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Shiv Nadar Talkasia Transcript

SB: Satinder Bindra
SN: Shiv Nadar

BLOCK A

SB: Hello and welcome to Talk Asia, I'm Satinder Bindra.

My guest today is Shiv Nadar, among the richest men in the world, and a man who presides over information technology empire.

His HCL group of companies is now among the largest hardware and software conglomerates in India, and his personal fortune at 2.7 billion dollars which puts him in the exclusive Forbes list of global billionaires.

SB: Shiv Nadar joins me now to talk about his career and his companies. Shiv, welcome.

SN: Thank you.

SB: When you started out thirty years ago, you started out in a garage, and now your companies are worth more than 4 billion dollars. Take me back, to those early days, what was it like?

SN: Those days we thought there must be a space for personal computers, and there were several groups of people that went into building a personal computer. One was Apple, one was us, and there were several others. 1978, early, we started shipping out those computers. And there were only two of those that finally survived. One is HCL, which has got a bit more than half a billion in size facing India, and the other is Apple, which is around 2 billion in size. All the rest are gone.

SB: So how did you survive, what has been your secret to survival?

SN: We survived, one, we only faced the Indian market during this period but, the last 15 years the Indian market has been like the world market. But it is just that we understand the marketplace well, and, you know, opportunities come normally close to camouflage. What is visible to everyone, and what that is visible to an organization that is very entrepreneurial are different. So, for example, if you see the history of HCL during this same entire period, it always went and found marketplaces which are new.

SB: When you look back on those years, what was the sort of biggest struggle? Was it money, was it team, was it organization, take me back again if you can.

SN: If I take back 25 years or 30 years, the biggest hurdle was governmental regulations on imports. So what we could do was not determined by what was technically possible, but what the state would allow you to input. There were very severe restrictions in the late 70's, so we had to argue technically, but at the same time they were amendable to technical discussions. They were all engineers, and it was my job to go and convince them technically that some of these parts should be allowed to be imported. If I were to take one single largest block, it was that. The second largest block was complete lack of any private equity support that is available in the Silicon Valley today. You know, there are no venture capitalists in India. So, we had to run, generate the cash within the business itself, and grow. That's why it took 13 years to get to 25 million dollars.

SB: During these early days, I guess you not only had to build computers, but you had to create an environment where people could know more about them, could learn to use them, and in those days you also set up the National Institute of Information Technology. Tell me about that as well.

SN: In '81 to 82, after about 5, 6 years of start-up, we found that we could produce computers. And a huge cost element, which was eating into our profit, was training our customers. Because the marketplace produced computer engineers, but the education system did not produce people who could use computers. So, we said, okay, now we have to have the job of creating the manpower that will be able to use the computers. We said if that's a restricting factor, can we remove that. So, one of our people, who was working in the company was marketing manager at the time, Rajiv Thapar, came up with the idea that, why don't we commercially sell computer education, and it looked very difficult, but the hypothesis research showed that it will work

SB: You know, in India now, Shiv, there are several large hardware and software companies; the world has heard of the Infosys's, the TCS's, the Wipro's. How are you different from the rest of these companies is there anything that makes you stand out?

SN: More than anything else, we are able to look at industries with a view of the future, not with a view of the past. You look at industries worldwide; several of the industries are overprovided. The world is all banked. The world has more telecom companies that what is required. The world is over retailed. The world has got more insurance products and processes than what is necessary. And if you see the healthcare facilities which are there, they are very inefficient sectors. So, there is going be a clean up that'll come, which means there is a transformation period ahead. So, we will be a partner for transformation, not just IT outsourcing. So, if you see some of our centers, you will see a mini part of a customer. That is where we are different.

SB: How would you define success, Shiv? Because you've created wealth. Does that define success for you, or is there another benchmark that you, personally, use to define it?

SN: The benchmark which I will use is how well is this organization serving its stakeholders, and how strongly is it built to serve its stakeholders. See, stakeholders are basically three: the customers, the employees, the shareholders. We follow a principle of employee first. If we put our employee first, and if they are satisfied and they are happy, and if their aspirations are filled here, then they will do things which will be naturally making our customers extremely happy, which in turn will take care of the shareholder.

