Chennai: As the $62 billion Dell Inc. tries to transform itself from an information technology (IT) hardware company to a technology solutions provider, in India it is looking to the small and medium business sector to drive the change. Acknowledging that the company is up against stiff competition as it journeys into the services space, Dell India president and managing director Ganesh Lakshminarayanan, who is also vice-president of Dell’s global consumer, small and medium business services, says the company is strengthening its capabilities, particularly through acquisitions. Edited excerpts from an interview:
Which segment is going to help you in your quest to become an IT solutions provider in India?
We have a decent market share in the large enterprise space. We have gained a large share in the consumer space (where Dell became the market leader this year). So our focus now is on small and medium businesses (SMBs) and public (business). What we want to see is our solutions which we have put together, starting from servers to storage. When you look at our storage portfolio, we have been in the magic quadrant of service and storage vendors for the first time because of the acquisitions we have done (such as storage solutions providers EqualLogic and Compellent).
Sales strategy: Lakshminarayanan says it makes more sense to sell hardware if it’s part of a solution. Photo: Sharp Image
On the services side, we just built our India capability to deliver remote infrastructure services in Chennai. We are beginning to gain traction in that area.
What’s the next milestone for Dell’s Indian operations?
Our stated goal is to get to $2 billion as quickly as possible in a profitable way. We are close to getting there. We now have close to $1.5 billion business.
What is going to drive that growth?
In India, hardware is still a big part of that growth. Our (India’s) adoption of technology is still in a very nascent stage. So we still see a tonne of growth in end-user computing—in the desktop, notebooks market. We still see a tonne of growth in the SMB space because the mid-market is going to continue to acquire technology. We see huge growth in the services space. We know we are a starting player. If we look at IT broadly across the globe, it’s a trillion-dollar market and we are at $60 billion, so we have a long way to go. If you look at the India market, it’s about a $30 billion market right now, if we exclude telecom and other things, and we are at $1.5 billion. So we have a long way to go there as well.
Is it a cause of concern that you have lost some of your market share in India in end-user computing devices (down to 15% in the July-September quarter, from 17% in the previous quarter, according to Gartner)?
Our point of pride is to become a solutions provider. Our days of being a fascinating hardware provider we’re very proud of, but we want to build on top of that. We are not unduly worried about client market share. What it really means is we have got to be focused on the total IT spend and more on the solutions and services side of the client’s business. We always want to grow profitably in the client space. There are a lot of ways to go after market share. But with our goal of becoming a solutions provider, it makes more sense to sell hardware if it’s part of a solution.
What is your strategy to reach your target segment, which is SMBs?
If we look at SMBs, they organize themselves as clusters. There’s a retail cluster, a food and beverages cluster, a textile cluster—while the business drivers of the clusters are common, their unique technology needs are different. So we are really interested in bringing those solutions and showcasing them to those clusters so that the clusters can adopt those technologies. My belief is that the adoption of broadband, mobile and cloud (computing) is going to help SMBs adopt those technologies.
Any expansion plans?
We are really excited about exporting out of Chennai to the Middle East and Africa. We want to expand that further. We’ve got a factory in Chennai with close to three million units capacity where we’ve invested close to $30 million; we’re now doing close to two million units.
We are not only investing in Chennai, where we have close to 5,000 people. (Our factory has about 1,000 people.) We are also investing in second-tier cities in Tamil Nadu. We are opening up our own SEZ (special economic zone) facility in Coimbatore, which can hold up to 2,000 people. We are going to bring Dell services development capability into Coimbatore. We already have a rented facility there with about 500 people. It came as a part of the acquisition we did—Perot Systems—and we are just building on top of it to cater to both domestic and global markets in the application and business process outsourcing space. It will be a big piece of our transformation in becoming a solutions provider.