Indian firms can fill our skill and manpower gaps

Updated: Jan 28 2008, 04:40am hrs
Previously known as only a safe haven for parking funds, a recent study by Arthur D Little showed that now half of European corporations preferred to be headquartered in Switzerland. Even Indian companies are making a beeline for the scenic country, with more than 20 of them announcing plans to set up base there.

Development Economic Western Switzerland (Dews) CEO Jacques Pasche is credited with making his region a hub for the highly specialised biotechnology sector, with the number of foreign companies coming to the region growing by more than a third since he took over in 2005. On a recent visit to Gujarat, he spoke at length to FEs Jyotsna Bhatnagar about why Western Switzerland is one of the most successful investment zones in that country. Excerpts:

What gives Switzerland an edge over countries like Mauritius and Dubai, which have thus far been preferred destinations for companies looking for a global footprint

Large global companies seeking sustainable global growth have always opted to set up overseas subsidiaries with substance. They typically apply three criteria: The first are strategic factors, such as proximity to customers, a place where opportunities abound, where global leaders in your domain are located so that you can elevate your own operating benchmarks, and a place where there is a strong cluster in your industryboth horizontal clusters as well as vertical clusters. The second are soft factors such as quality of business environment, entrepreneur-friendly labour regulations and pro-active support of government. And thirdly, are tax issues.

Switzerland scores way above any other location in Europe, and above most other locations anywhere in the world. That explains why over 7,000 global companies have established operating subsidiaries in Switzerland. According to an Arthur D Little study Headquarter Location in Europe, 55% of global corporations preferred Switzerland, followed by the UK and Belgium (both 16%). Among those who chose a Swiss location, 97.5% of the companies are satisfied and plan to continue in Switzerland.

Indian companies that go to Mauritius do so only for short-spectrum tax reasons. Presence there does not add to business growth. Likewise, Dubai is suitable if ones target is the Middle East market only.

Why has Switzerland actively started wooing companies to set up facilities

Switzerland is particularly keen to attract knowledge- intensive and innovative entrepreneurs from all over the world. Such companies are necessary to sustain Switzerlands competitive edge in new technologies. Indian companiesparticularly in life sciences, information & communication technologies, the multimedia & entertainment sector, micro-technologies and gems & jewellery sectors are fast emerging as niche leaders. We would like all of them to set up their own R&D hubs and global headquarters in Western Switzerland.

The perception many Indians have of Switzerland is that its one of the most expensive European countries in every way. How far is this correct

Peoples perceptions are based on the cost levels in Zurich and Geneva. In French-speaking Western Switzerland, the region from the outskirts of Geneva to the outskirts of Basel, typical operating costs are 25-35% cheaper than in Zurich or Geneva. Several leading Indian companies have chosen this region to locate their subsidiaries in the last three years. As an extra incentive, large parts of this region are covered by Swiss Bonny Law, which enables companies to secure tax incentives.

In what sectors is it most advantageous to set up a facility in Western Switzerland

Apart from the sectors mentioned earlier, Indian companies are also establishing their global trading hubs in Western Switzerland. In such cases, they pay a gross income-tax of around 9% on international trading profits. Several Indian companies have established manufacturing facilities for high-tech products. In such cases, tax rates can come down to 2-5%.

Why is it better to choose Western Switzerland as a base compared to large cities like Geneva and Zurich

Lease rentals, land prices, salary levels and living costs in general are one-quarter to one-third less than in big cities. Office rentals can be as low as $80 per sq m a year, and factory rentals start at $45 per sq m a year. A large number of scientific parks, technological parks and business centres offer cost-effective start-up options. At the same time, you are never more than 90 minutes away from an international airport such as Basel, Geneva or Zurich. Except for the financial sector or retail, Western Switzerland is usually the preferred location for R&D activity, manufacturing, European marketing and servicing centres or global trading operations.

How does Dews facilitate those seeking to set up a base in the region

For Indian companies, Dews offers comprehensive services, free of cost, to help them establish Swiss entities. The one-stop service package includes: company registration, business premises location and leasing, work & residence permits, and tax exemption rulings which are binding for ever.

Why are you keen to attract companies from India

It is well known that demographically, we will have a deficit of skilled, knowledge-intensive manpower in two to three decades. We believe that Indian companies can fill these gaps and become a part of our mainstream industrial culture quite easily.

In what way does Switzerland, specifically Western Switzerland, score over other EU countries as an investment destination

First is its presence in a pan-European location with exemplary growth-oriented business culture, together with easy access to surrounding markets in France, Germany, Austria, Italy and the new EU countries. The region hosts the headquarters of several UN organisations as well as international Olympic organisations.

Second is the strong work ethic. Working hours are longest in Switzerland, and are typically 10% more than in Germany. There are no strikes and labour laws are investor-friendly. You need to give one to three months notice period to employees for termination of service (three months for those with more than ten years service).

The region is also a centre of innovation and development, which attracts leading global players in every field. It is home to world famous institutions such as Swiss Federal Institute of Technology, IMD (Europes top management school), School of Hotel Management, Centre for Micro & Nano technologies and Institute of Artificial Intelligence.

How many companies from India have set up or are in the process of setting up facilities in Western Switzerland

Over the last 12 months, more than 20 Indian companies have announced their plans to establish a base in Western Switzerland. We expect the figure to more than double this year. Leading companies like Dr Reddys Laboratories, Glenmark, Dishman, Alembic and Polaris are already established in the Dews region.