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.

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