As more Indians take over leadership roles in companies across the globe Ashima Jain, Managing Director in PwC’s National Office, US, and PwC's accounting think-tank, explains why it makes business sense for companies to employ a diverse workforce.

Ashima, a physics graduate from Bombay University and an alumna of IIM, Ahmedabad, is an expert on mergers and acquisitions, joint ventures, consolidation and lease accounting. She is also the founder-president of the IIM Americas and an advisory board member of Chennai-based Shasun Jain College for Women.

In conversation with the Business Line, Ashima Jain talks about workforce diversity, big-ticket acquisitions by the likes of Facebook and Google, and why convergence of the financial reporting standards is proving to be difficult. Excerpts:

What do you make of the big-ticket acquisitions in the US tech sector? Are these instances of visionary leap forwards or irrational exuberance?

I come from Silicon Valley that has this start-up culture. Someone finds an idea, builds on it and you have a big company which sees its application. Why would they want to reinvent the wheel? They just acquire the team and the technology. The valuation is based on diligence and appreciation of what they think the value of that particular acquisition is.

The question is how well will they manage once the acquisition has been made? Will the expected synergies be generated? All acquisitions are well-thought out. But it is a gamble, because technology is changing so fast.

So you have a choice: do you go for organic growth or do you go for growth by acquisition? In technology there is often no time for organic growth. Thus acquisition is a very common way.

Often after the acquisition, the team whose product is acquired, who are entrepreneurs themselves will join you. But after the golden period is over they might go on and do other things. The beauty of Silicon Valley is the only thing constant they realise is change. That is how innovation happens.

You are the founder of IIM Americas, how are the IIMs regarded in the US?

There are about 7,500 IIM alumni in the US. In 2005, I felt the IIM alumni could come together and create a synergy, a platform where they could network, share their thoughts and also give back to the local community there. IIM Americas has grown by leaps and bounds, and we have 13 chapters in the US. The thing is IIMs don’t have the same reputation as the IITs. There are thousands of IITians in the US. Because of the technological revolution, the IITians set up companies and are entrepreneurs and job-providers. Thus they are visible in American society as wealth-creators. In contrast IIM Alumni are fewer.

What does the IIM alumni association there do? Does it further the cause of the Indian MBA, what do you hope to achieve?

The IIMs are well-known in US’ academic circles. That is because IIM graduates become professors and are known and respected. But outside the universities, when you think about the corporate world and the general public, the IIMs are not well-known. The IIM Americas comes up with programmes that integrate the alumni better into the local communities. When you do that then automatically people will start talking about the IIMs. We believe that showing and not telling will help spread the word about what the IIMs in India are all about.

What is the role of liberal education and how can it help students?

In the US it is very expensive to go to colleges. You have to pay your way through college and you become very independent. The choice that a student faces is: should I take a loan and study in a college or should I work for sometime, save some money, and then go to college? It is a very financial important decision and its life changing. College education there is very intense, very authentic and very sincere. In the US education is a process of making mature and well-rounded personalities. By definition you focus on what you want to do but also learn other subjects, which makes you a very well-rounded personality.

What liberal education does is it helps students discover their passion, and provides them an opportunity to dabble in several areas before making that critical choice of what they want their career to be, and in the process this gives them skill sets which will be useful for life

So my vision for liberal education is merging the science (theory) and the art (application) of a field. For instance: I come from the world of accounting. I know the accounting rules. But when there is a transaction, it will not be designed to exactly fit into the model that is written up. So then I interpret the rules and apply them to the transaction. This is where a science becomes art.

And so eventually, if two people are equally competent, and they are applying for a particular position — for a job, or further studies, or business or funding — the one with liberal education will always be better. That person will be a well-rounded individual who will get what they are looking for.

From the time you went to the US to now, how are NRIs regarded? Many have taken on CEO roles, like you and others like Satya Nadella. How has that impacted the Indian story in the American dream?

I feel very comfortable being an Indian in the US. The US is a country of immigrants and what is wonderful about it, what has evolved is there is unity in diversity. And because of globalisation diversity in the workforce at the supply side makes a business sense because your consumer base is so diverse!

When you come to NRIs or people from a different origin, I think we are at an advantage. India and China with populations of a billion people have big markets. There are more people of Indian origin who can see the business opportunity in India or China and thus organisations will look for people like me.

Ashish Nanda, an IIM-A alumnus himself, and who was in Harvard, has returned to take over as Director of his alma mater. Do you see the trend of well-qualified NRIs from the US returning to India to take up positions and contribute to the Indian growth story?

I think with globalisation the IIMs cannot stay in a protected environment. They have to reach out. Now if you look at Wharton, Berkley or Stanford, once you go there you have systems and process and you are with them for life. The IIMs did not have that.

With competition from other global institutes, which are setting up a base in India, the IIMs have to start looking outside. They are now realising that they have neglected their alumni and are reaching out. They have to become global and should tie-up with other institutions. It makes a lot of sense to get someone who has been in a reputed US university so that the person can bring the global connections. Now what is interesting is: how do you manage that process by keeping the local individuals and faculty members, who are very accomplished and respected too, satisfied?

It is definitely important to have this cross-pollination from a globalisation perspective, but it is equally important that you put into place programmes or models that would reward the local faculty here.

The US follows its own GAAP (generally accepted accounting principles) and not the IFRS (International Financial Reporting Standards). Will this impede comparability? What are the major differences and how can these be reconciled?

There is a fundamental rationale that makes sense that all companies in the world must use the same language to report to their stakeholders. So that there is an apples to apples comparison.

At one time the thought was at some point we (in the US) would adopt the IFRS. But when we reached out to the preparers of financial statements it turned out that introducing IFRS would be a wholesale replacement of the US GAAP.

Though it made logical sense it was felt that it should not be done immediately because of the complexity, the cost involved and so on. Thus the next thought was convergence.

Pick up major areas of accounting literature and come up with converged standards on revenue recognition, leasing, and so on

Ultimately only some projects such as revenue recognition and business combinations were chosen for convergence. And because business was being done differently in different geographies it was difficult come up with a converged standard for those too.

It remains to be seen what happens on leasing as in the last meeting we saw that the International Accounting Standards Board (IASB) members and the Financial Accounting Standards Board (FASB) members had some fundamental differences. At this point we have to wait and see what happens to convergence but it has been a process of education on several issues for both sides.

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