SB: What advice would you have, Shiv, for other entrepreneurs, around the world as they set off with their dreams, and sometimes, I guess, they get disillusioned as well. What would you like to tell them?

SN: You have to stay paranoid.

SB: What does that mean?

SN: See, you don't know in which corner which one of your assumptions is going to go wrong. Any business goal is built on a set of assumptions, and you have to constantly test the assumptions to see that, does it stand valid today? If it doesn't stand valid today, what are the changes? If you don't do this, businesses will fail, or fail to produce the results that we wanted it to get to. So, that actually is, mindless to be extremely restless, to do that. I suppose, that is what should be for an entrepreneur in this city. And once he comes out of the restlessness, in any case he should sell the company and go away.

SB: So that means you've got to constantly think never stop and if you do you die?

SN: Yeah, you must, you have to carry that feeling. You know, like they say, in Africa, you know I've seen the posters of it it's very nice, if you're born a gazelle, you get up in the morning and think that how I run faster than the fastest lion, and if you're born a lion, how do I run faster than the slowest gazelle. So, whichever way, if you're born in Africa, you get up and run. So, if you're going be an entrepreneur you have to stay permanently paranoid.

SN: Nadar friend's say he has some very special management mantras. We'll find out more about them after this break.

Block B

SB: Welcome back. We're talking to Shiv Nadar, infotech entrepreneur.

SB: Shiv, they do call you the wizard because perhaps of your management style and some of your mantras. I guess one of them is, to delegate. Many people would be scared of delegating, but, you're not.

SN: Actually, uh, I would use the word empowering. When I was working in the previous organization, something which they did extremely well was they empowered me to build their organization in the electronics business. And I did it well, and I had a lot of pride in doing what I was doing. We wanted to do more, so we stepped out to do more. I believe that that's the best culture that would make building a large organization, you know, viable and possible. Which is what we do, we do that quite well.

SB: You also hire only entrepreneurs and if people in your company or your managers were to come to you saying they had a great plan to do something, perhaps even outside the company, would you support that?

SN: See, for governance reasons I can't do that financially. But if they were to go out and do something, they always carry my best wishes with them. You know, we don't frown on some of our people going and starting something. We all feel very happy; if we can support it we'd support it.

SB: How tolerant would you be of failure when you delegate to someone, and three months later or four months later they don't deliver the goods. Do you get very angry or do you tend to be tolerant?

SN: If the goal was achievable, and if it was not achieved, then at that point I do get the same level of frustration as the team which is working on it does. At the same time, when we take upon a mission, the mission succeeds or fails. If it's failed, it's like, it's not a matter of you're trying to run a hundred meters in 9.8 seconds. But if you've attempted it and you've failed it, then in that case you're going to cry. You're emotional association with the goal is so strong, we celebrate success, at the same time we definitely will cry if there is a failure.

SB: But, you haven't answered the question. Do you tolerate it?

SN: Yes, completely yes. Otherwise, people will not try. The goals will become very average.

SB: You take inspiration from sports people, as well as from the fine arts. How, how do you apply those lessons to your business?

SN: You know, I'm a very avid watcher of many games, and some of the sports people have stayed my very good friends. And I have seen the passion to achieve certain goal, and the goals are always a level of excellence. You know, they're all very well marked.

And if you see an athlete, or if you see a sportsperson like Shane Warne is today (SB: The Australian cricketer) yes, if you see them, uh, they have very well-set benchmarks. They want to better them. They have competitors. It's almost like what you see, or what you deal with, in the business world. And in that, they go about with their game plan, to win.

SB: Shiv, you're so busy at work, all the time, dreaming, conceptualizing, hiring. Do you get any time to relax or is that sort of completely forbidden?

SN: No, I relax a lot. As a matter of fact, weekend I'm pretty much my own person, and at that time I spend time upon myself, on my mind and my body, with my family, with my very good friends. I am a 5 day/2 day person.

SB: You like to read a lot and, I gather, you have a large collection of movies?

SN: Yes, that is something which I collect meticulously, I have here and America, and I enjoy reading. There is some amount of reading which is compulsion. You know, about 80 to 100 pages a day I have to read, which is technology related or business related, which just keeps me abreast. That's 5 days a week. But the weekend I will read milder stuff.

SB: You're also very inspired, or you do want to do more in the field of education. Why? Why does that sort of motivate you so much?

