Ingersoll Rand's experiment to grow its biz: Spawning entrepreneurs in small towns

Last Updated: Fri, Nov 30, 2012 03:20 hrs

Sandeep Kumar Gupta, 26, had three job offers on hand from marquee multinational and Indian companies at the close of last year’s campus placement season at the Indian Institute of Management, Ahmedabad (IIM-A).

To the surprise of many of his batchmates, he did not go for any of these. Instead, he opted to join Ingersoll Rand, a diversified manufacturing company, as an entrepreneur partner in its two-year Entrepreneur Creation Programme.

For the first six months, Gupta and 15 other IIM alumni from Ahmedabad and Bangalore who joined the programme over the past two years underwent in-depth fast-track training across all the businesses and functions of the company -- it is into air conditioning, security and energy management systems, part of a US-headquartered $14-billion global conglomerate. (FOSTERING ENTREPRENEURSHIP)

In the next six months, the entrepreneur partners create a business plan for a financially profitable venture. These ventures can be for sales, distributorship or as a solutions provider for Ingersoll Rand products and services, preferably located in Tier-II and Tier-III towns and cities.

In the third phase, Gupta has to implement the business plan and demonstrate its financial viability, with support from various functional departments of the company. In the final six months, the fledgling entrepreneurs become business owners and start independent operations.

During the course of the two-year programme, the entrepreneur partners earn a monthly salary like any other management trainee. But once they move out of the programme, their fortunes are tied to the success of their business venture.

“We want to create a pool of 100 such entrepreneurs over the next five to seven years, who would operate largely out of small towns and cities,” says Venkatesh Valluri, chairman, Ingersoll Rand India. For the company, it makes long-term business sense to spawn and foster entrepreneurship in tier-II towns and cities. Valluri expects each of these start-up ventures to grow over time, to generate around Rs 50 crore worth of business over seven years.

That means adding Rs 5,000 crore to revenue. A brainchild of Valluri, the programme is unique to India and part of a strategy to strengthen its company’s hub and spoke business model.

According to Krishna Tanuku, executive director, of the Wadhwani Centre for Entrepreneurial Development at the Indian School of Business, Hyderabad, there is a huge untapped opportunity to foster entrepreneurial spirit in small towns and cities. “This will help leverage the local economy to meet the needs of the global market,” he says.

Key resources for any start-up are access to the market and technology for offering a product, service or a solution.

These two requirements are handled by Ingersoll Rand, with its range of products, services and solutions, along with service support.

The entrepreneur partners are free to design their ventures from any of Ingersolls line of businesses. “They have to build their businesses on their own,” says Valluri. The company might help them connect with financial institutions and banks for start-up and working capital, depending on their business requirements.

Gupta and five others, who joined the first batch of the programme in 2011, are slated to move out in April 2013.

They’re currently validating their business plans on the ground. Says an unfazed Gupta, who has two and a half years of work experience in the information technology sector, before joining

IIM-A: “I always wanted to be an entrepreneur.” The programme just expedited the move, he says.

For Valluri, the stakes are high. The success of Ingersoll Rand’s long-term business plan is deeply intertwined to the entrepreneurial success of these start-up ventures in small towns and cities across the country.

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