easy to assume things such as legal, procurement, process, structure and many other aspects of dealing with the U.K. are the same as the U.S. It is highly important that there is local representation who understand the nuances of the markets being approached.

I remember a U.S. GPS supplier who was unsuccessful in a bid to a U.K. ambulance trust. Their response was very aggressive and they assumed they could dislodge the selected supplier by taking this approach. The result was that they quickly earned a reputation within that close-knit market. The right approach would have been to engage with the trust to get valuable feedback and use it as a learning experience.

Andrew Jones works with PinkRoccade, an IT services company with offices throughout the United Kingdom and Europe.

It is not unusual for American companies trying to establish a relationship with a foreign counterpart not to be prepared for the cultural differences between the two parties.

European companies often have more liberal social policies than their American counterparts and tend to operate on a more relaxed schedule. For this reason operating parameters need to be established at the outset. Flexibility and communication are the keys to every successful relationship.

Flexibility does not refer only to social policy. It has to be applied to all aspects of a beneficial relationship. Both sides need to realize that while establishing the common ground for a partnership, experimentation will be required.

This is especially crucial when deciding pricing. If you are selling in a foreign market, you need to set your price to be competitive in that market. The key is agreeing with your partner a set of parameters, for example pricing authority that you cannot go below but that is flexible enough to reflect market conditions and benefit everyone.

Communication may seem obvious but is extremely important. There should never be radio silence. Sometimes this can be perceived as pressure by European staffers but miscommunication can mean missed deadlines and missed payments, which are bad for everyone. There should be a mediator responsible for interaction between the two parties to ensure daily communication.

Paul Dwyer, based in Boston, is the chief executive of Concept Design Group which has partners in Ireland and Canada.

Many U.S. companies fail in India because they don’t understand the underlying cultural and business dynamics in India. They fail to understand how the Indian bureaucracy and the whole system work.

They assume that Indian businesses operate the same way they do in the United States. The difference between a successful and a less successful foreign company in India can be traced back to their ability to understand the local culture business practices and to take appropriate measures to deal with them.

Some of the major issues determining the performance of a U.S. business are:

  • How much time does senior management spend on Indian business issues?
  • Are there foreign nationals in higher management in India, and how do they interact with local management and employees?
  • What is a company’s vision for the Indian market?
  • Has the company tailored its business plan and practices to reflect cultural preferences?
  • How has the technology been used to increase the local efficiency and productivity?
  • How is the local workforce hired, rewarded and groomed?

India is an emerging market and has been growing rapidly in a number of areas, especially telecommunications, information technology, health care and biotechnology. The best way for U.S. companies to enter the Indian market is through a joint venture with a local partner who has the right connections and can get things done faster, especially during the early stages. Going alone for a U.S or any foreign firm in India can be a Herculean task. Key to success in India is finding the right partner.

Vinaya Dubey is the director of marketing and sales for BioTech India in New Delhi, India.

When choosing a partner, find an established company. First look at their Web site - if it's only one page, that's not the right partner.

Find out how long they have been in business, check their references, make phone calls.

Another thing to do, for Russia, is to check with RUSSOFT, which is the national software development association ( They have a list of established companies.

An example of where U.S. companies might get into trouble is in the black market. There are some programmers who seem good technically, operate on the Internet and present themselves as being established. But they are not paying taxes, which can cause big problems for American companies.

I have seen two extremes in American companies dealing with Russian companies. One is micromanagement, where the U.S. company gets involved in every detail. This is not beneficial.

The other is no commitment. There should be a certain level of dedication. There should be a dedicated person who is able to influence the decision-making process.

A U.S. company working with a Russian partner company should plan for overhead. There should be trips to Russia and Russian engineers should travel to the U.S. Yes, you might save on things like salaries, but you must plan on overhead.

Alexis Sukharev is founder and president of Auriga Inc., an IT consultancy with U.S. headquarters in Amherst, N.H., and software engineering operations in Moscow.

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