Hcl Technologies Case Analysis 6n3e60

Case background In 1974, Indian government ed the FERA act which discouraged MNCs from doing business in India In 1976, HCL was founded by Shiv Nadar with fellow engineers just after the MNCs like IBM left India

HCL entered the hardware market with sophisticated R&D capabilities

With heavy investment in R&D, HCL was able to keep up with the latest technological trends and hence gained reputation for innovation In 1992, Nadar offered Vineet to head a new business to be started, HCL Comnet, an Infrastructure and networking business wholly owned by HCL

Comnet was one of HCL’s most innovative and successful businesses

One employee’s statement, “We were first in the market although we were only in India”.

Challenges facing HCL Technologies when Vineet took over • Two trends that affected HCL – Software and services became the source of revenues since hardware became commoditized. HCL was only in hardware – HCL decided to go global but Americans were reluctant to buy hardware produced by an Indian Company as it was perceived to be of inferior quality. So HCL entered a JV with HP • As a consequence of deregulation, MNCs like IBM returned to India • Customers were increasingly demanding integrated IT services • Companies were increasingly offshoring, recoding and application development work to India. HCL did not take advantage of this opportunity to build strategic relationships with top leaders of global companies since HCL did not want to compete on price • Attrition rate rose to 30% which was much higher than industry average

As a result of these, Nadar decided to reorganise HCL into two companies-

HCL Infosystems, focussed on harware and on software integration

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HCL Technologies, a global IT services company for providing software led IT solutions, remote infrastructure management services and BPO

HCL required a leader to handle HCL Technologies in order to transform it to adapt to market dynamics since it HCL Technologies had to beat the intense competition in this industry by getting Big Deals Looking at his previous experience, Vineet Nayar was the best choice for the company

Steps taken by Vineet

• Vineet became president of HCL Technologies on April 5, 2005 and he began travelling around various HCL locations and talked to employees • He started a “Mirror Mirror” initiative in which he interacted with employees and showed them also as to how fairly the company was performing for last 25 years and how it had been for past 5 years • While his travelling, he identified the problems and thought of solutions which are as follows:

Steps taken by Vineet (Contd.) Problems identified

Solutions given

Challenges in Sales and Delivery group

Created 2 operating groups – a 7 person Management Consult for Delivery and a 5 person Management Consult for Sales

Company was facing a lot of challenges and was not able to perform well

Formulated a plan – company should move up the value chain and start going after larger, more complex engagements

Employee working in silos and lacked unity Attrition rate was high Employees had “it’s okay to lose” mindset

He located his 30 people marketing team on his floor and met the team frequently Came up with ‘Employee first, Customer second” strategy

The way HCL approached to customers

He recommended to offer multi-service, unique propositions and go after big deals He created communications and marketing team of about 30 “Young Sparks”

Steps taken by Vineet (Contd.) Vineet announced a three phase strategy focussed on value centricity: First phase Duration 2 years

Objective – Rejuvenating employees and improving operating efficiency

Second phase Form strategic partnerships with other companies in order to offer more value and end-to-end services for customers

Third phase Plan to radically change the HCL business model by 2010 in which 50% of revenues would come from services which did not exist in 2005

Changes made to align HCL’s structure and systems with big deal strategy 5 LOBs

• Organised company around 5 lines of business(LOB) with 7000 employees operating in HCL’s verticals – essentially industry sectors • LOBs – applications, enterprise consulting, technology, infrastructure and capital markets

Second finance group

• Sandip Gupta, Comnet’s head of finance was appointed as head here • This group would directly participate with Sales and Delivery on bringing in vale added business

Multi-Service Delivery unit

• Focus of this unit will be on winning and delivering big deals , then integrating their learning back to the organisation • It consisted of 200 brightest engineers selected based on their technical capability, business acumen and personality fitness for the job

Consistency across LOBs

• Automated processes , intranet use would induce transparency • Coupling of automated processes with sophisticated employee friendly intranet, made it possible for employees across LOBs to have consistent relevant information in a timely manner

Most important steps Employee first customer second strategy

• As per the nature of the business, employee customer interaction played a very big role and hence keeping employee happy would keep customers happy • This will reduce the attrition rate and hence the cost of hiring

Multi service delivery unit

• This unit would focus exclusively on winning and delivering big deals which was very much required for the company to compete with big companies like Accenture, IBM • It would act as a saviour for the company while the entire transformation was in process