Case background

In 1974, Indian government passed 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 Technologies, a global IT services

HCL Infosystems, focussed company for providing software led IT
on harware and on solutions, remote infrastructure
software integration 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
Challenges in Sales and Delivery group
Company was facing a lot of challenges
and was not able to perform well
Employee working in silos and lacked
unity
Attrition rate was high
Employees had “it’s okay to lose”
mindset
The way HCL approached to customers
Solutions given
Created 2 operating groups – a 7 person
Management Consult for Delivery and a 5
person Management Consult for Sales
Formulated a plan – company should move up
the value chain and start going after larger, more
complex engagements
He located his 30 people marketing team on his
floor and met the team frequently
Came up with ‘Employee first, Customer second”
strategy
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
Second phase
Duration 2 years
Third phase
Objective – Form strategic
Rejuvenating partnerships with Plan to radically
employees and other companies in change the HCL
improving operating order to offer more business model by
efficiency value and end-to-end 2010 in which 50% of
services for customers revenues would come
from services which
did not exist in 2005
 Changes made to align HCL’s structure and
systems with big deal strategy
• Organised company around 5 lines of business(LOB) with 7000 employees
operating in HCL’s verticals – essentially industry sectors
5 LOBs • LOBs – applications, enterprise consulting, technology, infrastructure and
capital markets

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

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

• Automated processes , intranet use would induce transparency

Consistency • Coupling of automated processes with sophisticated employee friendly
across LOBs intranet, made it possible for employees across LOBs to have consistent
relevant information in a timely manner
 Most important steps
• As per the nature of the business, employee
Employee first customer interaction played a very big role and
customer hence keeping employee happy would keep
customers happy
second • This will reduce the attrition rate and hence the
strategy cost of hiring

• This unit would focus exclusively on winning and

delivering big deals which was very much
Multi service required for the company to compete with big
companies like Accenture, IBM
delivery unit • It would act as a saviour for the company while
the entire transformation was in process