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We won't acquire an Indian IT firm just for aggregation: Suresh Vaswani

Bibhu Ranjan Mishra/Bangalore 08 Aug 12 | 05:13 PM

Ever since Dell acquired Perot System, the US-headquartered company is going full stream in building up its IT services delivery capabilities. In a discussion with Bibhu Ranjan Mishra, Dell India chairman Suresh Vaswani who is also the Executive VP and Global Head for Applications & BPO for Dell Services tells why the roadblocks like global recession and cut in discretionary spending won’t make much impact on the company’s services business. Edited excerpts:

Dell, traditionally known for computer hardware manufacturing, seems to be moving towards IT services. What is the strategy behind this?
Few years back, you would have called Dell a technology company. What we are doing today is making us to head towards becoming a full-scale IT solutions company. Our strategy is to offer end-to-end solutions addressing all aspects of IT for the customer and delivering the business outcome.

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So is Dell moving away from its core?
If you look at Dell today, we are roughly are $60 billion company in terms of revenues with four broad lines of businesses. End-user computing is a very core part of our business. It is very strategic for the positioning of our IT solutions business because at the end of the day the users need to have the end-user computing device.

Industry experts say that Dell has not been able to leverage India as much as some other large global companies who have strong presence here?
Our services business is more than $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 about managing the past as much as it is about managing the customers’ future. We certainly are not into body shopping.

So in that way offshore is not really a big focus in your agenda?
Offshore is good, but we must leverage the overall capabilities available across the world since everything can’t be done in offshore. We really believe in a 'balance showering model’. Of course, we will balance our showering based on a combination of factors such as solutions, IPs, platforms and technology expertise. However, India is quite strategic for us. We have 27,000 people based in India which is the second largest location for us in terms of employment.

There were talks that Dell is looking at doing India-specific acquisitions and ready to shell out $1 billion for the same?
Acquisition is core to our strategy. If you look at companies we have acquired in the past, all of them have a strong IP component with significant services revenues generation capability. So all our acquisitions will be strategically aligned to that thrust. We will not acquire an Indian services company just for aggregation.

Do you find many Indian companies who are solution-oriented?
There are IT companies in India and there are companies abroad who leverage India extensively. If you look at companies we have bought, each of them have got development centres of scale in India. But again to reiterate what I have already said, we don’t want to buy companies that are servicing the customers’ past.

The macroeconomic environment seems to be under pressure; is it not a challenge for you?
Since our thrust is on building customers’ future, we are seeing investments continuing to happen there. If I were over-dependant on the past, all I would have seen is customers’ cutting down costs, and that’s when you become revenue-challenged. But if your business is mobility, cloud, social media, new intellectual properties (IPs) and new solutions, then you are not challenged. Customers continue to investing in these areas.

Industry leaders say large transformation projects which are dependent on discretionary spends are not happening at the moment?
Frankly saying, I have never understood the term ‘discretionary spending’ properly. When I am building the future business model, I need to invest on new applications to support that, and those are necessary applications. What is discretionary to me is how much money I am spending in the past to maintain applications which are redundant. That, to me, is not even discretionary spending but stupid spending which I have to cut and invest in the future.

How big is India as a market for you? Have you started selling IT services here?
India is a very strategic market for us and we do a business of more than $1.5 billion here per annum. We do not sell a lot of services here but mostly offer services bundled with products. Going forward, we are planning to bring a lot of our full services capabilities to India.

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