22 international markets
Thames Valley and India – technology business links
The performance of the BRIC economies, whilst not without their own problems, has for the most part been on a more steady upward trend in the last couple of years than the performance of the economies in the western world. In the Thames Valley, technology businesses have for some time now benefited from strong links with one of the BRIC economies – India. While Indian outsourcing IT services providers have long been active in the UK, there is now a growing level of engagement by businesses in the UK with Indian businesses directly and this necessitates an approach that covers both fronts. The following issues tend to crop up repeatedly, writes Rustam Roy of Pitmans LLP
Rustam Roy Local advice
India (and the UK) have changed tremendously in the past 10-15 years, especially in relation to the flow of services between the two countries. The widespread use in India of English in business life and the high quality of education means Indian businesses are targeted increasingly for the provision of services to UK businesses. India’s consistent strength in IT-enabled and IT-related services means that this industry has become the focus of the commercial relationship between the two countries – this is evident in the Thames Valley with its large number of Indian IT professionals on short- term as well as long-term assignments.
... documentation may need to be structured with an emphasis on regular communication and governance ...
When investing in an Indian company or appointing an Indian company as a service provider, it is essential to obtain local tax and legal advice. Many UK advisers offer such advice from the UK, but the rapid change in India’s investment laws as well as the variety of ways in which one can engage in business with Indian companies, necessitates someone on the ground who is on top of the current regulatory framework.
Service delivery
Contracting with a service partner in the same jurisdiction can be tricky enough – the same relationship across several time zones needs even more attention. Notwithstanding the leading standards of Indian technical education and training, there are differences
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in service delivery culture and contract documentation may need to be structured with an emphasis on regular communication and governance, as opposed to relying on precise standards and remedies for breach of those standards. This is not a case of “better or worse” service standards as much as cultural and geographical differences in service delivery expectations.
... clients in the UK are often faced with a fairly inflexible position in relation to choice of law and jurisdiction ...
Some of the larger Indian service providers have set up UK-based entities, designed specifically to contract with local businesses. While the presence of a local entity often facilitates better regular communication, the services themselves (especially where IT-related services are concerned) often continue to be provided (wholly or in part) by people in India and it is important to ascertain those facts and tailor service delivery requirements and expectations accordingly.
Jurisdiction
Due to the availability of technically educated graduates and the relatively low cost of setting up an IT-service business in India, there are many of them and most of them are targeting business from outside India. Many of these are smaller companies who will not (just as analogous businesses in the UK) have an awareness of the “legals” that are associated with running a business. One of the results of this is that clients in the UK are often faced with a fairly inflexible
position in relation to choice of law and jurisdiction, which the service provider insists should be Indian law and India. The wheels of justice grind slowly in India and for complex service agreements (especially where they involve the delivery of goods or IPRs) some thought should be given to this, as it may be prohibitively expensive and/or too slow to resolve a dispute in India relying on the Indian courts.
It is equally expensive
for a small Indian service provider to seek to resolve disputes in the English courts. The difficulties related to the enforceability of judgments in other territories as well as the expense of traditional legal processes means that often more innovative and consultative means to resolve dispute need to be considered.
There is much to be optimistic about, as far as the existing and growing relationship between Indian tech businesses and the Thames Valley is concerned. In a global economy, finding best value service delivery partners is of fundamental importance and with a growing awareness of potentially problematic issues and their solutions, this relationship can only get stronger.
Details: Rustam Roy 0118-9570180
rroy@pitmans.com
THE BUSINESS MAGAZINE – THAMES VALLEY – APRIL 2012
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