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India is among the top two fastest growing countries for Dell: Thomas Sweet

Varun Aggarwal/Thomas K Thomas Mumbai | Updated on July 29, 2019 Published on July 29, 2019

Thomas Sweet, Chief Financial Officer and Executive Vice-President, Dell Technologies   -  Paul Noronha

Since going public for the second time in December, Dell Technologies is seeing a healthy growth in margins. However, even as the global economic environment continues to be uncertain, India is turning out to be a beacon of hope for the technology giant.

In a conversation with BusinessLine, Thomas Sweet, Chief Financial Officer and Executive Vice-President, Dell Technologies, faster integration is a must for any large merger, including the one between Dell and EMC. He spoke about the challenges from the global economic slowdown, opportunities in India and the way forward for Dell as a listed entity.

How has going public again helped Dell position itself for the next phase of growth?

We needed to go private to sort of re-transform the company, we had some business model adjustments we needed to do. We needed to get the right focus, the company had become too cautious, too risk averse and so being private allowed us a bit more freedom to change the culture quickly and to get everybody focused on growth.

So fast forward now to the EMC transaction, we’ve spent the last 2 plus years integrating the two companies. We spent last year as you know working on the capital structure because a lot of what we did last year was how to realign economic and equity interest.

The operating principles of the company hasn't really changed. We want to grow faster than the market and faster than the competition, we want that growth to be profitable.

We are fortunate we have an ownership structure with Michael Dell who owns majority of the company that he’s focused on long term growth and value creation over the long term and so our focus on how to run the company post public transaction hasn't changed. We’re still focused on long term growth.

Being back in the public market you’re having the public inspection every 90 days. So we’re running the company the same way. You know the environment is a little different from a macro economic environment from what it was a year ago.

Also read: Dell closing in on $3-b revenue in India: CFO

So would the focus now become more on return on investments ?

Yes, I am looking for a return on investments that we made over the last number of years. We are continuing to invest though around our go-to-market coverage model, some of the solution-orientation you have heard us talk about. We’re investing now as we think about edge computing. There is an investment cycle that will have to happen there. We’ve made a number of investments in the last 24-30 months and we’re looking at what’s the payback cycle on that and are they hitting the business case they committed to at the time of the investment cycle.

You mentioned your overall revenues, touching $91billion. Where does India figure in the scheme of things?

India is actually our second fastest growing country right now. The economic cycle, the economic technology investment cycle that's going on here is pretty interesting. India and Japan are our fastest growing markets right now.

There has been a lot of the initiatives from the government around banking, the migration to a digital framework, driving an enormous amount of technology investment. The government's initiatives around infrastructure are all driving investment cycles. I think we're optimistic about the opportunity here. There's challenges, obviously, but, we're pretty interested in how we think this market evolves over the next few years.

Many US companies are looking to de-risk themselves from China and looking for various options to manufacture. Are you looking at shifting some of the manufacturing to India?

No, we haven’t. We have a manufacturing plant in India and we are actually adding capacity to that plant for the Indian market consumption. But we’re absolutely producing in China. A vast majority of electronics supply chain moved there 25 years ago. That doesn’t move overnight.

In the past, a lot of manufacturers have complained about policies in India which were not conducive to electronic manufacturing. Do you think that things have changed now?

I would tell you that anything that the government could do or continue doing to support manufacturing here can be helpful. We have talked about it in the past that there were some challenges and you know, we are going to continue to work with the government to see what facilitates growth.

Last year, Michael Dell actually spoke about India as one of the fastest growing markets for Dell but at the same time he also mentioned that there is a lot more to do in India. So where do you think India is still lacking?

India is a very fast-growing market for us. But, there’s maturity that needs to happen in the infrastructure here, there’s maturity that needs to happen as-the government initiatives around education. A healthy technology environment is fuelled by an investment cycle, which is actually fuelled by an educated population that has a rising standard of living. I do think there’s more activity that should be done here and more progress that needs to be made.

From our perspective, we think this is a pretty interesting market for us for the next number of years as economic maturity continues to develop and investment cycles continue to happen. Just the pace of innovation here is pretty remarkable.

As a CFO, you were at the centre of the EMC-Dell merger. What are the key takeaways?

By all accounts EMC-Dell was the largest technology mergers in history. My takeaway if I was to do this again is that I would do it faster -faster integration.

In retrospect there were probably some areas where we could have gone faster. Just get through the change, get through the integration and get moving. There are some places where you want to be thoughtful but there are other places where you’re a little bit slower. I think we could have gone faster.

It was a big change for our customer base. How did they think about Dell vs Dell technologies. People still think of us as just a PC company. As I hate to admit it , I probably would spend a bit more on branding and messaging to get that message out there a bit faster.

What are the pain points that you see going forward?

Clearly, macro is a bit choppier this year and there is certain headwind. I think what keeps me awake at night is that I can’t control what the GDP of China is going to be, so we’ve got to focus on what we can control which is our execution.

I tend to spend a lot of time thinking about how do we get sharper in our execution. So you never want to miss the turn but you also don’t want to take the wrong turn. So it’s a careful balance in terms of where are we investing to having a perspective and a point of view on technology trends and customer needs and making sure that we have got the appropriate placing there such that we move as we need to move.

Is there a second phase of the transformation plan for Dell?

Absolutely, there’s a second phase from a transformation perspective because the one certainty in this business is that you’re always moving forward, you're always transforming.

So now it’s going to take the form of how do you continue to transform the capabilities we have and the other capabilities we think we need as we continue to provide solution capabilities to our customers.

We are never done with transformation given the technology cycles we’re in. You’ve got to continually reinvent your model.

Watch the interview here

 

Published on July 29, 2019
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