`Time to celebrate competition'

Vipin Kumar

THIS August, we completed 25 years of HCL. I believe this is the first IT company in the country to achieve this milestone.

We started from nothing, from a `barsati' in Delhi. Six of us,

Shiv Nadar, Arjun Malhotra, Subhash Arora, Yogesh Vaidya, D S Puri and myself, had quit our jobs with DCM on the same day. But before HCL, we had started another company called `Microcomp' with the objective of generating enough funds to start HCL. We were marketing calculators under this company.

Then we founded Hindustan Computers Ltd. In those days of `licence raj,' getting one was a big problem. UPTRON, under the Uttar Pradesh Government, had a licence then and we formed a joint sector undertaking with them. Later, we bought back UPTRON's 26 per cent equity in the company.

All of us fanned out to different parts of the country to open offices. I went to Chennai to start the HCL Office in 1976. Although we started off as a scientific computing company, right from the beginning we emphasised sales and marketing. So we decided to do a campus recruitment and went to IIM, Calcutta. We were a tiny start-up but offered the best salaries of that time - Rs 2,000 per month!

Keeping trust pays off

One of the greatest things that happened to HCL at that time was that the scientific community in the country trusted us.

Those days we would go to the IITs, institutes of science and various engineering colleges to talk about our computers. We had a good marketing team, beautiful brochures; what we didn't have was the product! We invited people from these institutions to our labs to see the product being developed. To our surprise, a lot of them turned up and saw the computer lying on the desk with wires all over. They trusted us and placed a lot of orders.

Soon we faced a problem of plenty. We had a lot of business from Government institutions and we had to deliver the products by March 31, the date of expiry of their funds.

Our research and development team put up tremendous work in our manufacturing facility -- a shed in Noida!

On March 27, we got the product out of our labs. I received the computers in Chennai just a day or two before the deadline. I personally loaded them in my Fiat and delivered them at IIT, Madras.

Looking back now, if we had not delivered the product between March 27 and 31, HCL would have been dead. We would have let down the initial customers who had faith in us.

Luck lends a hand

In 1977, we decided to go into the commercial computer market, because microprocessors were just coming out. We believed that microprocessors would change the world. While we used a 4-bit microprocessor in our first scientific product, in our commercial computer we used an 8-bit Intel microprocessor. We very quickly developed our new product and launched it in the middle of 1977.

Fortunately for us -- sometimes you need luck in this business -- IBM, along with Coke, was asked to leave the country. That created a huge void. Those days, IBM used to sell refurbished computers in India. And we went into that void and quickly tapped that market. That was a huge piece of luck. The competition from large companies such as ICL and DCM was there but we had an amazing response from Indian companies for our new product.

When we look back on those days and wonder at all that happened to us, we often ask this question: Why we could not grow to the size of a multinational giant like many US companies who started after us? The real answer lies in the fact that we were born in India, a closed country then. We did not have resources that were available in a country like the US, nor a market its size. We did not have a global presence either. What would have been an Indian company in the US then? Today India is known for its IT but those days were different.

First software exports factory

But we did venture out to other parts of the world. We were

three years old and Rs 3 crore in size. We did market research in Singapore to find out how we could enter that market. We realised that there was a good opportunity to sell solutions there. That was in 1979-80. Subhash Arora and I were asked to pack our bags and head for Singapore...

The challenges were many. For instance, the Reserve Bank of India would not allow you to take big amounts of money outside the country. We had just enough money to keep us going for 30-40 days in Singapore. But we felt we had something unique to offer. We took our hardware to Singapore and rebranded it ``Abacus'' and created special packages by setting up a software exports factory. It is a very little known fact that HCL started India's first software exports factory.

We did quite some audacious things in Singapore. We launched full page ads. We created a fantastic campaign:`We sell computerisation and not computers.' Before we left for Singapore, Shiv Nadar had set a target of $1 million-worth orders in the first year. And believe me, on December 31, 1980, we signed an order which completed the $1-million target!

But we had problems exporting the software. The X-rays at the airports would damage the floppies and soon we realised that

our plan wouldn't work. So we switched strategies and created some standard packages. Then we converted the Singapore arm into a distribution and system integration company.

Off to America

Later, in the 1988-89 period, we entered the US with Unix-based hardware. That's how HCL America was born. Our plan was to leverage on our Unix capabilities and to supply OEM products. We did get some initial orders but we committed an error. We did not consider the strict environmental laws in the US. We were again quick to shift our strategies and started working on software. You can find the seeds of HCL Technologies here.

The experience in Singapore taught us that we could do the same in India. So we targeted the small companies in India. While doing so, we found that there were some myths regarding computers -- that they are difficult to use; and expensive. To counter this, we went to small companies and created the new concept of selling through roadshows. That was the first time in India that roadshows were conducted. It was a very successful strategy.

Birth of NIIT

In 1984-85, India changed. The Government opened up the computer market and permitted import of technology. During that time, we realised that a lot of our customers needed training in computers. Raji (Rajendra) Pawar, who was our Regional Manager in Mumbai, suggested the idea of a computer education company. That's how NIIT was born.

We strategised the growth of the company in this way: We would believe in an idea and invest in it as individual shareholders. So somebody invested in NIIT, someone in HCL Technologies etc. There was a lot of freedom. We have nurtured entrepreneurship in a big way and that has been the strength of this company.

Learning from mistakes

When we look back, what we missed out clearly was software.

We could have started software much earlier. We had created tremendous technical depth because when we were trying to develop a computer in those days, we had no tools to write software. We even had to write our own operating system. So we had developed tremendous software capabilities within this hardware company.

But if you today look at what we have done in the last 10 years and consider the combined revenues of HCL Technologies, NIIT and Infosystems from software, we are number two in the country after TCS. So in a way, we caught up very quickly and moved very fast into software.

There were a few mistakes that we committed. We ventured into non-IT areas and they were totally unsuccessful. We had got into the granite business in the early 90s and bought quarries in South India. That was a disaster. We obtained a licence to operate cellular services in Tamil Nadu with Singapore Telecom. Luckily, that never took off. Then we decided that we would not do anything other than IT.

Today, we have created three solid organisations in the country, independent, with their own board members and totally separate from each other. As a group, we are the number one IT organisation in the country with revenues close to $1 billion. People say that the work pressure in HCL is very high. I agree with that because this is a company which believes in performance. We put our people through a heavy pressure environment and give them crazy targets. Because right from the beginning we have had to fight intense competition. And that is why we chose the theme ``celebrating competition'' to mark our 25 years.

Feedback can be sent to vipin@thehindu.co.in

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Picture: Ajay Chowdhry.