Opinion | The special paradox of HCL’s succession plan

What marks technology out from most other businesses is the speed at which markets evolve. Inflection points show up with high frequency, often out of the blue, with the result that multiple generations of products and services get compressed under a single generation of leadership. Few Indians have thrived on this reality quite as HCL’s Shiv Nadar has. Last week, the 75-year-old co-founder of the group made way for his daughter Roshni Nadar Malhotra as chairperson of HCL Technologies. This succession at the nearly-$10 billion software services major has been under planning for many years. Armed with an MBA from the Kellogg Graduate School of Management, she has been a director on its board since 2013, and became vice-chairperson in 2018. As announced, Nadar shall stay on as managing director and chief strategy officer. The company’s direction, however, is now expected to be set by his 38-year-old successor. Shareholders, among others, would be watching HCL closely for signs of continuity. But what needs to sustained above all else, in this case, is the spirit of change that has got it so far. At first glance, that may seem paradoxical. With clarity on what must bear Nadar’s imprint and what needs to be refreshed, though, it could easily resolve itself. This is because the story of his success as an entrepreneur is a strong argument against the safety of status quoism. In all his best-judged decisions, he foresaw what lay ahead early, and swerved his business toward the future in good time, undaunted by risk.

Like Silicon Valley legends Hewlett-Packard and Apple, HCL was a classic “garage startup” with big ambitions. It started small in a Delhi barsaati of the mid-70s, when Nadar and his co-founders spotted an opportunity in digital devices for a mass market. From calculators, they leapt swiftly to desktop computers, making the most of a demand boom in the 1980s. By the end of that decade, these machines had got commodified to such an extent that they were selling almost entirely on the appeal of low price tags. Hardware manufacturing was a low-margin affair, it grew evident, with profits dependent on the scale of one’s output. It was in the early 1990s, just as India opened up to global competition, that Nadar took what can be termed his career’s boldest bet. He turned a unit of research and development into a hotshop for software services, taking care to set it apart from players such as Infosys and Tata Consultancy Services by opting for different field specializations. This was spun off as HCL Technologies, and once it went public in 1999, it began to overshadow the old business. Education has been Nadar’s other domain of interest. While the group’s computer training chain has faded away, the multi-disciplinary Shiv Nadar University could yet consolidate his legacy as an institution builder.

Today, HCL Technologies is a sizeable corporation under the watch of equity analysts, with all the burdens that keep such businesses from moving too swiftly. Nadar seems keen to have it retain its agility, as signalled by his recent description of the covid pandemic as a catalyst for change. What this translates into may take time to show, but observers seem unsure if it will differ much from what its rivals do. Some say it must go beyond leveraging foreign deals, that it should sharpen an internal edge in a sector full of skillset overlaps. For HCL to differentiate itself again, it may need to rejuvenate an old zest for novelty.