Economic Times - Delhi

Mon, 20 Feb-12

Pg# :1

Size : 579 sq.cm.

The World has Changed, So should the Indian IT Sector: HCLs Vineet Nayar
C O R P O R A T E 14

World has Changed, So should the Indian IT Sector

The w orld has changed, w h e th e ry o u lik e ito rn o t. The faster you accept it and faster you con v e rt the threat to opportunity, the better it is, says HCL Technologies CEO Vineet Nayar. In an interview to Sudesna Sen, the head of Indias fo u rth largest locally-listed software ex porter talks about the Indian IT industry and what ails it. Edited excerpts:

e t q&a

W h a t ails Indian IT today?

Ill summarise it in one word. Nostalgia. The world has changed, and there are significant threats and significant amounts o f opportunities. The old rules, the old ways are not going to apply and, therefore, if we keep on w aiting fo r the golden old days to comeback, w ell keep on waiting. The biggest threat and opportunity fo r us is that we've to give up hoping, take a step forw ard and launch into a completely new normal. The w orld has changed, whether you like it or not. The de mand has changed, the employees have changed, the customers have changed, societies have changed. The measures have changed. The faster you accept it and faster you convert the threat into opportunity, the better it is.
So, w h a t is th e n e x t big idea g o in g to be?

Employee firs t is not about w o rryin g about people who go, it is w o rryin g about people who stay. If people are empowered and more productive, and produce faster grow th than your com petition, then the employee firs t policy works. Young people have aspirations. W hile people are there, we get better value out o f them, and they are happy. Do you feel respected? Can you tell your boss to back off? Does he ask fo r your opinion? Employee firs t is try in g very hard to bring this kind o f culture in. Do we have uniform im plantation across 85,000 across 26 countries? No. So, we have pock ets o f excellence. But the whole philosophy and ethos, at least every single employee coming into HCL comes in w ith a belief that we are try ing very hard to live a sentiment. Others are not even w ill ing to I ive that sentiment. So, at least there is some hope here.The reason we are gaining market share, is because our employees are motivated. They w ork harder, they feel more loved.
So, w h e re do you see HCL vis -a -v is th e co m p etitio n in India? How w o u ld yo u position yo u rs e lf am ong th e top p la ye rs in Indian IT?

W h a ts th e business m odel o f th e fu tu re going to look lik e fo r In d ian IT?

Were not a product company so youre not going to suddenly see an iPad or iPhone from us. And therefore itsgoingto be innovation aroundthe edges. In atypical product com pany,youre going to see centre-based innovation. In a services com pany you see innovation on the edges. Charging mechanisms change. You could have charged per person, now you w ill see charging per application, or per device. You worked in back office to in crease efficiencies, now you w ill w ork in fro n t o f fice to increase revenues. You have an opportunity to charge on revenue share, as we do w ith Cisco and many others, rather than charging on cost re duction. I th in k you w ill start pricing in risk and re ward. What has been said about the financial ser vices c o m m u n ity -th a t reward is much higher than the risk - the same w ill be asked o f the IT in dustry. The reward to risk ratio fo r each customer has to be p re tty balanced.
If you d o in g a T& M contract, yo u dont h a v e to w o r r y ab o u t risks, b ut th e m o m en t yo u m o v e in to m o re in n o v a tiv e contracts, yo u h a v e to w o r r y ab o u t m anaging risk.

getherto create a Sony Ericsson. Either jo in t ven tures, or jo in tly goingto market, where you collec tiv e ly become biggerthan you currently are, these are the 3 levels in which you w ill see business models emerge. But these are all innovations on thefringes.
T h e re is c u rre n tly a lo t of angst am ong Indian businesses a b o u t th e state of th e nation and p o litical w ill, and a glo o m y o u tlo o k on In d ias prospects. W h a ts y o u r view ?

We have had this debate every decade, and we have come out o f it. Something w ill happen. A country w ith billion aspirations, something w ill happen. We are an optim istic society. Should the governm ent do more? Yes, but no governm ent anywhere inth e w orld isdoingany better.

Let's go back 10 years. I think the answer o f the fu ture is in the past. In 2000, application devel opment was dominating Indian industry, after that three new ideas, each o f them billion dollar plus ideas came up. One was engineering outsourcing, second was BPO led largely by small entrepre neurs outside IT and the th ird was remote in frastructure management. In the last decade out of three big ideas which came in our industry, HCL w a sle a din gin tw o . We have to look at a decade at a time. Do I see one singular business idea that can potentially give a billion dollars?There are 7 or 8 such ideas in the anvil, but you do not know which one w ill succeed. M obility, cloud, m ultiservice.B ut I'm not w illin g to bet any o f them are goingto be billion dollar ideas in 10 years. We don't know. We heard o f all kinds o f ideas - business consulting, products - come and go in the last decade. A product company is ve ry obsessed w ith new ideas. A services company is obsessed w ith taking 3 or 4 o f these to market.
D espite HCLs m uch publicised e m p lo y e e firs t policy, you still s u ffe r as much fro m a ttritio n and lack o f ta le n t as others.

In 2005, when we started the journey o f trans form ation, we were faced w ith choice o f w hat we want to be. In India, fortunately we have some ve ry fine ITcompanies. Some were fine, some are fine. But th e y re fine. We took a decision that th a ts not the space we want to be in. They have created a business model that worked extrem ely w ell fo r them, and if we compete w ith them, there's no point. So, we sharply focused our eyes and energy on competing w ith the IBMs and Accentures of the w orld, on total IT outsourcing, whereas most of the others are focused on a d ifferen t business model. Whenever I'm asked thisquestion, I don't know how to answer. We don't compare ourselves w ith HP or IBM or Accenture, but we compete in that space. And we are obsessed about not competing withlO Ps. We are deal ing in a trillio n dollar m ar ket. And collectively, Indian IT companies have less than 3% market share as lOPs. There is a huge mar ket out there. At HCL, we dont have an obsession about comparing ourselves w ith rest o f the lOPs, because our focus is on the 97% market and not the 3% market.

The second big change w ill be the way we deal w ith our employees. Initially, building campuses and bringing them on buses, was our biggest lever fo r efficiency, tom orrow itw ill be somethingelse.The w orld is really short o f talented IT folks. The w orld wants more data analytics, more m obility, more new technologies, but where are the people? In itia l ly coding was fine, but people now w ant people who can understandthe business problem ,ar chitect a solution and implement a standardtool in response to theirbusiness problem. The th ird level o f change is about partnerships. So far, most of the w o rk w eve done has been from end to end. So far, w eve done very few jo in t ventures; you saw that in consumer electronics, wherea lot of companiescameto-

In itia lly coding was fine, but people now w a n t people w ho can understand the I business problem , architect a solution and im plem ent a standard tool In re sponse to th e ir business problem VINEET NAYAR
CEO, HCL Technologies