“Baniya bussiness” is a term derived from ancient Indian merchant/traders business practices. Those who understand Indian business practices will know about Baniya business culture. This is successful ancient Indian low cost trading/business practice. Typically, businessmen used to buy raw material or product in bulk with heavy negotiations to reduce price and then they used to sell it to market/big vendor/ customers or export to abroad. Main earnings for merchants/traders are through cheap purchasing cost, low supply chain/handling cost and commission or some percentage like service charges or brokerage from buyer/customer.
In early days of globalization; many western companies, in order to save cost and time, has decided to send some part of their work to abroad/India locations. India also offers huge 1.2 billion population local market for companies but with tough competition from many players. In response to this situation, many companies in India have developed new low cost business model to stay competitive. Interestingly, there is already ancient “Baniya” business culture in India which is also a kind of low cost business model. So, many companies have adopted this Baniya model. But, this ancient model has some practical business process and mind-set issues. I will try to discuss/compare both, new emerging global low cost model and Baniya local business model, as per my knowledge and understanding here.
Some Key points of “Baniya” Business Culture:
- Be Greedy (in hindi – Laalchi ) and too much Stingy (Kanjus )!
- Exploit Employees with low wages and high working hours (Employee is not a human but a machine/slave….if he/she leaves; don’t bother…there are plenty more to exploit).
- Try to do “ Jugaad” (adjustment/hiding) in TAX or Invoice/Bills and pay as much less tax as possible (so that owner can earn more cash).
- Spoil/Destroy competitors by-hook-or-by-crook/ Hostile Takeovers.If they close its better!
- Copy shamelessly from other companies; their Old patents/Data /Products/Business practices and on the other hand keep everything about your company secret.
- Investments in R & D (Invention / Patents / Copyrights / New or Radical product development) and Environment protection are considered as “Wastage of Money”.
- Innovation or creative idea development is encouraged only if it saves cost/money (leading to more earnings), rest will be straight away rejected!.
- Long term vision (say after 15-20 yrs) and strategies are non-existent! Only aim is to earn as much money as possible with existing set up and minimum efforts.
- “Chalta hai” attitude (means ‘who cares’/carelessness attitude). Resistance to Change (attitude, practices, work culture).
Employee facilities in Baniya Business Companies:
This culture creates too much of wealth imbalance inside company and also in society around. Owners or top management earn multiple times than their immediate lower rank employees (~90%+ employees) in the organization.
You are not paid as per your qualifications, degrees, calibre or experience.
You are paid as per your skills to keep your boss “happy” and save cost while performing your responsibilities (you have to highlight how much cost you’ve saved for company in every meeting time and again. A proud moment arises; when you save by hiring new employee in cheap and less price than expected.You are the man! )
Even if this new recruit will leave early with frustration or due to feeling of being cheated/exploited. Its cool, who cares! 😦
New recruitment process means new opportunity to exploit and this is owner’s/manager’s favorite passtime. Its fun!!
Chances of getting hired by such companies are high if you are ready to take lowest possible salaries in the same industry without much extra demands and work like hell without complaining.
Employee Friendly Practices in Baniya Culture Companies:
For such companies, providing basic facilities to employee such as decent food, stationery (pens, pencils, printer, pages, stapler, paper clips, notepads, files etc.), hygienic environment, clean toilets, treated/purified water, employee safety, personal business cards and personal desks/cubicles means great offerings to Employees ( as if giving honour)! Managers will always praise such facilities in many meetings and make you believe that company is doing so much for employee welfare!! 🙂
Hold on, not finished yet..….Providing a separate computer, separate landline phone number, personal outlook/company E-mail address, Air-conditioned/cooled environment, foam cushion chairs with table, digital ID cards, mineral-bottled water for drinking, and a fix Internet connection to each employee is considered as “7-star – state of art – employee friendly practice”!! Don’t get surprise, if they put this information with pride on their website/career link /job advertisement!! 🙂
Comparison: New Emerging Global Low Cost Model Vs Baniya business model :
This is as per my knowledge and understanding. Suggestions/Corrections/Changes are welcome!
New Emerging Global Low Cost Model in India/Abroad
Baniya Business Model in India
|Vision/Mission||Yes. Long term.||Short term. Earn as much as possible till death!!|
|R & D / Innovations||Innovative Cost effective products. e.g. Tata Nano & supply chain, Low cost Airline business.||What is this? Only save cost, earn more…basss, that’s it!|
|Environment Protection||Develop eco-friendly, efficient and cost-effective technologies. e.g Mahindra’s Electric Car E2O.||Who cares! Only if forced/noticed by local Environment department.|
|Business Ethics/Transparency||Yes, Of course!||Earn maximum possible money for me and my family by any means and secretly!|
|Employee Friendly (Salary, Facilities, etc)||Yes. Follows all Labour Laws and good HR practices.||What are you talking man! How would I earn money then??|
|Corporate Social Responsibilities (CSR)||Yes.||Depends. May be!|
Where you can find this “Baniya” business culture?
Some of Indian Manufacturing companies (Chemicals, Petro-chemicals, Pharmaceutical, etc), Goods Suppliers, Traders, some IT/BPO- Outsourcing companies, Small businesses such as Kirana (Grocery) shops, Street snacks/food shops, Local branded cloth outlets, etc.
Finally, you must have got it why some Indian businessmen and CEOs love Globalization and Capitalist Business Model. 🙂 This has given them an opportunity to earn more by adopting old Baniya low cost culture!
No wonder there is high attrition rate in these stingy /miserly/ low cost Baniya culture companies. Young Indians prefer to work in truly global multinational companies (Indian or Foreign origin) and some local innovative start-ups which encourage creativity.
Note : Term “Baniya” used here is for business practice and not used for particular community/organization/person.
- First Post : Lesson learn from Baniya business culture
- Livemint :How culture shapes Indian biz success
- LiveMint: The peculiar pedigree of the business class
Sources: Google search, wikipedia, and hyper-links provided in the post.