New Delhi: The remote infrastructure management (RIM) services business of India’s fifth largest computer-services provider, HCL Technologies Ltd, is the biggest in the industry. The RIM business has powered the firm’s revenues to $1.88 billion (Rs7,971 crore today) in its fiscal year to June from some $764 million in fiscal 2005. Of this number, $283.30 million came from infrastructure services, which in
New challenges: HCL Technologies’ Vineet Nayar believes innovation will be necessary for the company. Photograph: Madhu Kapparath / Mint
In an interview on Tuesday, HCL Technologies’ chief executive Vineet Nayar said how HCL Tech, as the firm is commonly known, has grown its per-employee revenue more than 16% in the same period and how he intends recasting the company’s RIM, software applications, engineering, enterprise applications and business process outsourcing (BPO) businesses. Edited excerpts:
You recently said HCL Tech’s revenue model was completely different. You also spoke about re-engineering product and service lines. Where does that stand now?
When you run a business, the smart thing to do is not to run all your five cylinders at the same charge. For us now, the applications (business) cylinder, the engineering cylinder and the infrastructure cylinder is firing, so we pulled back the enterprise application and BPO cylinders to try and rejig the business. I have also announced that I’m going to pull back the infrastructure cylinder because I’m seeing a completely new disruptive model come into place.
Right now, we’re working on rejigging the enterprise applications business using enterprise solutions. We believe we want to go into the business where we’re going to kill custom applications. The problem right now is that enterprise applications are too expensive, and too difficult to implement. We’re trying to see if we can implement it in seven days, theoretically speaking, at one-10th of the cost of what it is today. We launched a product last month, which is making headlines at all customer locations, saying we will upgrade their enterprise SAP (a business software product) free of cost, and leverage the savings from that upgrade by bringing in process transformation.
Do you see such a model moving towards a software as a service delivery?
Software as a service is a big theme by HCL launched 24 months ago. Assume you want to buy ERP (enterprise resource planning). What we are saying is, we will buy the ERP, host it, have templates for, say, the media industry. You can log in, we will transfer your data in seven days, and you will be up and running in that time, on a hosted, utility-based model. That’s the re-engineering that’s happening in the enterprise space. Instead of charging more and more, we’re trying to see how we can create a business of self-funding all of this by reductions in cycle time. We want to see that all transformations are funded by new operations.
Take an insurance company client. For an insurance company, the more products you have, the more revenues you generate. But the more products you have, the more it increases IT (information technology) complexity and cost. So what is the optimal level in this scenario? You had to replatform the entire application so you could deliver a level of service to your customer which is unique. And, with a little bit of change, you can change the product and create customizations. We did this entire rearchitecting, and now they have doubled the number of products and reduced costs overall by 30%. Per product cost has come down by 60% and they have been voted the best insurance company in their region. And they did not pay even a dollar more from Day One. So, they did the entire transformation from the saving they accrued.
You mentioned a disruptive model coming in the infrastructure space.
Brilliant ideas sometimes come from a simple change in context. In remote infrastructure management, we are retaining the word remote, but are testing the words infrastructure and management, to see what more could it mean. Who said infrastructure is only IT infrastructure? We have said it. But why can’t you also make more manageable devices—mobiles, PDAs (personal digital assistants), consumer electronics, automation plants, printing machines? Why are we obsessed with managing only IT infrastructure?
Similarly, why can’t we expand the word management to become more proactive, so it becomes remote infrastructure pro-activeness, so we get into predictive and not reactive management? So when you test these words, interesting ideas appear, and these innovations can sometimes become viable businesses.
Do you have the skills to, say, run a water plant in London, or a power station in Cincinnati?
The answer is yes and no. After I said this at a Fortune (magazine) conference in San Francisco, a number of people have written to me and said we would like to see how you do this. A lot of people collaborate to create a new business model. In a global world, you spread the word that HCL is rethinking the world infrastructure, and you immediately have people going “A ha! Yes”. We went into aeronautics this way. In aeronautics manufacturing, there is now HCL’s plant automation service that’s come up in the last 12 months!
What’s dawning on me is that this definition of IT is a box we’ve created for ourselves, and to explore that space outside it will create immense value, but it’s too early to say what those effects will be.
Do you see yourself as an engineering company 5-10 years from now?
No, I think we will be a business problem solver. We will leverage all our strengths to become a business problem solver; it could be plant automation, managing mobile devices, it could be managing IT, it could be anything, but not restricted to that IT box.