BEYOND THE BOTTOM LINE
Brain Drain in Reverse
01 December 1997


Indian businessman Farhad Forbes packed his bags in California's Silicon Valley and returned to serve his own country. Now his company is meeting the challenges of India's economic reforms.Indian businessman Farhad Forbes packed his bags in California's Silicon Valley and returned to serve his own country. Now his company is meeting the challenges of India's economic reforms.

India is known worldwide for her excellence in computer software and technology. The Financial Times describes India as a 'software superpower'1. But Farhad Forbes admits that his decision to return to his home country, from a plum job in California's Silicon Valley, was one of the toughest of his life. A Masters graduate in electrical engineering from Stanford University, he was working in research and development at Hewlett Packard, the major computer manufacturer.

Three events encouraged him to return to Pune, one of India's largest industrial cities, where he joined his family's business in 1982. In January the previous year, he had accompanied his parents to an 'international dialogue' conference at Asia Plateau, the MRA centre in Panchgani town, high up in the mountains south of Pune. There, says Forbes, he was impressed by 'seeing a lot of very committed people involved in various causes and issues. It made me realize that the individual can make a difference. It sparked the feeling that I should come back and do something here in India.' There was no family pressure to do so. But coming from a Parsee family, Forbes found that the emphasis at Asia Plateau on the need for moral values in society--such as honesty and unselfishness--'related very well' to his Zoroastrian faith.

Back in California the following month, he was inspired by the vision of Nani Palkiwallah, then Indian Ambassador to the United States, who gave a talk at Stanford urging Indians to return and make their mark on India's future. This, says Forbes, strengthened his resolve. The following year, the division he was working for at Hewlett Packard announced plans to relocate to Colorado. It was a natural moment for him to make the break after four years in the United States.

'Initially I felt very unsure whether I was doing the right thing,' Forbes admits. 'Life in India was very different, and in 1982 there was no thought of liberalization and real economic progress. In Silicon Valley I was working with all this marvellous technology. Would I really be able to use it in India? There is also the shock that hits you when you come back and find that you have to struggle for very mundane things. We still had hassles making phone calls in those days.'

He has never regretted his decision. His role at the Forbes Marshall engineering group in Pune, where he is now Director, 'has given me a lot of personal satisfaction which I could not have got in the States'. He also met his wife, Rati, the daughter of a former chairman of the Central Bank of India and cabinet minister in India's first post-Indepedence government. Her mother was the Forbes' paediatrician. Rati is now responsible for the company's Human Resources Department, which includes social welfare activities.

Forbes first joined the research and development department. By 1985, he and his brother Naushad, who also returned from America, had pioneered most of the company's six joint venture partnerships with foreign firms. The group, which employs 850 people in Pune, manufactures steam engineering components for industrial heating, and flow measuring instruments. The company saw an annual growth of over 30 per cent for the four years up to 1997, and profits grew each year. The turnover in 1996 was nearly 900 million rupees.

Forbes points out that, in India's increasingly competitive environment, cost increases have to be met by productivity gains rather than being passed on to the customer. Multinational companies are also pushing up wage rates. 'They poach your best people. So we have to match wage expectations,' says Forbes. This creates a pressure not to replace retiring workers. Forbes Marshall saw a 100 per cent increase in productivity, in the three years up to 1996, without significant job losses thanks to the company's expansion. Nonetheless, 'we are still only about one fifth or one sixth as productive as our German or UK joint venture partners,' Forbes says.

He also attributes the company's productivity gains to the influence of Asia Plateau. The company has sent groups of workers and managers to the MRA centre's 'creative leadership' training seminars each year for almost 20 years. Most of the workforce have attended.

In 1989, the company wanted to introduce a structure of productivity-linked wage agreements. 'There was a lot of opposition because people didn't understand it,' says Forbes. 'We had a stalemate and couldn't come to a conclusion.' To his surprise, the trade union leadership and the management negotiating committee decided, without any prompting from the Board, that they wanted to continue negotiations in the 'idyllic' setting of Asia Plateau. 'They spent about 10 days there. People from the centre spent time with them and they went to prayer meetings together,' says Forbes. 'We gave our management committee full authority and they worked out the final agreement with the union which was ultimately signed. It was really quite something.'

Returning to Pune, the union leaders had to sell the deal to the members. At first they had cold feet, says Forbes. 'But they finally stuck by it and it was well accepted.'

In 1996, a four-year wage agreement, due to be signed in December, was reached as early as May. 'It was unique,' says Forbes. 'We are fortunate that we have got to the stage where a sufficient number of people who have been to Asia Plateau accept that we need to have dialogue, to respect each other and keep each other's interests in mind. So we do see benefits.'

Like other businesses, the company pays to send its employees to Asia Plateau, seeing it as a worthwhile investment. But is Forbes Marshall simply using MRA in order to make the company more successful? 'I think you have got to look beyond that,' Forbes replies. 'We don't ever force anyone to go to Asia Plateau. It is entirely voluntary. He admits that 'some of the union members had reservations about going initially because they said that it was a way of brainwashing them, and softening them to negotiate more compliantly. But as more and more people have gone from various industries, not just ours, I think that has become less and less of an issue.'

The wives of the employees seem to welcome the effect on their husbands. Rati Forbes runs a women's programme and, on the day we met, some 30 of them had spent the morning discussing family values, including the conflicts that can arise with adolescent children and in large families. This was followed by a factory tour.

When it comes to business ethics, Farhad Forbes admits that 'it is difficult to avoid corruption entirely'. But the company has a strong ethos against it. For instance, it would be easy for the company not to comply with bureaucratic regulations by paying off government inspectors. Instead, Forbes says, 'our philosophy has always been that we comply entirely with regulations. Rules have to be kept.'

Like other Indian businesses, Forbes Marshall also has a strong social commitment. For over 20 years it has run a private, on-site hospital for all its employees and their families. It is the only hospital for two neighbouring townships. Medical treatment is free of charge. The company also sends an employee to run an educational programme for children, who would otherwise receive no formal education, in a village across the nearby railway track.

Recently, Forbes Marshall took the initiative in cleaning up a public park overlooking the river in Pune, which had degenerated into a waste tip. The local government authority, which until then had done nothing, provided four garbage trucks. Another initiative came after a woman employee was killed crossing the main Pune-Bombay highway outside the factory. The company gathered together other local businesses to pay for the construction of a central road reservation to improve safety.

When an elderly employee died in 1994, after some 30 years with the company, the Forbes family attended the funeral in his village. They were appalled to find a village of 15,000 people with no running water or latrines and only one well, only four kilometres from the factory. The teachers in the village school had to have bottled water in each classroom. The company's engineers cleaned up the well, laid new water pipes to the school and built a latrine.

Farhad Forbes attributes the company's social awareness to his father, Darius, Chairman of Forbes Marshall. 'All these community projects started as a result of his vision and desire,' says Farhad. He hopes that such initiatives will help to improve people's quality of life. Forbes Marshall is by no means unique in its social programmes. Government may have the primary role in turning the tide of poverty. But as businesses benefit from economic reforms, their private initiatives could also make a major difference to India's poorest.

1. Financial Times supplement on the Indian software industry, November 1997.

First published in For A Change magazine, August/September 1997, and subsequently in The Pioneer, New Delhi, 14 September 1997. Interview with Farhad and Rati Forbes in Pune, February 1997.


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