Intellectual property key to future-proof business: HCL Tech CEO
C.Vijayakumar has taken over as chief executive of Noida-based HCL Technologies Ltd. HCL had earlier this year appointed Vijayakumar as chief operating officer, signalling a transition at India’s fourth-largest information technology firm where growth has slowed in the past few quarters.
Vijayakumar’s challenge will be to bring HCL back on the growth path and fill the void left by former CEO Anant Gupta. Edited excerpts from an interview:
What will be your focus area as the new CEO?
One very important thing that we have articulated to the market is our Mode 123 strategy. This is all about how we can map the customer spend and fine-tune our services to make it relevant to the spend. We have mode 1 services which are traditional services such as infrastructure, application, engineering services and BPO (business process outsourcing). These are momentum services and we believe these markets are still under-served. Only 49% of global 2,000 companies have outsourced. Then still there are a lot of re-bid opportunities, $150 billion worth of re-bid is on and year on year it’s $40-50 billion. It’s a big opportunity.
You have made niche acquisitions such as those of Volvo for automotive and Butler America for aerospace. Are you more focused on gaining technology instead of acquiring customers?
We want to focus on intellectual property (IP). If you want to future-proof your business, I think products and IPs are very important, so whether you can overnight build products and IPs of very high value—no. By this partnership and niche acquisitions, we will start building it in the long term. I think it’s really a very important strategy for us.
Are you planning to appoint a new head of the infrastructure business, and will the COO position be filled?
It’s something I have to think about. It’s too early. But we have a very strong leadership—sales leaders, delivery leaders and HCL has always boasted of strong leadership pipeline.
I think, I am pretty comfortable with the momentum and we are pretty optimistic for the overall outlook.
So, can I say that the COO position was created to help you transition to the CEO post?
You can take it like that. It was a part of succession planning.
You have chalked out a partnership with IBM. What gains are you expecting from this, considering that IBM is also a competitor?
Competition is in certain space. In the IT space, there are lots of opportunities. They have a huge software business. So, there are good IPs that can be potentially looked at and that’s what we have done.
And then they are also a very large PaaS (platform-as-a-service) provider, like Bluemix is a big PaaS service. Some of our modern applications can be built on Microsoft Azure or IBM Bluemix.
You have been defocusing on the India market. Will that continue?
Yes, we are not focusing on the India market. It will continue to come down.
With a 2.8% quarterly growth and a soft second half, will you be able to achieve the 12-14% target in 2016-17?
We had a 6% revenue growth in the first quarter, we have 2.8% in the second quarter, so we are clear on what the run rate is. It is between 2% and 3% to get to the 12-14%. So far, from whatever we know, we feel confident to achieve that target.
While many IT peers have hired outsiders in order to transform themselves, you are a 22-year company veteran. Do you feel confident to bring new ideas?
Each core business has got very strong leadership. We continue to hire from outside also. So, it gives a good mix of external and internal view. In a large company, to really drive, you need to understand the internals of the company.
You need to understand what is the market positioning of the company, who are your customers and where you are resonating well. So, all that understanding really helps.