How Shiv Nadar learned to let HCL Grow Up
Since the time Nadar handed over the baton to Vineet Nayar, HCL Technologies has gone through an overhaul
by Malini Goyal , Mitu Jayashankar | Nov 2, 2009
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T hose who’ve tracked Indian IT for a few years now, usually have no qualms in describing Shiv Nadar as the original pit bull terrier in the business. Fierce, hard charging, unforgiving, and deeply, deeply involved with HCL Technologies — a software services company he spun out of his original creation, a hugely successful hardware firm, HCL Infosystems. His persona was in stark contrast to the other titans in the business. Narayana Murthy assiduously cultivated a statesman-like image while Azim Premji came across as a recluse. It isn’t as if they weren’t as deeply into their businesses as Nadar was. It’s just that among the three of them, Nadar seemed the last man who would step away from the business. But then, nothing is what it seems. And so on October 2, 2008, when HCL Technologies paid £441 million to outbid Infosys for control of Axon, a UK-based company, it struck most people as odd that its mercurial founder wasn’t there to look into the cameras and say “cheese”.
“I have seen Shiv attempting to detach himself. In fact, at times he avoids meetings because when he is present, people at the company defer to him,” says Amal Ganguli, an independent director on HCL’s board. Strange, you would imagine, in a company where Nadar still holds a controlling stake of about 60 percent. Stranger still, you would imagine, in a company where until recently key executives, petrified of Nadar’s volatile temperament and enormous capabilities to push the boundaries they worked in, took cues from what he wears to work. Legend at HCL Tech has it that when Nadar walks in for a business review wearing a suit with a tie, it’s a good day. An open neck T-shirt on the other hand translates into “get out of the way”. Sleeves rolled up, jacket off, inevitably means all hell’s going to break loose. Fresh cookies in the room are a good omen, etc., etc., etc. And life went on. A company, which once upon a time was spoken of in the same breath as Infosys and Wipro, lost its way. In 2000, all of them had revenues of roughly $200 million. By 2005, Infy breached $1.5 billion while Wipro was nudging the number at $1.35 billion. HCL Tech on the other hand was just about half way there. Not surprisingly, few people were willing to give the company a snowball’s chance in hell. Exit Nadar, Enter Nayar This is our time,” says an ebullient Vineet Nayar, the 47-year-old CEO at HCL Technologies. And what a time indeed! Over the last two years, it has managed to snap some of the largest deals that have come Indian IT’s way. To be precise, $2.6 billion in an environment where even mighty Infy struggles to gather momentum. Last year, revenues grew 17 percent and its stock has outperformed both its peers as well as the benchmark index (CNX IT) by a wide margin (see chart on page 44). Better still, HR consulting firm Hewitt Associates ranks HCL Technologies among the best employers in Asia. “In three years, HCL has gone from zero to hero,” says Frances Karamouzis of Gartner, an IT research firm. What, you wonder, changed? Shiv Nadar, actually. After fighting pitched battles to dominate the Indian hardware space, Nadar got there by 1987 after he founded HCL Infosystems in 1976. By 1996 though, he figured while he was spilling blood over domestic spoils, the real war was waging elsewhere: Outsourcing. He quickly reorganised the company and created HCL Technologies to take advantage of the software services opportunity. But Nadar made some strategic mistakes there. He believed the Y2K business was not worth chasing because it was low value. Everybody else though went after it because it helped them build strategic relationships with large American companies. “In hindsight we shouldn’t have missed it,” says Nadar today. “We were the most qualified for it.” But he’s quick to add: “We are an engineering company, how many companies in the world have the capability to design an entire aircraft? HCL has that depth of technology.” Boeing is one of HCL Tech’s largest accounts today. To be fair to Nadar, when the writing on the wall was obvious by 2005, he did the best thing a founder can do. He stepped aside and asked Vineet Nayar to step into the saddle — on the face of it, his polar opposite. Nadar is imperious and usually wears an Armani. Nayar can most often be found with his sleeves rolled up, is an extrovert and likes to hit the dance floor with as much gusto as he would a sales presentation. There’s one thread that binds them though — an undying love for single malt whiskey. “He was a star,” says Nadar who spotted him in the 80s. Nayar was asked to move into Nadar’s office as the executive assistant, a job meant for those on the fast track. For three years, Nayar was the top sales person for HCL Tech, exceeding his sales targets two to three times over. But he had a problem – he got bored soon. In 1991 for instance, he got bored with selling. “Shiv was taken aback,” recalls D.K. Srivastava, senior VP at HCL Tech. “His top sales guy didn’t want to sell anymore.” So Nadar asked Nayar to come up with a business plan, which he promptly did with everything from ready-to-eat omelettes, aircraft manufacturing, and satellite-based communication systems. Nadar liked the last idea and HCL Comnet was in business with Nayar at the helm. He didn’t realise it then, but Nadar had “venture capitalised” the future of HCL Technologies. Which is perhaps why when Nadar eventually asked Nayar to take over HCL Technologies, the protégé demanded only one thing — a free hand. He got it. Over the next four years, Nayar overturned the business strategy and undid pretty much everything his “mentor” had put in place. |
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Find this article in Forbes India Magazine of 06 November, 2009
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Recent Comments
Sayan Sen :
November 12, 2009
Shiv Nadar is an inspiration for future Indian entrepreneurs. His unconventional methods are embodied lessons to budding entrepreneurs. Hats off to him!!!
November 12, 2009
Shiv Nadar is an inspiration for future Indian entrepreneurs. His unconventional methods are embodied lessons to budding entrepreneurs. Hats off to him!!!
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