Since Dell acquired Perot Systems, it is ramping up its information technology (IT) services delivery capabilities. Dell India Chairman Suresh Vaswani, also the executive vice-president and global head for applications and business process outsourcing (BPO) for Dell Services, in an interview with Bibhu Ranjan Mishra, says why roadblocks like the global slowdown and a cut in discretionary spending won’t affect the company’s services business much. Edited excerpts:
Traditionally known for manufacturing computer hardware, Dell seems to be moving towards IT services. What is the strategy behind this?
A few years earlier, you would have called Dell a technology company. What we are doing today is putting us on the road to becoming a full-scale IT solutions company. Our strategy is to offer end-to-end solutions, address all aspects of IT for customers and deliver the business outcome.
So, is Dell moving away from its core area?
If you look at Dell today, in terms of revenue, we are roughly about a $62-billion company, with four broad lines of businesses. End-user computing is a core part of our business. It is strategic for the positioning of our IT solutions business, as at the end of the day, users need to have the end-user computing device.
Industry experts say Dell has not been able to leverage India as much as other large global companies with a strong presence here.
Our services business is worth about $8 billion, which is quite big. We also leverage technology in service delivery quite extensively. So, it’s not just about adding people. Besides, the thrust of our business is not so much on managing the past as it is about managing the customers’ future. We certainly are not into body shopping.
Is offshore not a focus area on your agenda?
Offshore is good, but we must leverage the overall capabilities available across the world, since everything can’t be done in the offshore segment. We really believe in a ‘balance shoring model’. Of course, we will balance our shoring, based on a combination of factors such as solutions, intellectual property (IP), platforms and technology expertise. India is quite strategic for us. We have 27,000 people based here, the second-largest location for us in terms of employment.
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There were talks of Dell considering India-specific acquisitions, for which it was reportedly ready to spend $1 billion.
Acquisitions are integral to our strategy. If you look at the companies we acquired in the past, all of these have a strong IP component, with capabilities to generate significant services revenue. So, all our acquisitions would be strategically aligned to that thrust. We will not acquire an Indian services company just for aggregation.
Do you think many Indian companies are solution-oriented?
There are IT companies in India, as well as those abroad, which leverage India extensively. If you look at the companies we bought, each of these has development centres of scale in India. But, to reiterate what I said earlier, we don’t want to buy companies that are servicing customers’ past.
The macroeconomic environment seems adverse. Is this not a challenge for you?
Since our thrust is on building the customer’s future, we are seeing investments continuing. If I were over-dependant on the past, all I would have seen is customers cutting costs, and that’s when you become revenue-challenged. But if your business is mobility, cloud, social media, new IP and new solutions, you are not challenged. Customers continue to invest in these areas.
Industry leaders say at the moment, there are no large transformation projects dependent on discretionary spends.
Frankly, I have never understood the term ‘discretionary spending’ properly.
When I am building a future business model, I need to invest in new applications to support that; these are necessary applications. What is discretionary to me is how much money I am spending in the past to maintain applications that are redundant, and can be cut.
How important is the Indian market to you? Have you started selling IT services here?
India is a very strategic market for us and our business here is worth about $1.5 billion a year. We do not sell a lot of services here. We mostly offer services bundled with products. However, we plan to bring a lot of our services capabilities to India.