From Start-Up To Global Success: The Zensar Story

and March 25, 2016 0 comments

Since its inception in 1922 as a tabulating machine manufacturing company in the western city of Pune in a country still under British rule to its rise to supremacy in the domestic hardware industry and then its various struggles to build a credible software and consulting business, the story of Zensar is one of rises and falls. Through this sinusoidal progress, the company has successfully completed 50 years of listing in 20 I3 on the Bombay Stock Exchange and carved for itself a distinctive position in the IT sector. We recount here the early trials and tribulations leading to the creation of the new unit and the first 10 years of Zensar Technologies.

the 1990s: the rise and fall of ICIM

In the sleepy town of Pune in 1922, a British firm set up a tabulating machine manufacturing unit. While very little is known about the progress of the unit in the early years, it evolved to become the Indian manufacturing wing of a very successful European computer hardware manufacturing company, International Computers Limited (ICL). Christened International Computers Indian Manufacture (ICIM), the company listed on the Bombay Stock Exchange in 1963 and welcomed RPG Enterprises as one of its shareholders in 1988.

The company capitalized on the exit of global leader IBM from India in 1977 and quickly rose to a position of preeminence in the Indian mid-range computer industry. At the time when one of the book’s authors, Ganesh Natarajan, started his career in 1981, ICIM was known as the manufacturer of choice for both public and private sector organizations. Well known for its ICL 1901 and 2904 computers, the company also launched the ICIM personal computer (PC) range, where it ran into competition from early Indian movers such as HCL, WIPRO, DCM, and PSI.

The 1990s saw the slow decline of the hardware business because of both external and internal reasons. The external environment became one of intense competition and price wars, with nimbler firms sniping at the installed base and weaning away companies to their brands. Ganesh was in fact one of the first IT managers in his role of Planning and Systems Head of the Switchgear Division of Crompton Greaves Ltd. to switch from ICIM to a new firm, PSI Data Systems, and by the 1990s, market share erosion had begun to happen fast. The opening up of the economy and the entry of brands such as Dell and IBM also heralded the arrival of global competition, and the writing was on the wall for incumbents like ICIM.

The company was also suffering internally from a combination of hubris from its successful past and leadership troubles at the top. With Fujitsu having bought out ICL, the two joint-venture partners RPG and Fujitsu were in a rather stormy marriage, and the CEOs of the time showed very little inclination to weather the storms and stick on to build a profitable business. The company in 1991 decided to set up a software and services subsidiary, ICIL, in a somewhat late recognition of the fact that the days of local hardware manufacturing were over and it was software that would power India’s future. That was when the US office was also set up Fujitsu also came in 1994 as an investor. For the first 10 years, however, the management was caught between the conflicting pulls between the decline of the hardware business and the inadequate attention given to growing the software business, with the result that this became the most traumatic decade for the company.

In fact, by 1996, the company was at the brink of going bankrupt and it was when the company was just I5 days away from filing for bankruptcy with the Board for Industrial and Financial Reconstruction, that Mr A.T. Vaswani, who was then the Vice Chairman of ICIM, was given the responsibility for brining things under control. With both the investors, RPG and Fujitsu, making it amply clear to him that they would invest no further in the company until they began to see some returns, he set about looking for new investors and brought in a new investor, Electra Partners, who continues to stay invested in the company till date.

This was then followed by some hard calls and tough decisions being taken, which included selling off the hardware business and shutting down the manufacturing factory in Pune in 1999. Very soon, Fujitsu disinvested in the company in 2000, followed by ICL also disinvesting in 2003.

The turbulent period of the 1990s is best described in the words of Vivek Gupta, Chief Executive of the Infrastructure Management Business Unit of the company, who joined the company from IIT Delhi in 1985 and has stayed on with the company
since then:

From 1995 to 2001 was a period wherein the CEO’s Office was a Revolving Door at Zensar. Midway through 1995, the then Managing Director of ICIM, Mr Ashok Jain, resigned to return back to HCL where he had come from. And within months after that, the President of the International Software Division (ISD), Mr Pawan Kumar, also left to join Square-D, an IT venture of Deepak Dalmia. That triggered 6 years of uncertainty for ICIM and its various stakeholders.

Mr A.T. Vaswani, who was the Vice Chairman of ICIM at that time, had to be parachuted into the role of a caretaker CEO. His main focus was to somehow stop the hardware division from taking the entire company under water, while keeping the fires burning in the promising software exports business of ISD. He admirably held the fort, dealing with numerous government agencies and creditors and preventing talent from leaving the company by the dozens. Among his top challenges was the daunting task of somehow keeping the company running, finding a capable CEO, helping with bringing in a PE investor, and selling off the hardware division-all at the same time.

Almost every day employees heard a fresh rumor about some well-known industry veteran being interviewed by the board to take on the CEO’s chair only to hear a completely different name the next day. Months turned into three long years as ICIM continued to operate headless. Predictably, the company lost many top-notch employees from across both the divisions of Zensar.

Excerpted with the permission of Sage India from From Start-Up to Global Success: The Zensar Story. Copyright 2016. Ganesh Natarajan and Prameela Kalive. All rights reserved.

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