How Shiv Nadar turned HCL into a successful venture
Shiv Nadar was born in the mid forties of the last century, a time period when India was about to liberate itself from the yoke of British imperialism and chart its course as a young and vibrant nation. Born in the rural outback of Tamil Nadu, he had a very humble beginning completing his higher secondary education from the town of Kumbakonam. Thereafter, he earned a collegiate degree from The American College in the district of Madurai and also received a degree certification in ‘Electrical and Electronics Engineering’.
How HCL was conceived
Shiv Nadar began his professional career in 1967 in one of the affiliate companies of the Walchand Group-Cooper Engineering in the township of Poona. But it was while working in the calculator division of Delhi Cloth Mills in 1976 that the idea to establish a concern for manufacturing PCs (personal computers) took seed. He along with six other enterprising engineers, all of whom were employed with DCM, quit their jobs and set about giving shape to their vision of creating an establishment that would produce personal computers.
And that’s how Hindustan Computers Limited or HCL was born. Today HCL is one of the world’s foremost IT enterprises with yearly revenues exceeding US$ 6.3 billion. The HCL Group consists of two broad divisions-HCL Technologies and HCL Infosystems. HCL has a worldwide presence with operations in 31 countries and it has a pan-India presence with bureaus in over 150 cities and more than 500 service centres in nearly 4,000 towns. It has a total employee strength of 92,000 and has 93,000 POS (point of sales) scattered in more than 11,000 towns and cities. In its more than 3 decades of existence, HCL has blazed a trail of perpetual growth and development.
HCL in the first ten years
Shiv Nadar, who is the CEO and chairman of HCL Technologies, remembers teaming up with Arjun Malhotra who was much younger than him and other budding engineers in DCM like Ajay Chowdhury, Subhash Arora, DS Puri and Mahendra Pratap for setting up HCL. Shiv Nadar was acutely aware that he’d have trouble sourcing funds for his start-up as no bank or financial institution would be willing to fund a fledgling venture. So, he conceptualized a firm-Microcomp Ltd.-that marketed and sold teledigital calculators. Establishment of this undertaking solved the funding problem to a considerable extent. Furthermore, the Uttar Pradesh state government chipped in with a sizeable sum. Thus, HCL got off the ground with seed capital of 2 million.
Just a year following the incorporation of HCL, the Janata Party (presently the BJP) won the parliamentary elections for the first time. George Fernandes, the industry minister laid down industrial policies that encouraged the growth of domestic enterprises and entities in almost every conceivable industrial or commercial segment. Foreign establishments, particularly USA companies like IBM, Coca-Cola, and Pepsi packed up and left as they felt that the business environment was not conducive for them anymore. Their departure created a vacuum that prompted sagacious entrepreneurs like Shiv Nadar to fill in.
Quite soon, HCL started distributing microcomputers throughout India giving stiff competition to the American IT giant, Apple. Within two years it launched the microcomputer with a 16 bits processor. In the next five years, Shiv Nadar and his team of specialists were able to independently develop client based server structure, a database management system, and a network based operational system. Eventually, HCL had its first international foray when it established a computer manufacturing unit in Singapore.
The abject aim was not only to manufacture computers but also to promote the concept of computerization which inter alia included hardware aspects, software designing and servicing and presenting the entire model as an interlinked system. In the year 1981, HCL ambitiously entered a hitherto unchartered territory-computer education. In fact, the field of computer education in India was completely unexplored.
Shiv Nadar and his business partners had reliable business contacts including links in IIT and IIS (Indian Institute of Science, Bangalore). Hence it did not take them much time in coming up with an institute that would extend quality computer education and training-NIIT (National Institute of Information Technology). After three years, i.e. in 1984, the central government announced a policy that allowed Indian manufacturers of computers to collaborate with foreign producers.
For HCL it was a heaven sent opportunity to increase its share in the Indian market for personal computers which was gradually burgeoning. Busybee-the first inventive PC was developed in just about 21 days.
The next decade was a transitional phase for HCL
Soon HCL was on its way of becoming one of the biggest IT companies in the country. It went on a vigorous recruitment spree recruiting the best brains from the technical institutes. It also went on an ambitious expansion drive by opening sales and marketing divisions throughout India. Enthused by the unexpected growth of HCL, Shiv Nadar was seriously mulling on foraging the market for computer hardware in USA. But in his desperation to tap the American markets, he ended up supplying computers without taking environmental aspects into consideration. Consequently, the project fell through.
But Shiv Nadar took this setback in his stride and in 1991 entered into a pact with Hewlett-Packard for making computers. Subsequently it entered into collaborations with Nokia for marketing its cellphones and with Ericsson for promoting its switching systems. However, the market for computer hardware was getting constricted and HCL’s revenues were falling. Furthermore, Arjun Malhotra, Shiv Nadar’s friend and business partner from his DCM days left the company to create his own venture.
The dawn of the new millennium proved propitious for HCL
HCL in a bid to shore up its falling revenues formed a totally new division-HCL Technologies-to explore the software market. To get started with this new start-up in full swing, the flagship company came out with its first IPO in 1999. Shiv Nadar, for a while cast aside his vision of turning HCL into one of the world’s largest hardware producing entity and instead dedicated his efforts in laying the foundations for a robust software concern.
HCL partnered with British Telecom to launch a BPO in Ireland. The following years saw HCL going into an expansion binge. It collaborated with Boeing for its ‘Dreamliner 787’ project and with NEC of Japan for software development. HCL shortly took over its JVs with British Telecom (Apollo Contact Centre) and Deutsche Bank. In 2005, HCL Infosystems came out with a personal computer costing less than INR 10,000. The next year saw HCL producing nearly 75,000 PCs every month. It was Shiv Nadar’s insatiable lust to excel that made HCL what it is today.
Salary of Shiv Nadar
According to BusinessWeek Magazine, the Salary of Shiv Nadar, the founder and Chief Executive Officer of HCL Enterprise Solutions, Inc is INR 119,000,000 per Year for the financial year of 2013-14.
Last Updated: July 18, 2013