Bangalore: For a long time, Dell Inc. has been regarded as a box pusher, given its strength in the personal computer and server markets. But over the past couple of years, the US-based company has made a concerted move into the services business, underscored by its $3.9 billion (Rs17,589 crore) acquisition of Perot Systems in 2009. Unlike the hardware business where market shares and margins easily fluctuate, the services business is more consistently profitable.
Dell’s services business has a revenue run rate of $8 billion a year, and employs 44,000 of the company’s 103,000 people. Of Dell India’s 24,000 people, 11,000 work for the company’s global information technology (IT) services business.
Dell recently hired Suresh Vaswani, who was a joint chief executive of Wipro Ltd, as its India chairman. Vaswani’s boss, Steve Schuckenbrock, who took over as president of Dell Services about three months ago, leads the company in growing this lucrative business. On a visit to India, he talked about the opportunities and challenges before Dell. Edited excerpts:
Changed track: Schuckenbrock says in the recent past, Dell has emerged as a solutions company.
Isn’t Dell a little late to the services game? Unlike say an IBM or Accenture or Indian IT vendors such as TCS, Infosys and Wipro, Dell isn’t top of the mind when it comes to services. Have you caught up with other vendors?
I am very bullish on India as an epicentre of our growth story. I am quite comfortable about our continued ability to support growth out of India. When I look at the massive growth over the last decade or so, the big Indian outsourcing companies have done an admirable job. Yes, Dell earlier might not have been top of the mind (among services companies), but having said that, I am proud of the progress that Dell has made in becoming a solutions company.
While you have a large services revenue base of $8 billion, more than half of that comes from providing services around your hardware business. When do you see a transition into a complete IT services vendor?
It is a fair question. If you look at it, we were purely a support services organization not long ago. We were not doing much around software or packaging solutions. We were a hardware vendor. However, over the last 4-5 years we have made acquisitions in software, variety of different service companies including Perot Systems. We globalized services, standardized our processes, and we have extended our services offering to include the likes of infrastructure consulting and outsourcing. Dell Services had certain capabilities but then we acquired Perot for a couple of important reasons including a good leadership team, which we continue to supplement.
Perot founded the outsourcing industry. They were big enough to get us credibility in the services space. Even though we were doing some good things, we were not known as a services company. They were small enough to embrace the future in the way services would be delivered. Not necessarily the contractual, bespoken model that had preceded. That acquisition has helped us to get credibility and scale in the services business. We have built strengths in applications (development and maintenance) as well as BPO (business process outsourcing). Now, it is a question of adding more verticals, deepening our delivery capability and ensuring greater growth. All those tasks are under way. You will see us do this through both organic and inorganic growth.
Dell was not seen as somebody who invested in innovation but as somebody who would focus on shipping a box at the lowest cost. Has that changed with the emphasis on services growth?
No question about that. Earlier, you would never hear Dell speak about verticals. Today, we have the No. 1 position in healthcare (services), No. 2 position in education and a very strong play in government business.
We are now having a very different profile compared to what it was even a few years back. We are open and scalable, both of which require innovation. The market recognises that they are seeing more innovation from Dell than they did in the past. There is no question that we were seen as a hardware company, but in the recent past there is a new Dell which has emerged as a solutions company.
What is Dell’s pitch to customers?
We believe that we are at the cusp of an inflection point and this applies not just to us but for the industry as a whole. There have been 4-5 change points till now. Mainframe, distributed computing, client-server, Internet and the new era which we call the virtual era. Dell, because of the strength of its technology offerings, can play a pretty disruptive role and, thus, leapfrog competition in this virtual era.
Our direct sales model is also an asset here. We are open (architecture), scalable, capable and affordable. We, therefore, believe that we can grow market share much faster than competition.