HCL CEO Vineet Nayar: Outsourcing is dead, and there's nothing innovative in cloud technology

He wrote the book on a philosophy known as 'employees first, customer second.'

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It's an election year in the U.S. How big an issue do you expect outsourcing of U.S. jobs to be in this election and how concerned are you about any potential backlash to that?

I think it is going to be a big issue, as it has been a big issue in all elections, and for the right reasons. Jobs are important in any community. And a debate on jobs is the right thing to have and if you are a politician not addressing the concerns which people have around jobs [you're] not doing the right thing. Having said that, I truly believe that a lot of people in the U.S., Europe and India understand the correlation between growth and jobs. Let me take you back to India. A lot of Indians, for a long time, believed that allowing foreign investment or allowing any of the global competitors to come to India will take away jobs, and therefore we would not allow Coke and Pepsi and IBM or anybody to come into the country because it would take away jobs. Over a period of time, the population matured in thinking that actually by encouraging investments to come in, we created a global, connected country which gains far more and will become globally competitive.

I think that getting the best and brightest to work for U.S. companies in the U.S. will create a competitive advantage for you, as is slowly being understood by a lot of the mass community within U.S. and Europe. Some leaders will run ahead of other leaders in connecting the dots, especially because the [IT] unemployment is only 3.8 percent and the customers are screaming for a higher skill set, and that is the competitive advantage. I believe in this election you may also see some smart people connecting the dots and talking about making America more competitive than it is, and people will understand it. I've seen that change happen in India. And so the debate is right. I think the tenor of the debate will change as people understand the issue more and more through forums like yours, where you educate people. More debates will happen, but I am okay with debates. I'm okay with all kinds of debates because they help us reach the right conclusion. In the end, we have to be creating jobs for local communities where we do business. I'm committed to that.

If someone in our readership base today is a customer of IBM or Accenture or Capgemini or CSC, what do you want to say to them from HCL?

They are extremely good companies. However, if you believe that you are not getting what you want for your competitive advantage, both in the form of flexibility, innovation and cost, we would be happy to work with you in a co-source model to deliver flexibility and innovation at a cost which is much lower than is what you are currently spending.

Is there one key question that those CIOs ought to ask those companies?

I think the one key question they should ask themselves -- is the vendor aligned with your goals? Is the vendor behaving as if he is aligned with your goals? And is the vendor demonstrating in every day behavior that he is aligned with your goals? If the answer to any of the above questions is no, then it is better for you to think about change today when the growth is not there, rather than think about tomorrow when you really need all your partners to be 100 percent aligned with you.

Vineet, is there anything that I didn't ask about that you think is important for us to understand about the company or the market?

There is only one thing that I think we didn't cover, which is that most of our customers' answers to recessionary growth in developed economies is to focus on emerging economies and expand their business in the emerging economies. If the emerging economies also shut their doors, saying they are not open for investments from American and European corporations, we will have a crisis on our hands across the world. Whenever we look at things like increasing the hurdles for entry, either through visa regimes or through barriers for entry through regulation, we should be careful. The world is an interconnected economy today, not an isolated economy, and therefore we can logjam it very easily. In this world economy innovative companies need to go to emerging economies so that the consumers gain from their innovation. Same is true with emerging economy companies' ease of entry into [developed economies] so that the economy keeps moving forward. If we raise trade barriers in this environment, we will lock the global economy into gridlock and I think we will see recession for a longer time than possibly we should.

Copyright © 2012 IDG Communications, Inc.

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