In this market, you can only grow by eating someone elses lunch

Written by Surabhi Agarwal | Updated: Aug 26 2009, 07:29am hrs
HCL Technologies past strategy of focusing on big deals helped it in registering a double-digit growth last financial year. However, its CEO Vineet Nayar candidly admits that the strategy will not hold in this environment and the company is open to lapping up everything that comes its way. You cant get married to your idea, he told Surabhi Agarwal, in an exclusive interaction, where he also talked about why the company is choosy about deals in the domestic market. Excerpts:

How is the strategy on focusing on large deals shaping up in times when such deals are rare

Post the Lehman Brothers bankruptcy, we decided that whatever moves, we will win it. So the large deal focus was a historical idea. In this environment we are focusing on emerging geographies like Latin America, Brazil, Canada, China, Middle East and South Africa. The second area is new services like cloud computing and Axon services. The third is increasing market share in existing customers.

Are clients still revaluating their vendors

Fortunately, vendor consolidation exercises are still going on. They are the only way by which I can improve my market share. The margins are going down, so you can only grow by eating someone elses lunch. All the large 18-20 deals like Dr Pepper Snapple and Sony we have announced this year are due to vendor consolidation. I think it will continue in future because there is a big churn happening.

Is HCL seeing any recovery in terms of clients drawing up their IT budgets

No. Not as of now

There has been a spate of acquisitions in the captive space. What is going to be HCLs strategy in that space

HCLs view is that recession is the time for investment. As long as an acquisition helps us transform our business model, size is not a constraint. We are open to buy-outs in enterprise application services, platform-based BPO, infrastructure services and geography acquisition in Continental Europe, Middle East, China and Australia.

HCL doesnt seem much excited about the deals in the domestic market, especially in the government sector, unlike its peers. Why

Indian government deals are largely L1 driven, which is lowest on price. We believe that unless you have a solution it is very expensive to participate and lose. HCL is very focused on winnability and only if it is high, will we go after it. Our domestic component is less than 5% currently and we believe that the Indian market is as good as any other market.

How do you look at new emerging models like Software as a Service (SaaS) and Service Oriented Architecture (SOA)

We are already considered a leader in SaaS and SOA. HCL believes that cloud computing is going to percolate into large corporations too. There are still concerns around security which are yet to be worked out, but you will see some growth in this space soon.