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August 6, 1999
Hewlett-Packard, the $39 billion IT giant, will finance Indian start-up ventures.
The decision is part of its global plan to launch big initiatives in electronic commerce and electronic services.
"HP India would finance catalyst projects in e-commerce, e-services and communications on a risk and reward basis," HP India President Ganesh Ayyar told reporters.
This is also not a hire-purchase arrangement either. The companies funded would be sharing revenue and growth as also their risks with HP.
Ayyar said HP is fully geared for the new activity and has already developed risk management capabilities. ''We do asset financing to the extent of $4 billion. Fifteen to twenty per cent of our global business is done through this route and the same ratio would remain for India,'' he said.
HP's asset financing would not be like venture capital because it would not involve equity participation. ''But we will surely be taking interest in the management of these start-up companies because our money would be involved,'' Ayyar said.
Obviously, HP would be selective in identifying the projects under the 'risk and reward' scheme.
''We are negotiating with three financial software companies, five software development firms, two manufacturing units, three communications companies and two government agencies,'' Ayyar revealed.
India investment to double
Hewlett-Packard will also double its investments in India. ''We will double up our resources in India in the next four to five months,'' Ayyar claims.
Though Ayyar did not disclose how much money would be put into the Indian subsidiary, he promised that the number of IT professionals hired by the company in India would double too.
''We will be investing heavily in human resource,'' HP Vice-President Stacy Plemmons has said. HP India, with 335 employees had revenues of Rs 6.56 billion in 1997-98.
''HP India has drawn a 'force-multiplier' strategy to enable Indian companies, wanting to ride the next Internet wave, to ready their businesses for the digital economy,'' Ayyar said.
He also unveiled building blocks of two e-commerce technologies - E-Speak and Chai.
E-Speak is a technology designed to enable e-services to interact with each other spontaneously for meeting a need, completing a task and conducting transactions across the Internet.
Chai is an integrated software suite for information applications that links devices like cell phone handsets and microwave ovens to services.
HP India is consolidating its different divisions under one umbrella, the 'enterprise computing sales organisation' or ECSO. This umbrella would comprise the earlier 'enterprise accounts organisations' that addressed the computing needs of large organisations and was mainly responsible for HP's server and workstations business, the HP consulting division and HP's financial operations.
Software sales, HP's storage solutions and support services will be the responsibilities of the new ECSO.
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