Pepsi's Nooyi, McKinsey's Gupta Get Return From India Education

Pepsi's Nooyi, McKinsey's Gupta Get Return From India Education
Mary Jane Credeur and Ashok Bhattacharjee
Bloomberg, 2006-08-22


When Rajat Gupta couldn't find a decent job in India after earning a mechanical engineering degree from the Indian Institute of Technology in Delhi in 1971, he did what many compatriots did.

He moved to the U.S. He attended Harvard Business School in Boston, then landed a job at the New York office of McKinsey & Co. Inc. in 1973. Twenty-one years later, in 1994, Gupta, 57, became the first foreign-born chief executive officer of the consulting firm, which then had $1.3 billion in revenue.

As Gupta's rise illustrates, PepsiCo Inc., which last week named Indra Nooyi as its next CEO, isn't the first global corporation to recognize the caliber of Indian executive talent. The annual reports of many large companies show Indians are landing big jobs. Like Gupta and Nooyi, most are products of an investment in higher education the country made more than 40 years ago.

``There is a huge demand for Indian executives,'' says Rana Talwar, 58, former CEO of Standard Chartered Plc in London who runs Sabre Capital, a buyout firm. ``The quality of the education is very good. And Indians can adapt to any environment. When we grew up, we got used to adverse conditions such as power outages.''

Those coming of age in the executive suite often were educated at one of two institutions founded in the 1950s and 1960s, the now seven-city IIT and the six-member Indian Institutes of Management. Created after India achieved independence from the U.K. in 1947, they were designed to train leaders for India's post-war industrial development.

First Crop

They did. And not only for India. Arun Sarin, 51, CEO of Vodafone Group Plc in Newbury, England, graduated from IIT- Kharagpur as did Ajit Jain, 54, a potential successor to Warren Buffett at Berkshire Hathaway in Omaha, Nebraska. Nooyi, 50, earned her degree at IIM in Calcutta.

Many middle-aged graduates from IIT and IIM are now rising to the tops of their fields, says Vivek Wadhwa, 49, a professor at Duke University who came to the U.S. in 1980 to complete a master's degree at New York University. India converted a former detention camp in Kharagpur into the first IIT in 1950, and this year increased total education spending by 41 percent to $4.5 billion from $3.2 billion last year.

``The people who are making it to the top are very resilient,'' Wadhwa says. ``They've studied hard. They've worked hard their entire lives. And now they are being rewarded and recognized.''

Willing to Move

At least eight of the 500 biggest companies in the world are headed by Indians. Lakshmi Mittal, chairman of Mittal Steel Co. NV, runs the world's largest steelmaker, based in Rotterdam, Netherlands; Mukesh Ambani is CEO of Reliance Industries Inc., the largest non-state company in India; and Ramani Ayer is CEO of Hartford Financial Services Group Inc., based in Hartford, Connecticut.

Four of the eight Indian CEOs listed in the Fortune Global 500 run companies outside their country. Indians head six of the 1,000 biggest U.S. companies, according to Fortune.

Part of what makes Indian graduates desirable is their willingness to move for a job, says Ajay Banga, CEO of Citigroup's $18.3 billion Global Consumer Group International in New York, who has relocated 10 times in 25 years.

Banga's first job was with Nestle SA in Delhi 1981, which moved him to Calcutta and Mumbai. He relocated back to Delhi to work for PepsiCo 1995, then went to Chennai when he was hired by Citigroup in 1996.

Three months later, the bank offered him a senior marketing position in London. ``My boss said `Ajay, you've got aspirations beyond what you're doing. Come to London and be the marketing head,'' Banga says. ``If I had stayed in India, I would have been lucky to just become the marketing director of some company there.''

Tough Schools

Nooyi's older sister, Chandrika, 51, paved the way for her to leave India, moving to Beirut with Citibank shortly after graduating from IIM in Ahmedabad. Nooyi left next, followed by her younger brother, Narayanan, who studied at Yale in 1981 when he was 17, says Nooyi's mother, Shantha Krishnamoorthy.

