Doing good pays off for India’s entrepreneurs

Devi Shetty, founder of the Narayana Hrudayalaya hospital chain, wears an operating gown in his office in Bangalore, India, to be prepared for an emergency surgery.

HONG KONG — Where there are social problems, there are opportunities for social business to flourish, and since the global financial crisis struck in 2008, Indian entrepreneurs have been at the forefront of this new kind of capitalism. 

Health care for all

On a sprawling plot of land in Bangalore, set back from a noisy, car-filled road, sits the headquarters of Narayana Hrudayalaya, a major hospital chain operator.

The headquarters is practically a town unto itself. It has four hospitals with a total of 2,000 beds, and a school bus can be seen carrying students to the physical therapy and nursing care education schools located on the premises.

The group was founded in 2000 by Devi Shetty, 62, who was the primary physician of Nobel Peace Prize laureate Mother Teresa. After years of growth, the company debuted on the Indian stock market this past January. And although the market has been declining since the start of this year amid global market turbulence, Narayana Hrudayalaya’s share price remains higher than its initial public offering price.

Heart transplants at the group’s hospitals cost around $2,500 on average, compared with $60,000 to $100,000 in the U.S., providing impoverished people with opportunities to lead healthier lives.

The group has several ways of keeping its fees lows, such as using disposable surgical gowns and gloves, making surgical procedures more efficient, and getting the local government involved in providing health insurance.

Another important tool is the “fast-track” service, offered on the second floor of the hospital I visited. Users of the service are relatively affluent and pay higher fees to receive treatment without waiting. Profit from this service is used to subsidize fees for poor patients waiting for their turns on the first floor.

Some 20% of patients receive heart transplant surgeries for $1,400, according to the group.

It would be more accurate to describe Shetty not as a philanthropist but as a business-minded physician. In his office, he has a message plate that reads, “The world’s biggest problems are also the world’s biggest business opportunities.”

India’s gross national income per capita is just 4% of Japan’s. As the majority of the Indian population is poor, the inexpensive surgeries offered by the Narayana group are in great demand, and the number of patients visiting its hospitals has been steadily increasing. As of the end of 2015, the group had 23 hospitals, with a total of 5,400 beds, in 31 cities across the country.

Even rich people like Bill Gates cannot continue philanthropic work when they run out of funds, Shetty said, stressing that social contribution financed by business is sustainable.

The group anticipates its business model could also find success in the U.S., where soaring medical expenses have become a national problem. For that reason, the group opened a cardiac surgery hospital in Grand Cayman in 2014 with the aim of accepting patients from the U.S. The island, located in the Caribbean Sea, is just a 90-minute flight from Miami.

“In Indian culture, constraints are seen as a catalyst for innovation” says Kris Gopalakrishnan, co-founder of major Indian information technology company Infosys. Shetty is just one example of that culture.

Smarter hiring

Younger people, too, are starting innovative businesses.

Varun Aggarwal, 33, founded Aspiring Minds with his elder brother in 2007. He was surrounded by many young employees when I visited the company’s office in Gurgaon, outside of New Delhi, recently.

Aggarwal received a master’s degree in electrical engineering and computer science at the Massachusetts Institute of Technology.

His company uses artificial intelligence to match job seekers and employers. It does this by using machine learning to sift through vast amounts of data and find patterns in the information.

Varun Aggarwal co-founded Aspiring Minds to help talented people find employment and companies make better hiring decisions. /Photo taken in Gurgaon, India.

The qualities that make a successful worker vary by industry, and they can change over time. Aspiring Minds repeatedly tests workers to create a portrait of the “ideal employee” in terms of linguistic and cognitive abilities, character and other aspects.

The company also tests students, allowing client companies to hire applicants closely matching their ideal. This practice helps students know what skills they should acquire to find employment at the companies they want to join.

Aspiring Minds’ test, called AMCAT, has been adopted by many companies. Seven of 10 major IT companies in India and four of the country’s top five banks use the test. In 2014, 500,000 students took the test.

Aspiring Minds has grown rapidly, and now has 450 workers on its payroll.

Aggarwal said he founded the company “to bring  meritocracy to the labor market”. In India, companies tend to offer jobs exclusively to students of elite universities. As a result, other students, even if talented, struggle to find employment.

AMCAT thus benefits both companies — by helping them hire talented an the most suitable graduates — and students, by making the selection process more fair.

Omidyar Network, a philanthropic investment fund established by Pierre Omidyar, founder of the eBay auction site, has invested in Aspiring Minds.

Aspiring Minds has expanded its operations to the Philippines, China, the Middle East and the U.S., as Aggarwal found inefficiency in the employment market to be a global problem. Amazon.com uses the company’s test in hiring software engineers.

The Narayana group and Aspiring Minds have a few things in common: Both are contributing to society, both have expanded beyond India, and both are cited as examples in Harvard Business School’s textbooks.

At the time of the global financial crisis, the graduate business school of Harvard University was criticized for creating a generation of people good only at making money. This, critics said, created the catastrophic economic bubbles that did so much damage to society when they burst. In response, the school now teaches students about the earnings opportunities to be found in social contribution.

Source : https://asia.nikkei.com/Business/Trends/Doing-good-pays-off-for-India-s-entrepreneurs