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A quiet revolution

Zafar Anjum | July 12, 2010
Indian IT company HCL, focused on 'transformational outsourcing', is trying to break the mould and shape a new destiny for itself as the brain behind new technologies, and in a seemingly historical move, is helping the ailing Japanese electronics giants to stand up on their feet once again. How is HCL doing this?

Virender Aggarwal, executive vice president and head for Asia Pacific, Middle East and Africa, HCL Technologies

While China is seen as the factory of the world, India is perceived as the Mecca of outsourcing. In the last two decades, Indian IT outsourcers such as Infosys, Tata Consultancy Services, HCL, and Satyam (now Mahindra Satyam) have established themselves in almost all major markets in the world, from America to Asia. While these companies are known for their business process outsourcing (BPO) and knowledge process outsourcing (KPO) prowess, there is one company that is daring to go off the beaten track.

HCL, focused on 'transformational outsourcing', underlined by innovation and value creation, is trying to break the mould and shape a new destiny for itself as the brain behind new technologies, and in a seemingly historical move, is helping the ailing Japanese electronics giants to stand up on their feet once again. How is HCL doing this? To know about this quiet revolution, Zafar Anjum, MIS Asia online editor, asked Virender Aggarwal, executive vice president and head for Asia Pacific, Middle East and Africa, HCL Technologies. Here is what they discussed.

The late Norman Macrae, The Economist's deputy editor, was the first journalist to discover Japan. In 1962, he wrote a survey predicting that a country most Westerners regarded as synonymous with knick-knacks and knock-offs would become an industrial power-house. Japan's rise as an innovation-driven industrial giant in the 1970s and 1980s was blistering. Then came the great cooling period, and Japan began to lose the edge to countries like South Korea. What went wrong with Japan and what worked in favour of South Korea?

In an effort to build up their economy all over again after the Second World War, Japanese business began to rapidly develop consumer electronics products using keiretsu (conglomerate) methods. Consequently, by the 1980s, a relatively small number of electronic industries led Japan's trade and investment interaction with the rest of the world. The initial success of these companies internationally came from continually pushing miniaturisation and driving down manufacturing costs. In fact, Japan's success very quickly overpowered the United States consumer electronics industry.

However in the 1990s, many Japanese consumer electronics companies began facing tougher competition from South Korean companies who established their supremacy mainly in budget electronics. The South Koreans showed that they could produce budget items with similar quality to Japanese lower-end items, but charge much less for it. But South Korea quickly emerged as an early adopter nation to take a lead in all market segments and not just the budget ones. South Korea's government has long used economic policy to encourage development, and its people responded wholeheartedly.

 

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