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 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 HCLs most innovative and successful businesses
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

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 IT
solutions, remote infrastructure
management services and BPO
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:

Problems identified Solutions given
Challenges in Sales and Delivery group Created 2 operating groups a 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 plan company 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.)
Vineet announced a three phase strategy focussed on
value centricity:
First phase
Duration 2 years
Objective
Rejuvenating
employees and
improving operating
efficiency
Second phase
Form strategic
partnerships with
other companies in
order to offer more
value and end-to-end
services for customers
Third phase
Plan to radically
change the HCL
business model by
2010 in which 50% of
revenues would come
from services which
did not exist in 2005
Steps taken by Vineet (Contd.)
Changes made to align HCLs structure and
systems with big deal strategy
Organised company around 5 lines of business(LOB) with 7000 employees
operating in HCLs verticals essentially industry sectors
LOBs applications, enterprise consulting, technology, infrastructure and
capital markets
5 LOBs
Sandip Gupta, Comnets head of finance was appointed as head here
This group would directly participate with Sales and Delivery on bringing
in vale added business
Second
finance 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 technical
capability, 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
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 big
companies like Accenture, IBM
It would act as a saviour for the company while
the entire transformation was in process
Multi service
delivery unit