``There was a lot of opposition at home from the elders to letting Chandrika go to Beirut then,'' says Krishnamoorthy in an interview from Chennai. ``But once she went, there was no looking back. That was what the children wanted to do.

``I would console my mother by saying that `The candle has to melt to let the light shine,' '' says Krishnamoorthy. ``Think of me as the candle. Someone has to make a sacrifice if the children are to do well.'' All three now work in the U.S.

`Ridiculously Hard'

Such family attitudes complement the rigorous education, much of it American-inspired, at the IIT and IIM schools. One in 50 applicants to the IIT schools is accepted, and at the IIM management college in Ahmedabad, it's one in 532, according to the Economist Intelligence Unit rankings. At Stanford Graduate School of Business, one in 13 is accepted.

``The entrance exams were ridiculously hard. You spent an entire summer preparing for the exam, and you worried about it constantly,'' says Vijay Trehan, 56, who attended IIT in the 1970s at Kharagpur and was a classmate of Berkshire's Jain.

Trehan says all of his college textbooks were written by American authors. Many of his professors had been educated in the U.S. and talked highly about schools such as Syracuse University. Trehan moved to the U.S. in 1972 to attend Syracuse. He never looked back.

`No Jobs'

``You pretty much had to leave. There were no jobs,'' in India, says Trehan, a senior technical consultant with Hewlett-Packard Co. in Nashua, New Hampshire.

Staying in India would have meant working for the government or a private company making the equivalent of $60 or $70 per month, says Vinod Gupta, who went to the University of Nebraska after graduating from IIT-Kharagpur in 1967.

Gupta, no relation to McKinsey's Rajat Gupta, founded InfoUSA Inc. in 1971 after his job was eliminated at a mobile- home manufacturer. InfoUSA, based in Omaha, Nebraska, owns a database of consumers and businesses used by Internet sites.

When Gupta visited his hometown of Rampur 100 miles north of Delhi a few years ago, he ran into an old IIT classmate. He was selling vegetables from a small stand on the sidewalk.

``If I had not come to America, I might be stuck in that same village selling vegetables,'' says Gupta, 60, who has given $2 million for a new science lab in Rampur for the village's 600 high school students. ``I had no qualms about leaving. I knew it would be a better life.''

With India's economy growing by 9 to 10 percent today, many graduates -- and some who left the country -- are remaining in the country, or returning home.

Staying Home

``Ten years ago, an overseas posting for a colleague would be viewed with envy, but today it is not big deal,'' says Roopa Kudva, director & chief rating officer with Standard Poor's Crisil Ltd. in Mumbai. ``There are more people who want to work here because India itself is turning out to be a bigger story.''

Puneet Srivastava, 28, is an engineering graduate who went to IIM-Ahmedabad after working for Infosys Technologies Ltd., India's second-biggest software exporter. He now works for Bangalore-based Marketics, which sells marketing advice to consumer-goods companies. He says he won't move overseas.

``Pay was one of the reasons people took up overseas jobs earlier, but the differential is narrowing by leaps and bounds,'' says Srivastava, whose classmates earn about 6 million rupees ($128,810) in Mumbai after two or three years of experience. ``That figure overseas is not much higher.''

`Track Record'

McKinsey's Gupta founded the $130 million India School of Business in Hyderabad five years ago in an effort to give more students a shot at education. The school is allied with Northwestern University's Kellogg School of Management and the Wharton School at the University of Pennsylvania.

``It helps for the younger generation to see more of us with a track record of success,'' says Gupta. ``It gives them a level of aspiration.''

And that's surely what Nooyi's appointment at PepsiCo will do. The day of the announcement, which was India's Independence Day, the news edged out President A.P.J. Abdul Kalam's address for column inches in four of the five national newspapers.

``There is an obvious sense of pride in that she is not only born in India, but also educated here,'' says Kiran Karnik, president of India's National Association of Software and Service Companies. ``She has broken through the proverbial glass ceiling to prove Indian talent is right up there.''