GROUPS: When the Going Gets Tough, The Giants Adapt

	Four of the Top 5 Groups are billion-dollar giants
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	Giants grew 25%, to about $6 bn, making up 30% of the industry
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	Record headcount increases, averaging over 50%
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	The Charge of the $Billion Brigade
	Exports vs Domestic: Healthy Mix
	The War of Talent

Group: Several figures assembled together or having some unifying relationship
Synergy: A mutually advantageous conjunction or compatibility of distinct business participants or elements (as resources or efforts)
-webster.com

If you apply rigid definitions of ownership, management control and group
integrity, you might find very few groups left. So some of of the 'IT groups'
that we consider in this issue follow a loose or flexible definition. Any one
condition-common ownership or significant shareholding, or common name and
origin, significant common shareholding, etc-will usually suffice for us,
provided the group members concur.

The most clearly defined group covered in the Top 5 happens to be also the
most diverse: the Hewlett-Packard group. It has the most complete range of
products and services (both domestic and exports) that a group could wish for.
It's revenue-dominated by domestic sales (of systems, peripherals, supplies,
and services), and manpower-dominated by the services groups. Services include
domestic and export SI and related businesses, and BPO and R&D and other IP
work for HP itself. Its India head talks of "leveraging India like no one
else", and it seems to have done it. It's also had the challenge of
taking up a global structure that works with four separate business groups. So
far, business customers would deal with four separate sales people. A common
sales force makes that process more efficient today, for HP's domestic sales
in India.

More loosely defined is the HCL group. The name suggests common origin and,
possibly, ownership, but the real link is the holdings of over 50% in both HCL
Insys (HCLI) and HCL Tech (HCLI), by Shiv Nadar and his family, through holding
companies. There are others who have moved out of the group. One is NIIT, which
was a member based on the same principle of origin and Nadar's holdings; but
over time, discussions with both parties brought up the issue that there was
really no thread strong enough to consider NIIT part of "an HCL
group"; so we moved it out in our reckoning. Former HCLT subsidiary HCL-Perot
went out of the picture after Perot bought out HCL's stake. HCL Tech and HCL
Insys have tended to work independently as separate companies; HCL Insys too was
keenly eyeing services exports. Last year, they came closer together, after 'rationalizing'
parts of the business. This basically meant that all the services exports
(software and BPO) business was hived off to HCLT and its BPO subsidiary eServe.
HCLI retains only the hardware-related services, and fronts the sales for other
domestic services.

You'd expect the Tata Group to be the most rigidly defined: all of them are
clearly Indian entities and subsidiaries or divisions of Tata Sons, or of one of
the group companies. While that is so, there is really no "IT group"
defined at Tata Sons. So there's no central discussion on "which
businesses the group should be in" or which are the gaps or overlaps. These
discussions do reportedly happen at an informal level, but it's not
structured. Nor is there a group CIO/CTO, so all IT usage decisions across the 85-odd Tata group companies are by and large "decentralized" and left
to the individual companies. On one hand, this means quicker decisions. On the
other, the group may be missing out on economies of scale, and, in the IT
business domain, on synergies, cross-selling, and efficiencies through the
one-customer-face approach it's done with, say, for with its Telecom
Enterprise Business Unit. Then there are market conflicts, which, with such an
overwhelming dominance by one company, are more likely than not to be resolved
in favor of TCS.

But there's a surprise. Usually TCS grows sharply, and the others pull
growth down. This time, TCS is at below industry average, and the other
companies pulled the group up to the industry average!

All in all, there are surprisingly few "IT groups". No other
traditional business house has really entered the IT industry and occupied it
the way the Tata group and Wipro (once a vegetable oils and soaps company) have
done. Both of these started with turning their internal IT departments into
profit centers, and growing from there. Nor have enough MNC companies entered
diverse areas in India beyond the captive development or contact center, or
integrated their businesses in the Indian market to "leverage India"
as HP describes it. Having said that, many MNCs are of course ramping up their
India services delivery centers to amazing level: for instance, GE, Acenture,
IBM all hitting the 10,000-person levels.

How much group-level leverage can a group do? Well, the five giants featured
here are all about scale. They're billion-dollar-level groups (except HCL,
which should get there next year). The Tatas (IT), Wipro, Infosys, HCL, even HP,
all employee between 12,000 and 25,000 people. Those numbers suggest that they're
also all into services. All of them are struggling with scale. Infosys gets a
million resumes in a year, and is rapidly recruiting. The scale helps both in
sharing learnings, and in possible efficiencies. Group CTOs and other functions
can have a similar purpose and effect.

An effect of scale is also influence (and in some cases, likely successor
grooming). Vivek Paul, vice-chairman, is now the clear number two at Wipro: even
the infotech (domestic) division now reports in to him. TCS' Ramdorai
reportedly (informally) calls the shots on IT business issues across the Tata
Group. Hema Ravichander is now group HR manager, handling Infosys too. And Balu
Doraisamy is MD for HP with charge of all HP activities in India, a new
designation that recognizes the scale of operations in, and the importance of,
India.

But the strangest effect of scale sometimes is speed. China has shown that
you don't have to be Singapore to move fast. In India, companies like Reliance
have done that too-if you're not overly democratic and decentralized, you
can turn a large corporate on a dime and recover from major marketing disasters,
etc. The IT giants have demonstrated agility and speed too-which is how they've
kept growing faster than the industry. Whether it's HCL Insys' rapid change
of direction (it's rapidly become a mobile-phone distribution powerhouse), or
HP's post-merger integration, sales structure changes and the integration of
and model shift for Digital, or Wipro's rapid structural changes over the
years.

So when we said last year that while the top groups accrue scale, growth
would slow down. We were wrong, at least for this year. The giants made it
through the bad years through adaptive agility. Now, when the wave is turning up
again, they're riding it smoothly, right on top.

Prasanto K Roy with Iishwar Daas
Nair