IT Gaints: HP India Group - The India Story

Of the tech groups in India, this is the one most worthy of the
group tag. Its diverse range of activities is integrated under a common
brand. It has the widest own-brand portfolio in terms of product span: personal
systems and servers, software and services, printers and scanners. And its
seen relatively smooth sailing in India, over these nearly five years since its
big merger.

Not so, globally. HP settled down after four turbulent years
following its 2002 merger with Compaq. Its management stabilized, its structure
settled down to three well-defined groups: PSG (personal systems) for PCs,
workstations and mobile devices; IPG (imaging and printing); and TSG (technology
solutions)business products including storage and servers, managed services
and software.

Global Turmoil, Local Calm

This 68-year old Palo Alto, California-based company, fourteenth in the
Fortune 500, is the worlds largest IT company at $97 billion for FY07.

Mark V Hurd, 51, took over the CEO reigns from Carly Fiorina in
March 2005, and the position of chairman from Patricia C Dunn (who resigned
after a criminal indictment) in September 2006. Fiorina had been sacked by the
board after post-merger performance glitches, and the exodus of top talent. She
left with a $21 mn cash severance package, part of the over $100 mn she earned
from HP, and a year down, two big investors sued HP for violating its severance
cap.

Against this turmoil, HP India did rather well. The merger was
relatively smooth here. Compaq had been the dominant company in India and it is
to the credit of HP that it allowed Compaqs managers to run HP India. Compaq
India chief Balu Doraisamy and his colleagues Ravi Swaminathan, Kapil Jain,
Neelam Dhawan (who then left in 2005 to head Microsoft India sales) took over,
while HPs Ravi Aggarwal took charge of IPG.

HP is blessed with a wide range of products with at least one
cash cow in each of its three divisions. In IPG, its consumables: inkjet ink
and laser toner supplies (for the millions of HP printers), adding up to a tenth
of HP India sales. HP overwhelmingly dominates printers, and all the competition
is for second place.

In the enterprise business, its services, another one-tenth
of sales. Thats modest, given HPs aspirations and arch-rival IBMs
achievements. HP says it does not go for mega-deals at the cost of marginsa
reference to IBMs total outsourcing deals with Bharti and Idea. But one
mega-deal would do much for HPs visibility in services. So if and when BSNL,
Reliance, Tata Indicom do similar deals, expect the competition to be tough. But
HP does have strong outsourcing deals with Indian banksBoB, UBI, Uco Bank, et
aland in other sectors.

Yet HP Indias real jump in profitable revenues came from a
less-than-expected group: personal systems, globally busy with low-margin PC
sales. The mobility boom had laptop sales in India near-doubling for three years
running. That took the focus off PDAs and smartphones, but laptops more than
made up for everything. With celebrity endorsements and a "The computer is
personal again" campaign, it was a big year for PCs.

Global Sourcing

HP has a wide range of global operations happening from India. Over
three-quarters of its 29,000 staff (including contract staff) work on services
for HP worldwide and its customers.

These employees span a range of divisions and subsidiaries,
whose names change rather often, but which have grown consistently. GDIC, once
Digital GlobalSoft, became the Global Delivery Application Services Center,
headed by P Venkatachalam and G Padmanabhan, the flagship application
services center in HPs global network. HP Global eBusiness delivers finance,
accounting, HR and other business processes for HP and its worldwide customers,
with 6,500 employees in four centers in Bangalore and Chennai. HP ISO became the
Systems Technology & Software Division, led by V Subrahmanyam, focusing on
R&D for software products. And a Hub Software/Firmware and Solutions Lab,
led by Sandy Lieske, develops software and firmware for printers and MFDs
(HP-ISO used to do this earlier).

Then theres the team led by Frederick Ravikumar which sources
and supplies parts and services to HP in 10 countries. The Global Competency
Centre, Bangalore, led by Paul Van Ingen, provides tech support for a range of
products, including and also software, networks, etc. The Global Solution
Center, Bangalore, headed by Jesudas Andrade, provides helpdesk and other
technical services for enterprise customers. Infrastructure Technology
Operations, led by MS Prakash, provides remote infrastructure and service desk
services to over 140 customers across the world. And IPG Consumer Contact
Center, led by Ramesh Giri, supports global print and imaging customers. And HP
Labs India (led by Ajay Gupta) addresses emerging markets for ICT.

So if services has been modest for HP India, the story looks
different from Palo Alto. For HP worldwide, while India accounts for less than
3% of revenue, it has nearly a fifth of its 156,000 employees. DQ