Personality: Arjun Malhotra Passionate and Strong-willed

It is more than a few months today when the industry learned about Headstrongs acquisition by Indias largest BPO firm Genpact for $550 mn. The acquisition, of course, marked Genpacts entry into the software services business. But more than anything, it was the completion of yet another chapter in Arjun Malhotras life, which stands as a witness to yet another Indian ITs success story.

Train of Thoughts

When Dataquest contacted Malhotra, he went reminiscent and traced a few moments from his successful past. After graduation, I worked with DCM as a senior management trainee for 5 years. It was into fertilizers, textiles, and food products, while I was an electronics engineer tracing a career in the management side. Then DCM got into electronics and as one of the few electronics engineers it was my chance to work on a domain Id studied, he says. However the Monopolies & Restrictive Trade Practices Act made it hard for DCM to foray into computers, thus paving way for his exit from the company. The exit was perhaps a part of the process that would give birth to Indias Apple with his 5 friends (Shiv Nadar, Ajai Chowdhry, DS Puri, Subhash Arora, and Yogesh Vaidya), whose unbridled faith in microprocessors was about to usher in a new era in Indian IT.

In 1976, 6 of them founded Microcomp, which designed and manufactured scientific calculators. The venture provided them money to start a company that focused on manufacturing computers. What motivated us to start HCL was the success of IBM and ICL that sold junk in the country that time. We were sure that we could do better. We started HCL or Hindustan Computer Limited in my grandmothers barsaati, remembers Malhotra while taking through his Golf Links bungalow and pointing towards the place where the barsaati once existed.

During his 25-year-long stint with HCL, Malhotra gave the HCL group an international identity, which subsequently had a profound impact on the Indian software sector. He drove the HCL-HP joint venture in India and gave fillip to companys Australia operations.

Period of Transition

However as the time went on, he found incarcerated by his own creation. This was the time when internet was making rapid inroads into the market, redefining the IT space. He was pervaded with an urge to start what he wanted. Since Id my own ideas and wanted to come out of the comfort zone, I left HCL amicably. The next step was to start TechSpan, which I started in 1998 with an idea of consulting with many domains. Since at that time I was consulting with Goldman Sachs, I managed to get funding from Goldman Sachs and Walden International, he narrates. But TechSpan soon had to shift its focus. We wanted to do ERP to generate cash. Our focus areas were telecom, finance, and ERP. But we didnt know how long it will take and how much investment it would require. We did not want more money from the investors, because it would take stake away from us. In six months, we had realized that the market was e-commerce and we switched our model to address the e-commerce market, avers Malhotra.

The brisk decision proved to be a cash cow for the company. It was the reason the management did not want to go public. Since we were profitable, therefore we didnt want to go public. Though it was a misleading argument, as it could lead to assumption that we were not investing into the future technologies, we decided not to go public. Because of our profitable model, we happened to sustain the slowdown that followed in 2001, further says Malhotra.

In late 2001, the company focused on the Capital Markets. TechSpan built its expertise in the US and India, through the acquisition of WebTek in Bengaluru. By the time it got acquired by Headstrong in 2003, it had become a $30 mn worth company.

According to Malhotra, since TechSpan lacked the consulting strength which Headstrong had, therefore this caused the acquisition by Headstrong. Since we did not have the consulting muscle, we found it difficult to attract the right kind of talent. Merger with Headstrong allowed us to build consulting layer, he shares.

Questioning the System

When asked about the Indian IT industry, he outlines the need for investments in the domain knowledge to build up inherent capabilities and fend off the dependency on the markets like the US. But Indian IT companies in the consultancy business need to expand their expertise and domain knowledge. If you dont invest in the domain knowledge, you are going to be missed out. When you do it, you treat the domain like a commodity. Well, there is more money in considering something as commodity. But there has to be a change. A company like Infosys can stay there for 3-4 years with its model. But I think they need change, he shares.

In addition, he also questions HCL decision of running 2 different companies (HCL Infosystems and HCL Technologies). I wonder why HCL decided to run 2 different companies, because the model that addresses the Indian market has to be different and not the company. There could have been 2 different business models, he says.

Even when Headstrong has been overtaken by Genpact, the passion of a 25-year-old boy runs through his veins. If I were a 25-year-old person, I could really make it big, concludes Malhotra.