Born out of HCL, among the pioneers of the computer revolution in India, HCL Infosystems began its journey producing micro-computing calculators back in 1976. Since then, from introducing India's first home PC to developing what's arguably considered the country's most impressive mobile distribution strategy in 1996, the company has achieved many a milestone. But it has been a bumpy ride, including when it was forced to change business models to survive in a pre-liberalized environment.
Ajai Chowdhry, founder, HCL and chairman and CEO, HCL Infosystems, shares lessons he and the company have learnt from some of the Stone Age of India's computing history and insights on tackling the challenges of low PC penetration in India. And more currently, how the company with its deep presence in India, is taking on competition from cheaper PC alternatives.
How competitive is the domestic PC and laptop market? And how are you dealing with it?
Although the PC and laptop market has always been a competitive market, in the last five years, there haven't been any real new entrants, except for one or two Chinese or Taiwanese companies who don't really have a brand. On the other hand, because there has been a significant slowdown elsewhere in the last two years, India has caught everyone's attention. And that means that there is plenty more competition in India.
We started the IT revolution in India therefore our brand association is very high. Furthermore, we have focused business teams that address each part of the market be it government, the public sector, the private sector, the small and medium industry or the consumer. We have great positioning in the government and PSU market - we are located in every taluka of the country. It is that extensive service and sales capability - in every district - that really gives us our competitive advantage.
There is no future without risk. And not just the risk taken by top management but even others within the organization.
How do you compete with cheaper, assembled PCs?
The grey market has always existed. Our strategy is to educate consumers on how to buy and what to buy. A lot of the products available in the grey market are assembled in somebody's garage, taking some new parts and mixing them with some old parts. That's how their products end up being cheaper.
Why is India still the most under-penetrated PC market among markets its size?
Worldwide, the government has always the largest customer for technology. The government has to be more aggressive in their strategy to increase PC penetration if nothing else but because there is a direct connection between PC penetration and GDP growth. If the country wants to record a 10 percent GDP growth, then PC penetration has to go up. My dream is to provide access for all.
If you make broadband readily available, PC sales will go up. Broadband access should be made available to every city, town, and village in the country. Indian telecoms have paid a lot of attention to voice but they haven't paid enough attention to data. In the consumer market, financing for PCs is not available and that's also a big impediment.
You work a lot of the government. Why are so few e-gov projects successful?
First, the e-governance projects that we've been a part of have been remarkable successes. The issue with e-governance is that although the plans are fantastic in nature, they are never executed in a time-bound fashion. There should be an expiry date to funds allotted to every e-governance project. Another problem is a lack of deep partnerships with the front-end users in most cases. Customers of e-governance projects need to be more involved.
What's the secret behind cracking government deals?
We have been doing business with various state governments for over 30 years. We have taken a proactive role and constantly update the government on the latest technologies. That's why we are regarded as trusted advisors. Another reason the government has so much confidence in us is because we are located in every district. Our reach for providing services as well as hardware support is the highest in the country
What’s the biggest challenge you’ve faced?
The biggest challenge for us came in 1991, prior to the economic liberalization when the country had very little foreign exchange. To make computers we had to import components but we didn't have LCs (letter of credit) which we could open. That's when we decided that we have to make a foray into the export market. Till then we were limited to the domestic market.
What's your view on risk? There is no future without risk. And not just the risk taken by top management but even others within the organization. Our best innovations happened when people took risks. Back in 1991, a young employee came up with the idea of creating a market for consumer PCs, following which we launched Beanstalk which has been one of our most profitable product lines. We encourage our employees to take risks - the more mistakes you make today the better you become tomorrow.
Can you define the CIO’s role within an organization?
A CIO's position is closest-aligned to the CEO of a company. The CEO's vision is translated by the CIO. A CIO's job is not to benchmark or copy; it is to innovate. CIOs need to take up an entrepreneurial role and create profit through technology. CIOs should no longer involve themselves with the IT part of the business although they should be responsible for making an organization IT savvy. CIOs should involve themselves in new areas where they can make a difference. And that will come only if the CIO works with the business and marketing.
What’s in HCL's future?
HCL has always thrived on innovation. From the beginning we were a product company. We have been constantly developing a range of software products that are integrated within our hardware. Similarly, when we entered the systems integration space, we decided that we would not only provide services but also develop specialized products. Our strategy has always been to give the customer a complete experience - be it in hardware, software or services. And we hope to continue doing so.