Business in India is not always just about business building and expansion.

Unfortunately, not all ventures are successful. The reasons for this are manifold, but are often due to the difficult market environment. In the last two to three years, numerous German companies have felt the economic headwind in India. Economic growth halved during that time.

This unforeseeable negative development caught many entrepreneurs off guard, as it was assumed that there would be sustained strong growth rates in India. As a result, many companies had to shift gears and sometimes reduce capacity. However, reducing the workforce in India is a delicate undertaking and must therefore be well planned and managed - otherwise you could be forced to close down the business altogether.

Case study: Food manufacturing plant in South India

The Indian branch of a German food producer successfully supplied hotels, larger catering establishments and airlines for a long time. Due to the economic downturn, a few major customers canceled orders, causing sales to drop by 30 percent. In order to ensure continued operations, an entire shift had to be shut down, which would result in the layoffs of around 20 percent of the workforce.

The management immediately sought talks with the union representatives and the employee delegation in order to discuss the company's explosive situation fairly and openly. A social plan was developed and agreed upon together, which guaranteed the employees assistance with continuing to work in other companies in the industry. The company management had previously dealt intensively with the labor law situation in India and proactively held discussions with authorities and the local press. The agreement was honored by both sides. The implementation was carried out prudently, smoothly and without public disruption. The press remained “silent”. All of this is not at all a given in India.

Criteria for success in crisis management

Ultimately, the same rules and principles apply in India as in Germany - with the only difference being that in India, small problems can quickly escalate into wildfires. That's why it's particularly important to really do things the right way.

In our real case study, the company sought early and aggressive contact with everyone involved and seriously tried to find socially acceptable solutions. The company management included employees and unions in the solutions, did not hide problems and hardship cases and showed responsibility. The employees and the public (keyword press) were regularly and comprehensively informed.

These were also the main reasons why the majority of Indian employees supported the solution and were willing to support it or communicate it to the outside world. This meant that weeks of strikes and public discussions, including a loss of image, could be avoided.

Experts in crises and difficult situations in India

India is always good for surprises. That's why you can entrust us with your problems and challenges, as our team of experienced managers can take action directly on site in particularly complex or risky situations. We offer you an experienced conflict team in the form of a “task force”, which can actively support you on site in India in crisis situations or as an interim manager.

You will receive further information six times a year in our WB India letter: