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October 02, 2006

From vendor to strategic partner: K@W interview with Shiv Nadar

Knowledge@Wharton has an interesting interview with HCL Technologies Chairman & CEO Shiv Nadar.
If you want to know what will become not just one of our biggest business lines but also among the most profitable, that is our technology business. It will provide the maximum yield to shareholders. That is the kind of work we are doing with companies like Deutsche Bank and Boeing. That won't go away for 50 cents less.

HCL has to become a partner, a strategic partner, to our clients. We can't remain just a vendor. Frankly, out of 500 organizations for whom we work, we are bound to be vendors to some 450. If we don't work for them, somebody else will. But to the other 50, we make a real difference. Those 50 firms cannot do without us because we are their strategic partners. That's not a very comfortable statement, but it is true -- they cannot do without us. Does it mean that they are prisoners of HCL? They are not prisoners, but they have stopped doing the work that we do. There's a huge amount of trust. Annual contracts are no longer necessary or even relevant.

We consciously worked for it. Over the years HCL has turned down lots of business. We've just walked away, and we have learned to say, "No." Today, when I look at software business, it's much simpler than it was in the early days when we were building HCL. Saying "no" had to come to us. It's a matter of vital importance. You have to say "no" if the machine is not going to do the job. Otherwise, for that one customer you could lose ten. And, to be perfectly frank, there was a period when we said "yes" to just too many things. In the past 30 years, at least two years had to be written off because of that.

Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.