hcl technologies case analysis

5/20/2018 HCL Technologies case analysis

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Case background

One employees statement, We were first in the market although we were only

in India.

In 1974, Indian government passed the FERA act which discouraged MNCs from doing business inIndia

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 technologicaltrends and hence gained reputation for innovation

In 1992, Nadar offered Vineet to head a new business to be started, HCL Comnet, anInfrastructure and networking business wholly owned by HCL

Comnet was one of HCLs most innovative and successful businesses


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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 applicationdevelopment 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


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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

As a result of these, Nadar decided to reorganise HCL into

two companies-

HCL Infosystems, focussed

on harware and on

software integration

HCL Technologies, a global IT services

company for providing software led ITsolutions, remote infrastructure

management services and BPO


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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:


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Problems identified Solutions given

Challenges in Sales and Delivery group Created 2 operating groupsa 7 person

Management Consult for Delivery and a 5

person Management Consult for Sales

Company was facing a lot of challenges

and was not able to perform well

Formulated a plancompany should move up

the value chain and start going after larger, more

complex engagements

Employee working in silos and lacked

unity

Attrition rate was high

Employees had its okay to lose

mindset

He located his 30 people marketing team on his

floor and met the team frequently

Came up with Employee first, Customer second

strategy

The way HCL approached to customers 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.)


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Vineet announced a three phase strategy focussed on

value centricity:

First phase

Duration 2 years

Objective

Rejuvenating

employees and

improving operatingefficiency

Second phase

Form strategicpartnerships with

other companies in

order to offer morevalue and end-to-end

services for customers

Third phase

Plan to radicallychange the HCL

business model by2010 in which 50% of

revenues would come

from services which

did not exist in 2005

Steps taken by Vineet (Contd.)


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Changes made to align HCLs structure and

systems with big deal strategy

Organised company around 5 lines of business(LOB) with 7000 employeesoperating in HCLs verticals essentially industry sectors

LOBsapplications, enterprise consulting, technology, infrastructure and

capital markets

5 LOBs

Sandip Gupta, Comnetshead of finance was appointed as head here

This group would directly participate with Sales and Delivery on bringing

in vale added businessSecondfinance group

Focus of this unit will be on winning and delivering big deals , then

integrating their learning back to the organisation

It consisted of 200 brightest engineers selected based on their technicalcapability, business acumen and personality fitness for the job

Multi-Service

Delivery unit

Automated processes , intranet use would induce transparency

Coupling of automated processes with sophisticated employee friendly

intranet, made it possible for employees across LOBs to have consistent

relevant information in a timely manner

Consistency

across LOBs


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Most important steps

As per the nature of the business, employee

customer interaction played a very big role and

hence keeping employee happy would keep

customers happy

This will reduce the attrition rate and hence the

cost of hiring

Employee first

customer

second

strategy

This unit would focus exclusively on winning and

delivering big deals which was very much

required for the company to compete with bigcompanies like Accenture, IBM

It would act as a saviour for the company while

the entire transformation was in process

Multi servicedelivery unit

hcl technologies case analysis

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