Change management in hcls rebranding a transformational journey

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In mid-2000s, India's leading IT Company HCL Enterprise(HCL) suddenly was realising that in spite of standing established as a prominent and important firm in the sector of IT, it was not marketing itself shrewdly as a result of which its peers were hogging the limelight even being at the same level of providing services as it was. The competitors were fetching deals which it could have, had it been marketing as prominently as they were.

The firm that had started manufacturing processors in-house when IBM was coming into picture in parallel in global market, has more than three decade heritage, and felt that shifting the branding paradigm from 'volume' to 'value' and from 'process' to 'people' would help regain its establishment as a company that in some way or the other could touch the lives of people. The company felt the need to unite its various business segments and connect with all its stakeholders. In parallel to this thought, EFCS [2] mode of working and marketing came to the fore of all its strategies and had started being the talk of the town.


Through out India and overseas, HCL has been regarded as India's original IT start-up. Back in 1976, Shiv Nadar, Ajai Choudhary and a few enthusiastic entrepreneurs came together to develop micro computers 3 years ahead of IBM and in the parallel times of Apple! It had already started disrupting the computer market in India and it maintained its pace of dominance for quite a few years until it reached a tipping point where it felt the need to expand its reach and of course, business. The business was going to be stagnant otherwise - some day or the other - in future. Beginning FY '05, HCL kicked off many initiatives to reinvent HCL as a valuable global Technology and IT brand in the ever-changing & dynamic IT landscape. The genesis of this rebranding was a simple one - to inform and provoke HCL's key stakeholders (customers, employees, shareholders) to recognize HCL as one of the iconic Indian brands that symbolized the spirit of an evolving India.

In this case study, we'll discuss how HCL underwent rebranding from a home PC maker into a leading IT company in India.

Rebranding at HCL

In order to retain the faith of customers under such difficult circumstances, Mr Vineet Nayar [3] , who had just joined as the President in 2005, had to chalk out strategies. Vineet, along with his team of senior management had started brainstorming through ideas and proposals and finally had zeroed in on shifting the branding paradigm from 'volume' to 'value' and from 'process' to 'people'. In fact, 'volume' to 'value' paradigm shift was possible through branding the organisation as 'people' centric which was realised true later by Vineet. He had understood that the critical points of value generation were people i.e. the 'Employees'. How and why he came down on this model when the entire industry was focussing on process and Customer as its priority? How would focus on 'people' help HCL brand its name when 'Customers' are the ones through whom we were earning our bread and butter? Nonetheless, at that point of time, 'Focus on Customers' was marking the journey of transformation at HCL.

The CEO in Vineet and possibly his competent team of managers had to design a model of a brand that had to be strong and durable. They had to outrun their peers/counterparts in the market. There was one pharmaceutical company HCL drew their inspiration from. That company had established itself through various rounds of review and feedback that it took from its customers and by gradually working upon them. Consequently the firm was successful in turning most of its customers into tokens of marketing for itself. It had achieved this forte riding on the waves of rigorous customer interactions as already explained above.

HCL's Verticalisation strategy

At around 2005, HCL had become a dominant player in banking and insurance sectors. However its business was growing with a significant rate with many other service sectors perched comfortably on its already-strong shoulders. With this gross confidence under its belt, it started acquiring numerous small/medium sized companies across different upcoming verticals. Gradually, HCL's arena was turning out to be a mix of varied cultures which was indeed promoting this as a fairly good diversified organisation. Ironically, or should we say, as truly a result of this, the situation was turning vital as it started losing its focus and required grip over one of its prime verticals - Banking and Insurance.

Some serious plan needed to be chalked out to win back the stability and the balance. Vineet was already cumulatively collating his thoughts and experiences but was yet to put something solid in practise. The clock stroke right one fine day and Vineet wanted to believe in EFCS and implement it. Details in the next session, and what served as the gunpowder to trigger the fire.

Vineet's plan on HCL Enterprise - EFCS

In the earlier days of his career at HCL, Vineet was leading the in-house Infrastructure start-up called HCL-Comnet. Although this start up went on to becoming the best infrastructure services company later, it had seen turbulent days in its younger days. At one point of time, many of its customers were already upset.

Once, while Vineet was bracing one supposedly unhappy customer of his company, he was pleasantly surprised that the customer was really happy in many facets of the service it had been touched upon which was not visible to the top management at a superficial level. More surprising to Vineet was the fact that after getting the greeting from Vineet, the customer executives had almost completely ignored him as the head-man and were directing most of their comments and compliments towards the core project team. The team was being praised where the supposedly-leader of the herd, Vineet, received minimal references. This meeting proved to be turning point in Vineet's philosophy of management. He realised that the true value-zone for the customer lay at the employees' circumference and the vicinity. And 'Employees', not a thousand in-place processes are the true value creators.

The Management realised that empowering employees made sense towards adding value to its service and which further could also be considered as a branding theme to woo customers to the true value-zone.

Thus was born the 'EFCS' philosophy. This philosophy was marketed inside the office and outside as well - at all those possible customer and potential-customer exhibitions - the prominent of them being the 'Global Meet' that is organised by HCL every year attracting business intellectuals and numerous business moguls from around the world. As a part of the EFCS drive, numerous themes and implementations started materialising inside the company that catered to various needs and comfort of employees. It was in belief that once the employees were happy, value creation would always be only a by-product.

But was it going to really work? Were there any bottlenecks to overcome? What were the challenges that now appeared seemingly tall to be scaled?