SN: I'm a product of education. And, I started two scholarships; I'm very proud of that. And, I have to give back to society what it has given me. Because where the scholarship comes from, somebody paid tax and the government can return some scholarship and give it. So, now I should be instrumental in returning that, and we built the educational institution, in South, it's very well-known, in Tamala particularly it's very well known, it's one of the top-ranked institutions. Now we hoped that we would do one similar to that in North India as well, and we'll convert it into a deemed university, so, we believe it's a form of saying thank you.

SB: Another short break, then can India sustain it's software success. We'll ask Shiv Nadar.

Block C

SB: Welcome back. I'm Satinder Binder, talking to Shiv Nadar of India's HCL group. Shiv, India's achieved a lot in software, but are you worried about the future?

SN: Visualizing a scenario of how Indian companies will go forward. Say, Indian software companies have enormous wealth, shareholders wealth built inside. The way I'm visualizing things to roll is, they don't have as good a customer contact level as some of those companies in the countries themselves. It could be German, it could be English, it could be French, it could be American. I take it that the Indian companies will become global by some of these pieces merging through. Now that is not a defensive step, that's a necessary step. This would make them very powerful. You know, this is very similar to how Lenova has gone and taken up the PC's off IBM. (SB: Right.)

Somebody will do it. Once one company does it then everybody else will do it, and become completely global. So give it five years, you will have five powerful, global companies. The global companies with origin being Indian.

SB: What happens then to the outsourcing outcry? If it was so loud, or if it is still loud now, and then if these companies are to get even more powerful, what sort of fallout do you see?

SN: They will become transformation companies. See, there are certain industries which are, because of historical reasons, they've need transformation because there cost structure is out of whack, their technology structure is out of whack. Without doing this too they can't serve their own customers well.

If there are twenty such companies, let's say in banks, or insurance companies, or investment banks, telecom, retail, any one of them, one company does it right, then its shareholder wealth will be so much disproportionate to someone else, they'll go and buy them, and clean them up again. It's a process by which the world gets efficient. So, you know, laissez-faire economy, this is going to happen.

SB: Along with the outsourcing outcry, Shiv, wouldn't there also be concerns about the nature of work that these Indian companies are doing. They're going up the value chain, they're doing some very sophisticated product development, and I believe, uh, even your company, HCL technologies, is doing some very cutting edge work for Boeing, right?

SN: Yes, you know, when we are doing this work, let's just take the specific case of whether we do this work for Boeing, or whether we do this work for Airbus, or, any sophisticated work. Typically, these companies don't do this work themselves. Two, it doesn't replace any job. It is a future opportunity, when they're going to go and take it; they're working with companies in Japan, companies in Germany, companies in England, in Spain, and, several organizations in the United States. Now, one more country which is added, which is India. That is all that has happened.

SB: So, is there not going to be more of a human cry, saying wait a minute, now, even very sophisticated work is going to India, it's high value work, it's more you know expertise that's going away to India, and what's the host country get out of this, aren't people going to raise this again and again.

SN: It's not the question of is it displacing some jobs? There are not people to do those jobs. In very high end technology, there is shortage of skilled technical, you know, the technical pool, and that's only expected to widen. You know ten years experience in avionics, twelve year experience in semiconductor design. You're not going to get them. They're not coming out of college today, in the next twelve years they're not going to be there. So, uh, what we are doing is filling in at that. The other alternative is for them to import the labor from India, and do the work, get the work done there. I don't think that's a really wise choice.

SB: Do you think the Indians have done enough to create an awareness of brand India, or, do you think more needs to be done?

SN: Lot's needs to be done, lot's needs to be done.

SB: You think that's a major shortcoming?

SN: Uh, I don't know whether that's a major shortcoming. We have not consciously done that at all. We have done that, but very, very limited manner. We are to do it in a much larger manner, at one time, if you recall the way the Japanese propagated their quality image, and their quality image was shot. At the moment, whatever is getting done it is getting observed, but there is no conscious movement to do that. We should.

SB: Thanks very much Shiv.

SN: It's a pleasure Satinder. I really enjoyed talking to you.

SB: That's it for Talk Asia this week. I'm Satinder Binder in New Delhi. Thanks very much watching.

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