Wednesday, February 20, 2013

Meet HCL Tech s new CEO, Anant Gupta


Anant Gupta, only in his second month as the new chief executive officer of the $4.2-billion HCL Technologies, is already toying with the idea of writing a book. His predecessor Vineet Nayar wrote one too, on employees. But Gupta, 45, wants to write one on sourcing strategies. "I believe the entire sourcing strategy will evolve, with paradigms around labour arbitrage, remote fixing of problems, integrated offerings on social, cloud, mobile and analytics services etc," Gupta says. 
Gupta is in no great hurry to get down to the writing bit. He first needs to take a shot at doing it. He has already begun selling his ideas to large global customers of HCL Technologies — India's fifth largest IT services company, following TCS, Infosys, Wipro and Cognizant. 

It is an oddity that Gupta has the time to think about a book and the freedom to experiment with new ideas, at a time when many large IT companies, including some even in the lead pack of five, are wrestling with growth concerns and eroding profit margins. 

That's largely to Nayar's credit. Under him, HCL Technologies' revenues ballooned from $1.3 billion in 2007 to $4.15 billion in 2012. He led HCL Tech to the biggest acquisition post the 2008 slowdown, beating rival Infosys to buy Axon, a UK-based business software consulting major. Nayar, who transitioned to the role of vice-chairman and joint managing director in mid-January, now spends time mentoring future leaders in E3+ grade of HCL (mid-management). 

This foundation which Nayar built, industry sources say, will be Gupta's strength and perhaps also vulnerability. "Gupta has the comfort of inheriting a high-flying business. His challenge will be to sustain the high-growth trajectory and raise the bar," says Jaideep Mehta, country manager, IDC India, an analyst firm. "But living on past growth momentum could find them in an Infosys kind of a trap," warns Sundararaman Viswanathan, who is manager, consulting, Zinnov. 

Wine and cheese 

Both Gupta and Nayar worked together for almost two decades, yet they have contrasting styles. "Nayar was a dreamer with a vision," says Zinnov's Viswanathan. 

"Gupta is more operational." Nayar went to B-school (XLRI Jamshedpur), while Gupta, a telecom and microelectronics engineer from the University of Liverpool, UK, didn't. But Gupta's succession was well planned. He was appointed COO in July 2012 and promoted as CEO on January 17, 2013. "Gupta has been Nayar's deputy for long and there will be continuity," says Partha Iyengar, vice-president, research, Gartner India. Gupta's rise, incidentally, was also at least partly Nayar's doing. 

Much of HCL's growth in Nayar's stint came from infrastructure management services (IMS). Initially called HCL Comnet, this start-up within HCL was Nayar's brainchild. Gupta joined the start-up back in 1993 and rose to head it in 2006. Gupta took a $196-million business, rechristened as IMS under him, and turned it into a powerful $1 billion revenue engine by 2012. 

Creating a deal pipeline 

IMS manages computers, does software upgrades, antivirus protection for clients and scales it up to manage data centres and networks. For example, it bagged a contract from Freescale Semiconductor, replacing IBM to do tasks like desktop support, storage and security in 20 countries. 

"Nayar has built a great deal-pipeline. But how Gupta grows the portfolio beyond IMS remains to be seen," says Ankita Somani, IT analyst at Angel Broking. 

Gupta believes there is a lot more juice left in IMS. "In traditional IT outsourcing, the penetration is in excess of 30% of the worldwide market. In IMS, it is less than 3-4%. Even at $1 billion, IMS is less than 1% of addressable market for us," argues Gupta. 

And, more than that, he also believes that IMS can help pry open more business in other services from newer clients. Like in the case of UK-based pharma major AstraZeneca, with which HCL Technologies first won a five-year contract to maintain data centres in 60 locations and later expanded the relationship to implementing cloud computing solutions. IMS brings 28% of the business, engineering services 18%, BPO 10% and custom applications development 25%. This, too, is both its strength and vulnerability. 

Navigating change 

"HCL has all eggs in two baskets — IMS and engineering services. BPO is a drag and applications services and it doesn't account for much," points out Viswanathan. "HCL has played the market share gaining game well for the last 2-3 years. But Gupta has to show that HCL can expand into new markets." Customers are now demanding more from offshore vendors. Says Phaneesh Murthy, CEO, iGate: "Vendors can no longer get away with junior kids on the block being billed per hour and learning at the client's expense. Companies need a sales force that can have conversations around business value." 

Murthy also argues that the industry needs to pitch new ideas to customers rather than grab business from each other. "There has been a clear trend of companies winning deals from each other. Such deals may contribute to a company's growth but not to the industry per se," he says. 

"Companies now need to be innovative, invest in IP-led solutions and offer ways in which technology can handle business challenges. "Murthy's pitch is not too different from Gupta's book idea on new sourcing strategies. "We see a convergence of social, mobile, cloud and analytics. Mom-and-pop shops will do the individual components. The key is using social media, mobile capability and use high-speed analytics to deliver results over the cloud," says Gupta. 

"That's the alternate sourcing strategy," he adds. "Combining software as a service, infrastructure as a service and other services to provide a business outcome. Our employees talk business benefits (to clients)." 

Even as Gupta charts a new 'convergence' course, he realises that HCL has to be quick to respond to customer needs. Says Gartner's Iyengar: "Customers don't want to know the outcome of data analytics a month or two later, but in 24-72 hours. From project managers, they (IT workers) now have to wear hats of real-time business intelligence providers." Gupta has to navigate that change, but he can do so from a position of strength. Angel Broking's Somani sums it up well. "Gupta has nothing to worry about at least for the next two quarters, given the pipeline of orders HCL has. He has time on his side."

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