Vineet and his team wanted to promote their philosophy through the voice of their own employees' .Yet they knew very well at the outset that employees would not take anything for granted which even had a smell or feel of pretence or opacity. As anticipated, many of them had a suspicion that this EFCS stuff was just a promotional gimmick from the boardrooms of the corporate. Nevertheless, many embraced the idea of being an "HCLite." [4] The corporate ethics and values have to vibrate in resonance with the employees' own value system and it was very unlikely a possibility that such a huge employee base would be swayed and influenced by a pitch that rang sceptical. Influencing the mind-set of 55,000 employees spread over 17 countries in a 32-year-old organization was not going to be expected as an easy task.

Stakeholders' Opinion on EFCS (Employees, Customer, Shareholders)

Although the EFCS slogan seemed extremely glamorous and had the potential of striking the right chord with the employees and the customers/potential customers with equal charm, much was left to be seen on how the concept went down with all the stakeholders. HCL's marketing team started interacting with their key stakeholders to know how rebranding with EFCS philosophy is working to the tune of their needs. The expectations were high, but implementation and the preceding perceptions were the challenges ahead. Surely, it was interesting waters ahead.

In the first phase, HCL's marketing executives made a survey to know employees feedback on EFCS. Entry level junior employees were not yet in complete perception of EFCS philosophy and they were somehow expecting this to be doing something with their pay hikes.

HCL carried over a survey on its EFCS branding initiative and circulated a questionnaire to over 100 fellows across all the levels in the organisation. Only 50% of them responded which indicated towards a fact that EFCS policy was not going down well down the throat of the employees and they were sceptical about believing and about implementation of a concept so off-beat and strange as this when almost the entire industry was lamenting about the 'Customer is GOD' take on service.

In a step towards understanding customer opinion, HCL management team examined customer satisfaction scores [5] . It covered geographically dispersed customers across its line of operations to collate views.

The opinions that were collated from various customers were of mixed kind. A few of them sought to be in a mode of partnership with HCL. Thus the expected focus was more on value than volume. The significant difference they observed with HCL after 2005 was majorly in terms of accountability, capability, innovation & entrepreneurship. They did not feel being obscured to the execution of their contracts and felt HCL was quite transparent to them in eliciting the costs and savings.

Another customer felt that the productivity was lower with HCL employees even though their enthusiasm levels were high and at par with other Service biggies. HCL-account head was proving to be really proactive but there seemed to be no such system or process in place to make sure that proactiveness was scalable to the mark. Customer believed that, at that present, company's relationship with HCL was between a vendor and a partner. HCL was trying to offer multiservice approaches, but the culture of the projects that way was killing the integrated approach. Multiservice offerings used to have liabilities of their own. They perceived HCL employees as enthusiastic but "reasonable opportunists"-resulting in skill mismatches. In essence, they were trying to swallow bytes that they couldn't chew which actually meant that they were desperately promising to comply with the tasks they were not completely ready with.

Analysts had a negative opinion on HCL's valuation of share options and distributing incentive to employees, within the profit and loss reported for particular verticals.

In addition, management statements such as "hiring was slow as we could do the same work with fewer people" surprised institutional equities. Moreover they were apprehensive about how the EFCS branding policy was going to hit the customers. Vineet was openly marketing this strategy in all possible global forums and was inviting discussions for the same. Investors felt that a significant hamper to the image and business could be inflicted if EFCS mantra is repeatedly elicited before the customers/potential customers who may feel offended by it. And yes, that turned to be true. There were mixed response to this policy, many were convinced, but still many were frowning bad and were walking out. In the course of expansion and marketing of this policy, HCL had lost a few deals as the concerned customers were not convinced enough. Possibly, it was to be seen that HCL had something else in fate - if some sour, some were probably to be sweet too.

In a significant revelation, some analysts had noted that prior to 2005 there were many entrepreneurs within HCL who prevented HCL's functioning without any diversification and free mobilisation of thoughts and ideas from the value zone "EMPLOYEES".

Revenue growth v/s margin improvement for the major Indian IT services was looked upon by shareholders. Share of revenues from new business for HCL and competitors was analyzed by investors. Quarter-on-Quarter growth rates for HCL compared with the average quarter-on-quarter growth rates for the top four Indian IT services players in 2008 was analysed.

The Road Ahead

In a 'fight or perish' business space of that period, there was scepticism floating around about how such seemingly a soft approach of 'EFCS' was going to cut through the branding ferocities of numerous firms preaching similar concepts.

Anyway, to implement EFCS, HCL had come up with various Employee friendly movements such as SSD (Smart Service Desk), 360 degree feedback (feedback for managers), Genie (Employees' personal service desk), U & I (discussion forum with the CEO) and many more. However all major firms across the globe were by this time, already implementing some or the other such models and there was a feeling at the outset that the concepts were not very new to the industry. Nevertheless, the implementation of the mentioned model was a real challenge. Many companies had taken the leap to implementing them, but there were possibly many loopholes to be plugged here and there. They were not in execution in the fullest of their forms. HCL had to stand tall and stout in implementing all of its EFCS initiatives to the maximum of extent. Only then could it walk the talk and gain the real trust of its stakeholders and potential customers.

The road was ahead. The path was set. It had to walk past all the obstacles… And more importantly, it had to walk its talk.



Table A

Customer Satisfaction Scores

Based on HCL Internal Portal

Table B

QoQ Growth of HCL in 07-08

Based on Internet sources.

Table C

Revenue across different Verticals at HCL

Based on HCL Annual Report 2005 & 2009.

Questions for Discussion

Why after so many years, HCL did feel the need to rebrand its communication campaign? Discuss.

Inspite of being in the IT industry for 33 years, HCL still is not the lead in the market share. Comment your views?

How HCL verticalisation strategy worked with EFCS transformation? Discuss.

How real was the EFCS transformation? Was HCL walking the talk, or was it all smoke and mirrors?