Interview with Suresh Vaswani

Dell India – Our Straregy is to consolidate, scale and acquire

At $8 billion (around `36,300 crore), Dell Inc.'s services business is bigger than most information technology (IT) services companies in the country, says Suresh Vaswani, who recently joined the company as chair- man of its India operations and executive vice-president of its global applications and BPO (business process outsourcing) business. It is certainly bigger than Wipro Ltd--where Vaswani served as co-chief executive of its IT business till about three months back. For Dell it- self, though, a $62 billion company by revenue, services account for less than 15% of this.
Vaswani's challenge is to transform Dell into an IT solutions company from being a product-centric one. Acquisitions will be one way of doing so, Vaswani said in an interview. Edited excerpts: You have been at Dell for around three months now. What's your first impression?

It's been very exciting. It's a fantastic time to be at Dell, which is clearly becoming more of a solutions company.

If it was all PC-centric once; it is (now) much more about enterprise solutions, cloud (computing), virtualization and a lot of BPO because that is a key part of the total IT solutions positioning. Services are a reasonable-sized business for Dell and we have major ambitions in terms of scaling that up. For Dell to be an IT solutions company, it needs to have a stronger applications and BPO port- folio. So I have two roles: one is to grow the applications and BPO business; then, I am also chairman of (the) India (business). This market is large, growing and exciting. We lead in the PC segment here and India is a very important part of our transformational journey.
India has to be the hub, the de- livery engine. It is virtually the second place outside the US in terms of strategic importance for Dell. We have as many as 25,000 people here, which will further increase.

How do you propose to achieve this transformation?

Dell is a $62 billion company and its services business is at $8 billion, which is more than (the revenue of) most services companies in the country.
However, it has to be scaled up. We have created three business units. The first is banking, finance, security and insurance; the second is healthcare--Dell is clearly a leader in the health- care space because of the Perot acquisition; the third is the broad commercial business unit comprising multiple verticals such as government and education.

Then we have the horizontals: our BPO business is much bigger than most of the BPO (companies) in India. India is a big back office for Dell glob- ally. And out of the 25,000 people, around half work for Dell internal and the rest for Dell external (other clients). In applications, there are five horizontals: testing, package implementation, business intelligence, application development and maintenance, and application support. So, while the verticals are more the solution implementers, the horizontals are where the capability is. We are looking for delivery transformation, we are looking at India more, (we are looking at) going beyond the onsite/offshore to a much more shared services model, and leveraging technology and next-generation service delivery models. We also have a big orientation towards the mid- market (mid-sized companies as customers).

What are the key sectors to your services business?

We are very strong in health- care and we have reasonable presence in banking and finance, government, education, and manufacturing. Our strategy is to consolidate, scale and acquire. Acquisition is a big part of the game plan, particularly for applications and BPO.
Energy and utilities are some of the new segments for us.

What are the areas where you are looking to acquire companies?

We don't necessarily need reach. We may even acquire for gaining scale. For instance, in the banking space, we have reasonable presence, but we want to scale it. The same is true for the healthcare sector.

(We may) look at specific geographies or markets. India, for example, is one. So, we could look at some interesting companies in India. The third is to look at specific IP (intellectual property). Fourth, we could look at captive centers of customers. We are a scale company, and we have the cash, and we certainly want to build a complete IT solutions business, which is for the future. So we will do what it takes.

Dell's services business is comparatively new. How will you differentiate it?

What they (our rivals) have in terms of sectors and customers is what we also have.
But we have a big eye for next- generation services. So there is a big thrust on IP, solution sets, cloud (services), modernization, and, lastly, the mid- market segment. I think that is what separates us. Most of the companies (operating) out of India will not even look at IP or at the mid-market strategy. And, we are an end-to-end company; we own mobiles to desktops to laptops, which give us an edge.

The dynamics of the IT services market is changing and traditional models no longer seem to work.

What lies ahead?

Most companies will have to go through the transition from the “people equal to billing” model. I think the language will all change a few years from now. Some companies will adapt, some will not. The challenge for the Indian companies is: how do we keep changes that are happening in mind. So, you have to run the business and change the business too. If you only run the business and don't think of changing the business, you are going to lose the big game. So some Indian companies are taking the risks, some are not. The same is true for global companies. At Dell, the buzz is very consistent.

What's your take on the demand for IT services globally?

I think the demand is there. In the emerging markets, the demand is very robust. And if you talk about global markets, there is some whispering here and there (of slipping demand), but there is demand for productivity and innovation. So, if a customer wants to remove some applications that are wasteful, it means demand is down, but the money saved could go into innovation, which means that (actually) the demand is sort of up. So I am not seeing any let-down on that. If you see the growth of some of the companies, it isn't reminiscent of a collapsing market.

(Source- mintlive.com)