Forbes India: How Shiv Nadar lets HCL grow up

THE MAN, THE MISSION: HCL Infosystems founder Shiv Nadar knew it was time to let go.

Ads by Google

ibnlive.com is on mobile now. Read news, watch videos
be a Citizen Journalist. Log on to m.ibnlive.com NOW!

Related Stories

• HCL judged best employer among tech firms

• Microsoft, HCL to launch world's cheapest laptop

• Sportstars, industry czars get top honours

Photogallery

Find us on Facebook | Join IBNLive community

Stay ahead with G-Talk Buddy | Click now!

  

Those 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”.

For HCL Technologies, Axon meant a lot. Lehman Brothers had crashed a month ago, and with it Wall Street. In the panic that followed, there was little money chasing good assets and HCL Tech had gotten itself a pretty damn good deal. What made it sweeter still was that arch rival Infosys, widely tipped to be the front-runner in spite of putting in a lower bid at £407 million, had to concede ground. To insiders at HCL Tech though, Nadar’s absence at the press conference to announce the acquisition didn’t raise any brows. His protégé Vineet Nayar did the needful, thank you very much.

“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.”