‘It’s not about leaders, it’s about business models’

Thomas K. Thomas New Delhi | Updated on March 13, 2018 Published on September 03, 2013

Vineet Nayar   -  File photo

It’s going to be a battle of service providers buying products and product vendors buying services and hitting the market. Vineet Nayar, Non-Executive Vice-Chairman of HCL Technologies and Founder of Sampark Foundation

After more than 28 years with HCL Technologies, Vineet Nayar has now embarked on a mission which he says is the toughest phase for him.

Fifty-year-old Nayar, who took HCL to spectacular heights through his philosophy of “Employees first, customers second”, is investing nearly Rs 90 crore of his personal money for social transformation initiatives through Sampark Foundation, an NGO that he set up in 2004.

Sampark has signed an MoU with the Punjab Government to drive educational intervention programmes. Business Line spoke to Nayar on the new venture and his take on the IT sector. Edited excerpts:

While TCS and HCL seem to be running away with the market, Wipro and Infosys are struggling. What do you think is happening here?

There is a very interesting McKenzie study which says that once the growth rate or the momentum of the company starts going down, only 10 per cent of the companies are able to recover. Ninety per cent fail. Therefore, the question is — why did some companies start going down? You can debate and discuss, but the effort of pulling them back up is very difficult. The second thing which I think people are missing is the fact that it is not about leaders and personalities, it’s about business models. The business model has dramatically changed.

There was an expectation in a particular time that the cost of service delivery will increase with inflation. Now, the expectation is the cost of service will go down every year because of productivity. In that scenario, you have to be an innovator. Do you think Indian IT companies are not moving up the value chain?

The new mantra is relevance chain. So, the question to ask is “Are skills, competence, business model, service, pricing and location relevant to the customer?” The customer has changed. The customer is not enamoured with your fresher model, golf carts and campuses. The customers is bothered about relevance.

Do you see at some point of time any Indian IT companies coming into the product side?

My view of the future of the world is going to be what I call “service product”. So, for the last decade, the product companies dominated because they were innovators and people bought products because they were capital intensive. People will buy utility in the future, and therefore, product companies will find it very difficult to convert themselves into services companies. So, the company which is capable of buying the most of innovative products will be the winner. That’s exactly what we are doing at Sampark — buying the most innovative product and converting that into a service model. It’s going to be a battle of service providers buying products and product vendors buying services and hitting the market and that’s the battle which will be fought.

Your new venture focuses on method of education whereas there are other issues related like availability of quality teachers or infrastructure. What’s more important to tackle?

Yeah, it’s an interesting question in terms of the number of issues. If you make a list it is very large. Infrastructure is not there, toilet is not there, teachers are missing, students are missing, midday meals are not available. So, the question we asked is — if we try and fix these problems, we will be here forever, so what one intervention can we bring about which will have the maximum return? And that intervention was method of imparting education.

How much of what you re doing is already out there and how much are you innovating?

Like in HCL, I believe, we were in the business of applying innovation. So, I have pooled together all the innovations that exist. At Sampark we only apply innovation to the problem.

What’s your take on the new Companies Bill which has given CSR a lot of importance?

I think the problem with our country when it comes to NGOs is the fact that funding to them has dried out from global agencies. No global funds are coming into the country. Therefore, their dependence on government funding is very large. So, most NGOs get governmental projects. Therefore, they live from one project to another project and those projects they have to win through tenders. With the 2 per cent CSR budget coming in I am hoping that these funds will flow into the small NGOs for longer-term programmes.

Published on September 03, 2013
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