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Article by Mohan Babu

Striking gold, the American way

Indians from technical backgrounds were instrumental in spawning a whole array of business ideas in the US ranging from mundane body shops to hi-tech fibre-optic, wireless and supply-chain systems, says Mohan Babu

‘The list of successful Indians who have made it big in corporate America reads like a who’s who of the business world.’

If I were to tell you that Indians in the US are entrepreneurial, you will probably give me a quizzical look since most Indians we know — our cousins our siblings are probably professionals. And, in today’s day and age, they are more likely to be software professionals or techies in the US. The word entrepreneur, to most of us, conjures visions of a person who runs his own enterprise, bringing together resources like land, labour, capital and his entrepreneurial skills, in the process amassing wealth.

Most Indians, especially those from middle-class backgrounds are quite risk-averse, especially when it comes to business and ventures. We are led to believe that the only way to achieve steady success in life is by studying hard, focusing on education and later excelling in our chosen vocations or careers. However, the American Dream contradicts this notion. It is every American’s dream to strike gold by thinking of an ‘All American’ product or idea, selling out and making millions.

It is a fact that there are thousands of people of Indian origin in the US who are entrepreneurs in the conventional sense. They run gas stations (petrol bunks), motels, restaurants, Indian bazaars and other small businesses. Many of them are from the highly industrious Gujarati community who came to the US during the seventies and early eighties after they were uprooted from their homes by African dictators. They were granted asylum in the US, UK and other countries and decided to settle here. As per one research report, over 70 percent of motels in the US are owned by Patels.

Many Indians, who came to the US as H1-techies during the boom of the nineties, also caught the entrepreneurial bug. Of course, the runaway success of a (then) young Indian Stanford graduate who sold his company to Microsoft for a whooping 450 million dollars really captured the imagination of a whole generation. Sabeer Bhatia not only became in instant celebrity but also gave inspiration to thousands who tried to emulate his accomplishment, many of them successfully.

Indians from technical backgrounds were instrumental in spawning a whole array of business ideas ranging from mundane body shops to hi-tech fibre-optic, wireless and supply-chain systems. The list of successful Indians who have made it big in corporate America reads like a who’s who of the business world. On one hand we have the likes of Vinod Khosla (founder Sun Microsystems), Sanjiv Sidhu (I2) and Pradeep Sindhu (Juniper), on the other hand, we have the troves of friendly-neighbourhood body-shoppers. And of course a whole range of entrepreneurs in between.

During the early years of the tech boom, one of the most popular ‘business ideas’ was to start a technical consulting company. All one had to do was to place an advert in the local newspapers in Bangalore or Hyderabad, sift through the hundreds of resumes that would pour in and pick up the most promising candidates and sponsor their H1 visa. Once the candidates landed in the US, hi-tech companies, hungry for bodies would grab them like hot cakes. The middleman would keep his cut of billing rate and go scouting for more bodies to “import”. There were little or no barriers to entry in this business and there were hundreds of body-shoppers operating in the US. Of course, all this changed once the economy started going south. Companies that were once hungry for programmers started becoming weary of body shoppers and middlemen. They started questioning the need to employ a teaming workforce just to keep their IT systems running. The result of all this is that the tribe of body-shoppers has all but vanished, but that’s another story altogether.

Starting a company in the US is an extremely straightforward process. Of course, legally, one can operate a business as a sole proprietorship or a partnership but that is riddled with risks and very few venture down that path. Given the risks involved in operating a business, it is better to “incorporate” the business into a corporate entity. However, unlike India, where one has to move mountains before one can incorporate a company, the process in the US (at least in most states) is quite straightforward. All one needs to do is to fill the necessary forms, which can be obtained from the secretary of the state where one resides. After filling the forms, one submits them along with the prescribed fees and one is given a certificate to operate as a business entity. The other paperwork like getting a tax id, opening a bank account etc is equally simple and does not involve a tremendous amount of paperwork. There are very few bureaucratic hurdles one faces and the whole process of starting and operating a small corporation is extremely streamlined. Incidentally, US also allows foreign residents and temporary workers to open operate corporate entities in the US. Of course, there are certain restrictions, but any corporate lawyer would be able to guide you. The result of all this is that the process of forming a business entity is extremely streamlined, leaving the entrepreneur to focus on the nitty-gritty of running a business.

During the dotcom boom period, it was everyone’s dream to come up with the killer Web-portal. With very few barriers to entry, even half-baked ideas were getting attention and capital. If there is any good that has come out of the current dotcom crash (and the economic downturn), it is that people are taking a hard look at their business plans. They are looking at how their business is making money, and are trying to become leaner and meaner. Real good ideas and business models are only going to survive and grow.

The US economy might be a wee bit slow, but the entrepreneurial spirit still seems to be going strong. I won’t really be surprised if another Sanjiv Sidhu announces an IPO once the cloud of gloom lifts. Until then, it is the survival of the fittest. Isn’t that what entrepreneurship is all about?





About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    For FAQ, Trivia and Information on Life in America, visit the Ask-A-Desi section

    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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