11. HCL INFOSYSTEMS: Outward-bound

IN 1999-00, HCL Infosystems set out with a unidirectional agenda–to shed its ‘hardware only’ image and move toward offering a complete end-to-end IT services and products portfolio. With services growing at over 100%, even though hardware chugged along at a woeful 16%, the change agent seemed to be firmly in place. Leveraging on the traditional Indian advantage of high quality, English-speaking and cheaper labor, HCL made inroads into the international services market. In the short span of a year, exports (primarily from professional services) jumped from the earlier 4.7% to over 12%.

The company did exceedingly well in the exports and services market, winning major e-governance projects from various South-East Asian governments. However, it had its share of bad news closer home. Compaq usurped its longstanding number one position in the desktop space. This was despite the company having a good channel infrastructure with over 1,000 dealers in place. While Compaq got significant numbers from the home segment, HCL, with its Frontline channel network, could do little to stop the march. On the corporate front too, aggressive pricing by multinational rivals took its toll on overall figures. However, even as the growth rate slowed down, desktops retained the largest slice of the pie, grossing 47.7% of overall revenues.

While the Infinity brand is clearly positioned for corporates, it was unable to take on the cheaper multinational brands. Another minor setback for the company has been its losing the status of HP’s exclusive distributor. This has seen the HCL Infosystems’ agency operations slipping from the earlier 37% to less than 24% in the last fiscal. Some major orders clinched by the company include deals with Bank of Rajasthan and a countrywide networking project for Indian Overseas Bank.

So what’s the strategy this year? Getting back its number one status tops the priority list. Apart from beefing up the channel act of its Frontline division, HCL Infosystems is introducing a wide range of its Infinity branded desktops for the corporate segment. However, the focus on the lucrative services segment continues–both domestic and international. The company intends to leverage its force of 1,000 plus strong engineers (forming the service and support backbone) to increase its service component as against its hardware business.