10. HCL Technologies: Heading for Gold



FOR a company that earns 88.7% of its revenue from exports, 75.9% of that from the US, the slowdown could have meant a major blow. Instead, HCL Technologies managed to sustain its growth rate of 43%. It also crossed the Rs 1,000-crore mark and registered revenues of Rs 1,322.2 crore. Profits rose from Rs 233 crore in 1999-00 to Rs 434
crore.

SWOT

  • Strength: Proven high-end technology capabilities and strong offshore business model
  • Weakness: High dependence on US-centric clients, exposed to client risk with more than 30% revenues coming from Top 10
  • Opportunity: The move up the value chain, from application development to software engineering, networking services and technology development to strategy consulting, has immense possibilities
  • Threat: Among the highest billing rates; undercutting by rivals may lead to a squeeze in margins

PERFORMANCE 
HIGHLIGHTS

  • Crossed Rs 1,000-crore mark 
  • Order book position from alliance partners swelled to $600 million

FACT SHEET

CHAIRMAN, PRESIDENT & CEO: Shiv Nadar 

START-UP YEAR:
1994 PRODUCTS & SERVICES: Technology development, networking, software product engineering and applications engineering 

BRANCH OFFICES:
30 EMPLOYEES: 4,625 ADDRESS: A10/11, Sector III, Noida 201301 

TEL:
4535071 FAX: 4530591 WEBSITE: www.hcltechnologies.com

There wasn’t much change in the strategy, though. In line with its focus on emerging and high-growth technology areas, HCL Tech continued to provide value-added solutions in the areas of Internet, e-commerce, networking and embedded systems. Significant investment in creating vast offshore infrastructure to meet the growing demand for offshore services proved to be the perfect recipe required to neutralize the impact of the slowdown.

HCL Technologies continued its focus on technology and R&D outsourcing, aimed at working with clients on mission-critical projects throughout the life-cycle, from conceptualization to ongoing development and maintenance. This helped in building long-term relationships with customers as well.

The slowdown saw Shiv Nadar’s company reaping the strategic advantages of scalability, economics and quality delivery, inherent in the offshore business model. This was managed through a large pool of skilled techies available at a significantly lower cost in India. As of March 31, 2001, the company had 3,948 billable techies, 3,403 of them based in India. The company also invested heavily on strengthening its offshore infrastructure, adding five new offshore development centers–for Toshiba, Vitesse Semiconductor, Victoria Roads, Dairy Farm and NTT Data in the last quarter alone.

Six new Fortune 500 clients and 16 offshore contracts were signed. Furthermore, the second half saw the company setting up nine ODCs, including two long-term contracts with NCR Corporation and Convergys. It was no wonder then that while a majority of the IT companies felt the pinch in Q4, HCL Tech’s offshore centric revenues increased by 53%.

Besides, the acquisition strategy–or alliance partnership incentive program–that HCL Tech initiated last year paid off this fiscal and its order book size grew to over $600 million executables over the next five years. Technology development services and application services continued to roll in the revenues–42.8% and 25.5%, respectively.

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