Why HCL Technologies puts employees ahead of customers

July 22, 2010, 8:10 PM UTC

Vineet Nayar, CEO of HCL Technologies

This is one in a series of articles leading up to
Fortune Brainstorm Tech
, which started today in Aspen, Colo. The articles look back at the progress of companies that presented at Brainstorm in 2009 as well as look forward to those that will present this year.

By Benjamin Snyder, contributor

HCL Technologies, an offshore IT and software development company, handles everything from setting up a company’s cloud computing services and performing research and development to software engineering. Founded in 1976 and headquartered in Noida, India, HCL employs about 60,000 workers in over 20 countries around the world.

During the recession, HCL adopted an unconventional business structure under CEO Vineet Nayar, who took the helm in 2005. The company puts its focus on employees first, with the idea that creative employees lead to better innovation, which results in customer satisfaction.

So far it seems to be working. In 2009, the company’s revenue grew by 23.5% and in April it reported better than expected growth during its third quarter. HCL is expected to report fourth quarter and fiscal 2010 results on Friday.

Nayar spoke with Fortune about his company’s unorthodox management style, its success during the recession, and getting the most out of the Gen Y employees through social media.

Fortune: How did HCL survive the recession?

Nayar: There were no new products, no new geographies, no new ideas, and no new services. You have to go back to the concept, which we call “employees first customers second.”

Fortune: What does that mean?

Nayar: It was very clear for us that anybody who can solve business problems and create more value for the customer would win the battle of the future. Size and scale will not matter, but the innovation you demonstrate will matter.

You can keep the customers first. You can only deliver value to customers if you make the employees the center of things.

Fortune: Does this apply more to a certain employee demographic?

Nayar: Fifty percent of the world’s population is actually less than 25 years old. Thanks to social media and networking, generation Y employees are very collaborative in nature, they’re very transparent, and they have multiple interests.

We discovered that we have to construct the organization structure to support this kind of talent coming in, rather than expecting this talent to adopt to the organizations structures of today.

We are able to get out a lot more out of generation Y today than we were able to get yesterday.

Fortune: How does this strategy transfer to other companies?

Nayar: We use social media network technologies extensively to drive teams within the organization. Once we did that, a lot of our customers got very interested in what we were doing. For example, the way we interface with our customers, the way we capture the value of the employees, the way we do 360 degree reviews [for transparency purposes]. A lot of these social networking tools were exhausted by our customers and were used differently by different customers.

Fortune: How is the role of the CEO evolving?

Nayar: The new CEO is the guy who is really creating the value, which will drive growth. It’s important to think of the CEO’s role as changing from the person who is directing in the place where execution was very important to a person who is in the business of enabling, enthusing, and encouraging the employees to create the competitive difference between him and his other competitors.