The Videshi Cowboy

rajpal.jpg (8625 bytes)Suresh Rajpal, the head honcho of Hewlett-Packard (HP) business in India,
has this story to tell: When HP entered India, the Government had all sorts of rules,
licenses, and regulations. In those heydays of license raj, HP came in and whenever the
Government told it to jump, it would simply ask: “How high?” Being one of the
first MNCs to enter India in a FERA economy, Rajpal has seen much water flow in the
Ganges. And now, after roughly two decades of entering India, it is no surprise that the
company continues to remain the largest MNC in the country and finds itself amongst the
Top 5 IT groups.

Not that growth has been easy. If anything,
HP has done things unconventional in India, which have raised many an eyebrow amongst the
industry pundits. However, Rajpal and HP have steamed ahead and, today, envelop the Indian
IT scenario in a manner so as to only expand with the increase in IT usage in the country.
Across the product segments-from servers to workstations, from PCs to notebooks to
palmtops, from printers to scanners to software-HP has taken full advantage of the
tentative reformative steps of a country with fifty years of red tape. And it has taken
its growth from prising open newer markets and attaining a mindboggling synergy between
its products, technologies, and the needs of the Indian market.

Notwithstanding the technologies, the
product portfolios, and the cornucopia of IT goodies in the HP basket, the key to the
company’s success is combining the above with an astute understanding of the psyche of
Indian consumer. If anything, HP’s continued success in India and its leadership in its
class of systems and peripherals is a case study, not only for Indian IT industry, but for
the band of MNCs who entered the country in the post-1991 reforms era and are still trying
to understand the complexities of doing business in India.

S T R A T E G Y
  • To straddle the entire spectrum of IT
    products and solutions in India.
  • To scale the CTO plant in the current year.
  • To maintain its supremacy in the printer
    business.
  • To remain one of the key partners for the
    major IT solution providers in India.

T A C T I C S

  • Retain strong linkage with HCL in the server
    business.
  • Push for wider channels access in the PC
    business.
  • Use price as a key differentiator in volumes
    business.
  • Use technology as a key differentiator for
    non-volume enterprise solutions business.

O B J E C T I V E S

  • Go for growth. Fifty percent growth targeted
    in the current year.
  • Push for PC numbers, and become at least # 2
    to Compaq in MNC brands.
  • CTO to give key competitive edge.
  • ISO business to be stepped up in Bangalore
    and Chennai.

The hallmark of HP’s strategy will
inevitably lead any historian to the HCL HP Joint Venture (JV). The first of its kind,
Rajpal had no hesitation in signing a JV with a company which was then 100 times smaller
than HP worldwide. Moreover, HP took a minority stake in the JV, but was able to influence
HCL, till then known for a less-than-desirable reputation for services, into incorporating
HP’s global best practices in the running of the JV. As a result, HCL HP raced to the top
of the customer satisfaction charts and, within a relatively short span of time, was able
to convert its reputation from negative to positive. Similarly, in product quality, HP put
in its own practices and quality standards and by the time the relationship matured, HCL
was able to parade a litany of world-class products both in the Indian as well as some
overseas markets.

Another upshot of this relationship was
that HCL’s entire organizational outlook went through a metamorphosis. Without taking any
credit from HCL’s top management, it is a fact that a bulk of HCL’s top managers, when
exposed to global way of doing things, matured up instantly, and that combined with the
formidable vision of its top brass, enabled HCL to embark upon its own journey of
globalization.

The maturity of the relationship came in
for a test when the JV was rendered redundant due to the changing needs of the Indian
industry and of the individual partners. Once again, Rajpal convinced the HP management to
sell its stake in the JV back to HCL. While many in the Indian IT industry paraphrased
this decision as a ‘break-up’, to this day, Rajpal refuses to use the word. According to
him, the JV filled a certain need at a certain point in time. When the need is over, you
don’t have to flog it to prove a point. And, the JV did prove a point. That if two
companies can come together for a business reason, then they can also dissociate for the
same reason, without any souring of the relationship. To this day, HCL continues to be the
exclusive distributor of HP servers and is by far the largest seller of HP PCs in India.

It was this understanding of the market
that has pushed HP’s peripherals business too. Interestingly, in the last seven years that
HP has been getting aggressive in this market, its marketshare has more or less remained
steady, i.e. roughly around 75 percent of the non-impact printer market. Such is its
presence that even competitors who compete healthily with HP elsewhere in the world have
been unable to make a dent of any significant nature in HP’s marketshare.

With a global paranoia about quality, the
Indian business of HP received the coveted CII-Exim Award for Business Excellence in 1997,
the first company in India to finally make the mark in what is generally described as one
of the toughest benchmark set-ups in India. Rated as India’s Malcom Baldridge award, the
award has brought into open HP’s preoccupation with quality and that the Indian business
of the company ranks at par with its quality initiatives in the rest of the world.

The area where HP will probably focus on
strongly this year will be the software business. Developing close to 650 person-year
worth of software every year, the Indian Software Operations (ISO) is a fully offshore
development site which is responsible for core product development of HP’s Internet
products, projects related to HP-UX, the Unix variant of the company, and network and
systems management middleware.

The company has also announced its
intentions to kickstart a configure-to-order plant in Bangalore. This has been made
possible by restructuring its parts assembly center in Bangalore, which was mainly dealing
in low-end parts. Consequently, HP has announced the creation of International Procurement
Organization (IPO) which will source sub-assemblies and will, as result, only concentrate
on improving its supply chain management through its configure-to-order plant.

It does not mean that everything is
hunky-dory at HP. One of the company’s most visible failures has been in the area of
mobile computing. Despite the early start, at least in India, HP has succumbed to the
worldwide problems that the company had with respect to this range of products. Despite
its assertions worldwide, HP will find it difficult to follow the # 1 or 2 principle in
this market for some time to come. Also, HP, globally as well as in India, will have to
re-examine its dual strategy of pushing both Unix and NT simultaneously. While presently
both product groups are enjoying a good run, over time, HP will have to take a decision on
where it is willing to bet. Current indications on this scenario are all pointed toward
Redmond.

Another challenge for HP will be to make
full use of, and also grow, the VeriFone activity in India. While VeriFone has had a muted
presence in India, the company has done some significant work as far as e-business
scenario is concerned. VeriFone was also involved with RBI to evolve guidelines for
e-business. Rajpal’s challenge will be to dovetail VeriFone’s work into HP India’s overall
gameplan so that the seminal development effort that VeriFone is involved in can be used
to further HP’s Internet strategy.

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