9 | HCL Technologies: The Rebel



Differentiation is a strategy; rebellion is an attitude. All
challengers try to differentiate; few choose to rebel. HCL did. It challenged
the offshoring status quo by looking at the business differently in every
possible way. If ADM was the forte of the Big Three, HCL started focusing on
infrastructure services and engineering; if time- and material-based pricing was
the established order, HCL started pushing the output-based business ready
infrastructure (BRI); if Fortune 1000 companies were chased by the offshoring
leaders, HCL consciously started to target the medium sized companies too; and
finally, in FY 07, when many Indian services firms rushed to buy companies
overseas, HCL went through the year without a single acquisition.

Though the jury is still out on the long-term impact of what
critics call HCLs desperate differentiation, the operational metrics in FY
07 showed that HCLs strategy is paying off. Its ADM revenue is just 40%industrys
lowest and Infra Services is 13.5% of the totalindustrys highest.

l
MD: Shiv Nadar l
Start-up Year: 1991 l
Products & Services:
Software, infrastructure and BPO
l
Employees: 40,149 l
Branches: 8
l Address:
A-10-11, Sector-III, Noida 201301
l Tel:
011202520917 l
Website: www.hcltech.com 

Highlights


Deals with Celestica,
Teradyne, Skandia and the UK


The BPO arm forayed
into insurance by grabbing deals in the UK and US


Established
top-of-mind positioning in some micro verticals like aerospace
and pharma

Strengths

p
An aggressive player, has
shown repeated success in tapping new areas

p
31% revenues from Europe
means the weakening dollar will hit it less

Weaknesses

q
BPO is still isolated
from IT

q
Not listed in America,
affecting mind share

Shiv
Nadar,
chairman and CEO

Vineet Nayar,
president
R Narasimhan,
exec VP and head, HCL BPO
Anant Gupta,
COO, Infrastructure Services

HCL won some multi-million dollar deals, but also managed
transformational deals from small firms like Insituform where it is growing the
relationship with companys business expansion.

But HCLs aggressive growth strategy has not worked well
everywhere. In BPO, where it was one of the first IT firms to enter, the
aggressive growth targets made it enter the low-margin voice business. Though
HCL did manage to improve margins last year, it has not been able to leverage
its IT capability for BPO something that almost all large IT services firms have
now achieved fairly successfully. DQ

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