Act Two, Scene One

It”s a reversal of roles. Three years back
Wipro Infotech was considered the last of the desi IT outfits and were knocking at the
doors of the arch rival and semi-MNC, HCL HP. And now, after breaking up with
Hewlett-Packard, HCL Infosystems (HCL Insys) has usurped the throne by distinctly becoming
the largest domestic operation, and Wipro has a JV going on with Acer.

Almost everything happened at the same
time. First, the break-up with HP. It was probably a logical step by both the partners.
Manufacturing enterprise-class systems in India was not proving to be economically viable
looking at the market size. With a plant at NOIDA (besides the Pondicherry one), HCL Insys
can dedicate fully to the manufacturing of its own products. The second thing, which was
more significant, was PCL doing a vanishing act. The industry predicted the cowboy of the
Indian IT industry to reach the top slot of domestic players. But it stumbled on its
follies and had to close operations due to financial troubles. And suddenly HCL Insys
found itself without formidable domestic competition.

Report Card
(Financial Year=July to June)

Year–1995-96
Turnover–625Cr.
Growth (%)

Year–1996-97
Turnover–643Cr.
Growth (%)–3

Year–1997-98
Turnover–720Cr. (projected)
Growth (%)–12

These two things were enough for the
skeptics to draw a similarity between Achilles and the domestic players-what with the past
examples of Sterling Computers, Modi Olivetti, and others. But HCL Insys proved otherwise.
CEO Ajai Chowdhry attributes the present position of the company to its wide and
well-oiled supply chain and its business organization into well-defined units focussing on
specific functions. But what he forgets is that the company always had these as its
advantages, which had also initially attracted a multinational like HP.

In the last two quarters of 1997-98,
publications were flooded with company releases about bagging many orders, the latest
being the Bombay Stock Exchange order. This happened essentially because PCL”s
disappearing act landed the orders (especially Government orders) in HCL”s lap. And the
company had the infrastructure to service the orders. For example, it has bagged Rs 13
crore worth government orders and Rs 11 crore worth orders from banks, besides public and
corporate sectors.

This was also coupled with the fact that
HCL Insys is the exclusive distribution partner of HP for enterprise systems. Now the
company is straddling almost the entire spectrum of IT, leading to its identity as a
systems integration company, or rather as Chowdhry puts it, a ”technology integration
company”. Thus, in fact, even after the breakup of the JV, HP remains HCL Insys” jewel in
the crown of offerings. This certainly proves to be beneficial for both the partners,
which was seen in the booking of the world”s largest order worth Rs 15 crore, for Intel/NT
based servers by HCL Insys (from Mahindra & Mahindra which comprises supply of HP
4-way and 8-way Intel servers for running SAP ERP application).

The Solitary Reaper
However, there is another side to the story. HCL Insys may focus on technology
integration, as it calls it, and it might have the HP brand name for enterprise-class
systems, but in PC arena, it is more or less alone. The PC scenario in India has undergone
a dramatic change in the last one year. Most of the national players have faced rout, the
last one being PCL. Now we have HCL, Zenith, and Unicorp, in the order. HCL has a
comfortable lead over the latter two and also has a huge mindshare for its brand, as was
indicated by a study by IMRB.

Today the flagship company of HCL Group has
a different role to play in the industry. No longer is it the darling of the media and
analysts (with the HP name missing). But it has the difficult task of facing the critics,
being the largest native. Which obviously means taking initiatives on its own expense. It
has to beat a path for itself, from a position where it has been put (mostly) by default.

SIVAKUMAR V,
in Delhi.

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