Relevance of Indian IT under threat: Vineet Nayar
Last year, Nayar stepped down as CEO and then as vice-chairman of HCL, India’s fourth-largest software services provider, to devote more to philanthropy through his Sampark Foundation even as he advises several companies on their strategies.
Vineet Nayar , former CEO of HCL Technologies, tells ET that the industry he helped build risks is losing its relevance and no one is getting it right, while referring to the coming digital revolution and the state of preparedness of the Indian IT companies. Last year, Nayar stepped down as CEO and then as vice-chairman of HCL, India's fourth-largest software services provider, to devote more to philanthropy through his Sampark Foundation even as he advises several companies on their strategies. Edited excerpts:
Tell us about your new innings?
I'm advising companies on aligning teams and building what I call a high performance culture. (Nayar is currently advising 18 Fortune 500 companies and three Indian businesses).
The one commonality is the boards are feeling that the management and employees are not aligned in executing the strategy with the speed at which it needs to be executed. The second big problem they're facing is that everybody is talking digital and they don't understand how to strip this whole digital world (down).
So what do you make of the coming digital revolution and the Indian IT?
I believe that with $118 billion and 3 million employees, the industry has done well in the past.
However, its relevance is under significant threat as the question which needs to be asked is, what problem are you solving for the customer today and how relevant is the problem for the customer today? You were in the business of solving the efficiency problem to begin with, then you were in the cost problem, and in both those phases, Indian IT is hugely respected.
It had a compelling value proposition in the number one problem that the customer is facing. Now the question is that the customer is seeking to solve a revenue problem, a growth problem, an opportunity problem, and an innovation problem.
Is the value proposition of Indian IT relevant to that customer? That's the first question which I don't think is answered. And the second is, who is competition? Are we sharply defining competition? I get a sense that we have a frog-in-the-well approach to competition that you're my competition as both of us belong to the Indian IT sector or global IT sector or technology sector.
I think the competition is going to emerge from completely unlikely quarters in the digital world. People are not going to build large applications; people are going to build small apps. People are not going to build apps with the CIO; they are going to build with the business. People are not going to buy; they are going to consume.
All this is going to bring up vendors, who are going to provide services in a non-traditional type of way.
If that is going to happen, maybe you're not going to be threatened immediately, but over a period of time, a lot will change.
Any examples from what you did at HCL in asking and answering such questions?
If you see the genesis of the infrastructure services, we were trying to solve the cost problem and the question we asked was, are we trying to solve the cost problem by addressing only the application services? The answer is, application is only 30% of the cost structure, 70% is infrastructure.
So, if you don't address the infrastructure, you really are not solving the cost problem. Do we define the business that we are in the application business or do we define the business as we are in the cost business? At Comnet, when we defined the business as 'we will take the cost out of the company (customer),' then therefore it was very clear that where is the cost. The cost was in infrastructure. How do you take it out? By remotely managing the cost.
Once we were done with it, then we asked the same question: Now that we have taken the cost out of infrastructure, are we still in the cost business. The answer is yes. Then why don't we take the run the applications and combine it with infrastructure.
That's the second phase. Then we said why don't we consolidate it. It is not just one idea; you constantly keep thinking about what is your business.
So who is getting it right in the digital context?
I don't think anybody is getting it right. I think capability, mindset, investment in understanding what it is it's a completely different ball game. I don't think IT companies are getting it right. I think a lot of consulting companies are getting it right, not getting right, but hugely investing in it to try and get it right.
For a CEO, you left at a relatively young age ...
I set up my foundation in 2004. So, my purpose of bringing about large-scale social change was defined in 2004 and this opportunity came in 2005 when Shiv (Nadar, ) asked me to run HCL Technologies. In all my open houses, in all my employee interactions, I kept constantly telling them that I'm there for a certain amount of time and they need to take the ball and run with it and I'll go back to social sector.
So, all the employees were very clear, right from 2005 that one day I would go. I think the momentum at HCL was very good, I think the team was the best in the world and we were on the up. That is the time when a leader should give the opportunity to other leaders to take it to a completely different scale.
In HCL, we wanted to build a company to last, not a leader to last. So, it was a good time for me to go back as I wanted to solve problems. Even when I am 90, I'll still be solving problems.