Back on Top

Two years of sticking to a unidi rectional agenda–of shedding a ‘hardware-only’

image and offering a complete end-to-end services and products portfolio–have

begun to do the trick. In the toughest year since its inception, HCL Infosystems

has bounced back and regained its top PC vendor slot from Compaq India, which

had usurped the throne in 2000-01 (as per IDC’s report for PC sales in FY

2001-02). "It is our continued focus on providing a single-point sales and

service option to customers that has seen us through this difficult

period," says chairman and CEO Ajai Chowdhry.

The year gone by has indeed been a ‘difficult’ one. PC shipments–as

reported by the annual MAIT-IMRB survey–touched the 2.45-million mark in

financial 2001-02. This number was later revised to 1.65 million. MAIT also said

the PC market in H1 of 2001 shrunk by 4%, compared to the same period in the

previous year. But alarmingly, the shrink as compared to the previous half-year

(October 2000 to March 2001) was a whopping 23%. As for overall annual growth

(see the PCs and Workstations segmental analysis in DQ Top 20 Giants, July 15,

2002 issue), it is likely to be more in the region of between 5% and 6%.

Against this backdrop, what is it that has seen HCL Insys push back the

competition and increase marketshare? "Traditionally, what has been eating

into the numbers and revenues of branded players has been the gray market

segment. However, with price differences going down to the bone, more and more

customers are demanding more than just boxes. They need support as well…and

that is what has swung us in," says Chowdhry.

The IDC report rates HCL as the number one desktop PC company in India for FY

2001-02, with 8.6% of the marketshare.

The report also says HCL Insys notched up a 27% growth in PC sales compared

to the previous year, shipping 151,104 PCs during the year, compared to 118,902

PCs last year (IDC counts only HCL Insys’ in-house brands, leaving out the

Acer, Toshiba and HP units sold by the company).

Fastest launch, highest specs…



"Our long-standing presence in the Indian market has given us

tremendous insight and expertise in servicing and anticipating all kinds of

customer needs, ranging from a home PC user to multi-location complex

enterprises, and coupled with our ability to provide leading edge technology.

This achievement is also because for us, hardware is a critical entry point to

build a robust systems integration business. We plan to continue introducing the

best products and latest technologies. Combined with an aggressive marketing

strategy, we are confident of continuing our leadership", he adds. The

company maintained its dominance in the education, government, small business,

banking and insurance sectors, riding high on strong partnerships with some of

the world’s leading technology companies like Intel, Microsoft and Broadvision.

HCL Insys has generally managed to be the first to introduce the latest

products and technologies and recently was the first to launch and ship a

Pentium 4-powered PC under the Rs 40,000-price barrier, simultaneous with the

global launch. The company was also the first to launch the Pentium 4-powered

PCs, following this up with the launch of the DDR-SDRAM-based desktop PCs and

India’s first Pentium 4-powered servers. "Our set-up allows us a

three-week window over MNC players, and by the time they have their launches, we

have already established our product lines," says Chowdhry.

Customer focus overdrive



Around a year back, HCLI went into what its calls a "customer focus

overdrive". "We have focussed divisions working on separate segments–be

it banking, SOHO, government, corporate etc. Most of our 200-plus sales force is

divided into separate focus segments, with no overlaps. We offer a single point

of sales and service. Every month, sales managers in charge of the various

segments generate reports for every single machine under their control, and this

is sent out to customers individually," he says.

That is a massive exercise in itself–the company’s top 400 corporate

accounts total over 700,000 PCs under the maintenance and service umbrella.

"A report is generated on the performance and utilization of every one of

the machines and sent to the customer. It is a mammoth task all right, but one

that we feel we need to offer to our customers," Chowdhry says. Chew this

to get to perhaps the magic recipe of customer satisfaction–60% of all the PC

business coming HCL Insys’ way now is through repeat orders.

The other big push that the company has made in the last 12 months is on the

retail front. Against the current number of 120 outlets, HCL will boast nearly

175 outlets in the next two months. The focus has also been on B and C class

cities. Here, the volume generated per outlet is typically lower as opposed to a

metro city–likewise, both vendors and partners are evolving strategies to

counter this. Vendors also look at local resellers to address the local market

despite the fact that their cost of training them goes up, because the level of

expertise is lower. This extra investment is offset by the fact that the local

partner understands the geography much better.

Education, home, government...



The hot product line–notebooks. "Notebooks are where we have perhaps

seen the biggest jump. From the education segment alone, we have received many

big orders of 150 units each. And our biggest order is one from PriceWaterhouse

Coopers, for 400 units," says the chairman and CEO.

Chowdhry admits, however, that the going has been tough over the last 12

months. "For the IT industry, the last year has been a bloodbath–one of

consolidation, tighter belts and budgets, and reorientation of focus. However,

there have been some growth areas–school projects have been coming in in

hordes. State governments–Tamil Nadu and Karnataka in particular–have been

taking up IT-enablement in a big way."

So where’s the growth coming from–40% of it is expected in the services

segment over the next three years. And the revenue mix–40% from domestic and

exports services, 30% from products and system integration, and 30% from

exports, mostly software. A lot of the services are around the hardware segment,

and the company is doing a lot of SME implementation as well.

But shouldn’t an end-to-end product line include software? "We see

domestic software as a nice strategy. We created an SAP wing to create an SAP

chapter in India. We wanted to grow this. The first project that we did here was

for GM. We carried out an information systems plan for them, and told them how

to start IT operations in India. That is how we internationalized our SAP. We

did the same for Samsung. We have continued to do SAP projects. We have

process-oriented customers here," says Chowdhry. "Perhaps it is time

to think along software-only lines for group."

Ask about IT-enabled services and pat comes the reply from Chowdhry–"We

identified that potential and set up HCL Infinet as a separate company. We have

close to 125,000 Internet subscribers, and 100-odd corporates complete the

picture. A small software technology park has been set up for IT-enabled

services. Our first 25-30 tech help desks (for Microsoft) have been set up for

IT-enabled services in Delhi, call centers and the like. The overall strategy is

to integrate all these operations–help desk, call center etc–since the

technology required is nearly identical. Dial-up is only used as a good way to

reach our customers, otherwise it doesn’t really bring in any returns… the

cost of sales is really low, and dial-up has helped here. The corporate market

is where the money will really come in from. We understand IT and applications.

You can’t just sell connectivity. You need to provide hybrid solutions to your

customers."

RAJEEV NARAYAN in New Delhi