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Outsourcing: Dr. Shami Khorana of HCL America (Part 4)

Posted on Tuesday, Feb 15th 2011

By guest author Tony Scott

Tony: Do you see HCL also doing more of the type of deals that you did with CA, possibly moving into product creation?

Shami: Definitely. There was a time when we were very strong and focused on seeing whether we could do an entire platform; everything is about platforms. One of the things I provide is what we can call a “service on a platform.” The question is no longer just, “Can I develop an application for you?” A lot of the new partnerships will be focused on value: they will be more output focused, more business-value focused, rather than focused just on the parameters that outsourcers have normally used.

Tony: Have you started to look at ways of pricing your services to reflect that mutual outcome, so that revenues are tied to  profits or cost savings?

Shami: Sure, we have done that. CA was a good example. With some of the tier one suppliers of the Boeing 787, for example, our agreement was that part of the remuneration is based on profits, but we don’t know how well the plane will do in the market.

Tony: In that case, you are effectively taking equity-based risk. Do you think your clients are looking for those kinds of innovations in pricing and deal structure?

Shami: Without a doubt, they all look for some fair way to share risk. It can’t be done all the time, in every case.

Tony: When you think about it, there is almost always a way to find something that you can tie to to the results you are to helping to bring about. But what kind of leadership does it take to run a successful outsourcing company in this new economic model? You have been in the United States for a long time, you were educated here, and you are clearly a truly “global” executive. This kind of a background is becoming more common, but even here in Silicon Valley a few years ago, it was very Valley-centric.  A VC  might drive a maximum of 15 miles to see a company. The mantra was: “The people might be from all over the world, but it is everything is right here.” Today, everything has exploded out.

Shami: Years ago I was at Stanford University, and there was a lot of hype about the diversity of people in Silicon Valley. One of the discussions that came up was about innovation hubs. Where would the next innovation hub be? Would it be in Silicon Valley, or would it be in China? My point was that as we move forward, the idea of the innovation hub will fade in importance. This has been global; you can’t talk about hubs anymore. It didn’t really sell, though, and when the vote was taken the majority of people said they believed Silicon Valley would still be the hub.

Tony: There is a certain vested interest in maintaining and defending your status.

Shami: When my daughter graduates from college, the first thing I will tell her is to get some international experience. Go learn, and international experience means that you should be comfortable in multiple countries. It can’t be just India and the United States, because that is not how things are going to work anymore. Today, people can go to Venezuela, they can go to Brazil, they can go to a country in Europe, and they are very comfortable being there even if they don’t know the language. They need to learn to find the way around and interact with people.

Tony: I find that there are lot of American executives, a lot of European executives, a lot of Chinese or Japanese executives, whichever, just take your pick, who may be able to work very well in their own environment. A few can work well in maybe one other environment, because they work in that place for a while, they understand it, and they have customers there. But they are woefully inadequate in the new flatter global environment.

Shami: Again, all of these things will take time. I think international experience will a crucial component of career success 20 years from now.

This segment is part 4 in the series : Outsourcing: Dr. Shami Khorana of HCL America
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