HCL Technologies: Confident of its future growth
In spite of the hurdles, HCL Technologies has set on a steady growth phase and has won some impressive deals. Editor Rohit Revo met with Brian E. Pereira, Vice President and Head of Australia and New Zealand for HCL Technologies to find out what the company has been doing right.
When did HCL start operating in this market?
Most of our operations in other countries have started in a similar way. We follow our clients wherever they go. In case of Australia and New Zealand we were incorporated 10 years ago as local entities. We started very small operations when we started, as you can imagine we were selling all types of operations except Hardware.
In Australia and NZ we are around 800 people including around 200 in New Zealand.
0 to 800 in 10 years. How did you manage this?
No it is not a phenomenal growth. Because we go to market using onshore offshore model. That is our sweet spot and our value proposition which Indian companies are also fairly using. Taking work which is high skill and we do work using low cost, high quality English speaking labour pool. In most of the cases we are front ending service delivery engagements here for transformation and consulting and we deliver some projects fully offshore. Growth has come in 3 areas like application support, Service delivery management and high level consulting.
What are you heading in the next few years?
Based on our current size we will be 3-4 times our size in 2010 in terms of revenue. In our business, people is equal to revenue. We are trying to deliver services without equating people to revenues and the way we do it is by delivering tools, processes, creating our own IP and creating offerings which are independent of people.
What have been your largest deals in this market?
Fonterra was a large deal for us involving 300 applications which we signed last year for 5 years. We recently signed a deal for CBA, one of the leading banks in Australia which has been our largest deal so far this year.
How did you manage to get into Australian companies with the barrage of criticms you and Indian companies have been facing since some time?
You have to look at what the criticism is and where it has come from. In some cases the criticism is not backed by any sort of logic or fact. If you look at the actual numbers logical numbers, there is a demographic researcher by the name of Dr Victor Hugo who teaches at the University of Adelaide. He has authored a report that talks of the availability of skills in Australia.
If you are talking of highly professional and highly technical engineering skills then it is under decline here. So for Australia to continue growing at the current rate of GDP and for Australian owned businesses to be successful, it needs a good influx of talent and we provide that.
Is there criticism of us taking work offshore, well I would challenge that….When there are business opportunities elsewhere in the world, Australian businesses are the first to reach there. You have to sort the fact out from fiction.
You have to disregard the criticism that Indian companies are taking work offshore. IBM, Accenture and EDS still function in this region and they are not Indian companies.
What is the value proposition HCL brings to its clients?
We bring talent. We bring our IP, our methodologies. We bring our experience…our experience in working with large banks in US and Europe, large insurance companies, large manufacturers and utilities. We may have done work in customer loyalty for example in a large insurance company and found out how happy their customers are with their claims process. We may in a large back do credit card processing or loans optimisation allowing them to approve lot faster than they were doing it. So we bring that expertise to Australia. That, actually gets us the interest,
Rupee has appreciated. Are your margins under pressure.
Yes margins are under pressure. We have enjoyed at least 18 months of the other scenario where rupee was weak with rupee appreciating our margins are under pressure.
Based on the slowdown are you reducing people here.
We have good growth plans. Our pipeline is strong. We are forecasting work which is coming in the next 18-24 months and I can say very confidently I don’t see a need to reduce. We are doing cost cutting and cost optimisation always. We are always looking at cheaper ways to do things irrespective of economic conditions. Finding cheaper travel options. Utilising office space better. We are always working on cost optimisation.
When you are growing 3-4 times till 2010, how do you factor the growth with the reductions you are doing? How do you balance both?
It is reductions that allow us to grow and not double our operating expense. We find options where we double the number of users say using the telephone system in office our expenses can double. In turn we double the number of users on the system.
Some Indian companies have been taking over some Australian companies which offer value. Are you making any such acquisitions?
We have a M&A strategy. For Australia and NZ directly, there is one in place and we are in the hunt for good companies since the past 18 months.
So far you have done any acquisition
We haven’t done one acquisition.
What is the biggest genuine criticism you have ever faced from your clients.
I won’t call it criticism but there is a lack of understanding of the value that India adds to the Australian economy both from the value perspective and the skills it brings and education perspective. The Indian students coming here has doubled and tripled since the last 3 years and is expected to increase which in turn is helping some universities to sustain. Lack of understanding of our cultural aspects is the biggest hurdle.
What should we then do to spread out in mainstream?
We should not create small communities. We should move into larger communities and assimilate better.
What is the best appreciation you have got?
We won a couple of really good awards. In IDC ranking for offshore vendor recognition we are sixth and ahead of many other companies. There is Brand recognition for HCL as we were never in this list from the last 10 years. We won a couple of awards from SAP this year and got accolades from Forrester. These are Australian based awards and globally we have hundreds of awards.
We are looking for becoming employer of choice in Australia and NZ. We will be lucky to be the first Indian company to get that award. We have recently been given the fourth and last spot on Australian computer society which enables all my staff coming to Australia to have an option of their getting their credentials verified from ACS and we bear the costs.
Indian students potential is not tapped. What is your advice to these students who do specialised courses and don’t find jobs especially in IT?
Work experience is the key because this is a mature market. Most Indian students who come here on MBA don’t have work experience. MBA was never designed for people with no work experience. I suggest they actually consider working 2-5 years before coming here.
We have internship with ACS. ACS is just a medium to get candidates across. That scholarship is designed to give students to give experience in India and join our deliver teams. So that can help some students as well.
What is your take on the future of IT in this market?
We got Australian citizens running regional business from Australia for us. Australia is known for good talent. 160000 highly paid highly trained Australians leave every year and most of them never come back and the government is getting half of this number on 457 visa. This number has to increase, if Australia needs to maintain its competitive edge.
Australian businesses like to be on leading edge of technology and this is a test market for us.
Spend of IT will increase would change. Focus would change. Recent figures suggest that IT will move from consultancy to application outsourcing which will help free resources for these companies. Some industries will see reduction in IT spend. Australian banks are not overly exposed to what is happening globally.
HCLTechnologies has recently acquired the AXON Group which has increased the HCL headcount in the region. The interview was taken prior to the takeover.
Similar Posts:
- Arun Jagatramka – Aussie Mogul with a Desi Twist
- To deal with India would be good business
- Peter Varghese speaks at AIBC Reception
- Indian Entrepreneur against Big Multi Nationals
- Sanjay Raina: Confident of Future
