30 Minute Interview

“It is imperative for us to set up a manufacturing centre in India”

What are your plans for India?

We are bullish about India and look forward to expanding our business in the country. In our meeting with the Indian Prime Minister, we conveyed to him our interest in setting up a manufacturing unit. He was supportive of our plans to invest in the country and bring in FDI. When Dell decides to set up a unit there is an eco-system that is formed.

What are your plans for setting up a manufacturing facility over here?

I don’t have a timeframe, but the potential is so large that it becomes imperative for us to set up a manufacturing centre. We also need to look at infrastructure requirements. When we relocate, partners also need to draw up their plans and thus the eco-system builds up. India is growing, and infrastructure, including roads, needs to be built ahead of this growth so that logistics can work efficiently. Where we locate would also be based on incentives since the plant has to be economically viable.

Which are the growth areas for Dell?

We have witnessed a 30-40 percent growth in the notebook market worldwide. Consequently, we are increasing our workforce and capability to meet consumer demand. In terms of geographies, Dell is strong and witnessing good growth in the Asia-Pacific (APAC) and Japan. Our marketshare in APAC has crossed 10 percent as per IDC data, and globally it is 18 percent. We have a 32 percent marketshare in North America. In India it is 3.5 to 4 percent, and we hope to improve it to match that of North America, but it will take a while.

Dell has always been seen as an enterprise player. How do you plan to tap the growing SMB segment across the Asia-Pacific?

We are focussed on the SMB market. Call centres and customer support centres that we are building in Asia are part of our strategy to service the SMBs. The direct model that Dell has is a great way to reach a large audience. We are targeting SMBs through the Internet and other advertising vehicles. Our relationship with large institutions is a benchmark for the way we operate and treat our customers. We want to replicate that for our SMB customers as well. Small and medium businesses around the world contribute to about 40 percent of the revenue. For enterprises it is around 20-25 percent; this includes servers, storage and notebooks. We want to become the IT supplier for the small and medium business which does not have the resources to put up a large IT department.

What is your strategy for the consumer segment?

We look at the market in areas where we can have a good topline as well as profitable growth. Corporate enterprise buyers and governments are our major targets. We have never had a strategy for the consumer and SOHO market. We are constantly upgrading ourselves with new notebooks, desktops and servers. In the consumer space, we have flat panel monitors and gaming devices. Our attention is on the wireless segment as well.

Are you planning to add service delivery centres in India and Malaysia?

We are setting up our fourth customer contact centre; the new facility will be at Gurgaon. Dell presently has customer contact centres in Bangalore, Hyderabad and Mohali that are part of a 30-site global customer contact network. The centre in Gurgaon is expected to add 700 to 1,000 positions to Dell’s existing Indian workforce of 10,000 by the end of 2006, first from a temporary location, which will open in April, and then from a 250,000 square-feet built-to-suit location, which is scheduled to open this winter.

We needed a real-time service capability to monitor, support and track customers in the Asia-Pacific and ANZ (Australia and New Zealand) regions. Our new, state-of-the-art Enterprise Command Centre at Penang, Malaysia, helps us to monitor operations. We are using Google Earth Pro to track our customers’ equipment. This is to support those installations which have been made at large customer premises. IDC data shows that our marketshare has been growing in the south Asian region, so this region will continue to be our priority. Datacentres have become crucial for large corporates which need constant and instant information. We needed to have real-time server capability to monitor and support enterprise customers.

Would a new captive centre in India mean less work for third-party suppliers?

We never outsource manufacturing and do not prefer to outsource call centre operations. We have been fortunate to have good partners and it is not our intention to take their business or allow them to grow into too large a chunk of Dell’s business. We are not trying to build internal capability to take it to the marketplace.

What kind of services model does Dell have? How crucial are services for you, especially when you sell directly?

Services for us is about making technology accessible. It is perceived that the maximum deployment around IT is in application development which determines the efficiency of operations in a business. However, in reality, services account for a large percentage of IT spends. Most people think that these spends cannot be controlled, but we believe that you can manage your services with the elimination of variation.

Our business model for services therefore is to standardise and thus eliminate cost while giving value to customers. Businesses are picking parts of their IT environment and outsourcing them. We are particularly focussing on the desktop and notebook servicing area as there is a standardised environment there. We don’t try to be all things to [all] people, and endorse a selective outsourcing approach. We are being customer-focussed in our service delivery model.

Dell has a single-point service delivery model much like our sales model. We provide outsourced services in the desktop and notebook environment but not in the server and storage environment. In addition, there are a host of services around the server and storage environment but we do not outsource that.

What do you think of Acer as a competitor?

Acer is a strong competitor and is resourceful. Their strength still lies in parts of Europe, especially southern Europe, while we are focussed in Asia and the US. However, we do take them seriously and keep a watch on them.

What are the challenges you expect from the industry?

The industry has always been challenging and aggressive. There has always been constant consolidation. Compaq sold their business to HP, IBM sold theirs to Lenovo. This kind of consolidation, I think, will continue. And one thing I can promise is that Dell will always be able to compete. Our direct model is the most efficient, competitive and cost-effective.

—Kusum Makhija