HCL TECHNOLOGIES: Matter Over Mindshare

Chairman & CEO Shiv Nadar Startup-Year 1991 Products & Services Technology development, networking services, software product engineering services, applications services Branches 24 Address A-10/11, Sector 3, Noida 201301 Tel 0120-2520917/ 2520937/ 2520997 Website www.hcltech.com

Shiv Nadar Chairman, president & CEO S Raman COO & president SL Narayanan Executive V-P (corp finance)

BPO contribution to overall revenues rose 6%, and the company set a “next-gen contact center” Change in business strategy–from many small to a few large clients–reflected in improved performance of last two quarters

Solid foundation and strong cash reserves to continue growth via the JV route Ability to rapidly widen services range and draw more business from existing clients

String of joint ventures could dilute focus Strong dependence on the United States’ market could pose a risk

It was the year after a bad year for most IT companies–for HCL Tech, it was
a not-much-better year. Year 2002-03 saw a further drop in revenue growth rate–from
20% to 17%–with final revenues at Rs 1,812 crore. As has been the trend,
software export revenues came primarily from offshore-centric development (75%),
while the rest was onsite work. The US continued to dominate in terms of
geographies, accounting for 73% revenues, and Europe (18%).

HCL Technologies has traditionally been focussing on the outsourcing of
high-end R&D for overseas clients, while most other Indian companies
targeted the IT budgets of companies worldwide. While this strategy worked for
HCLT in the earlier days, it lost pull last year–and the company changed its
strategy. Driven by the objective of obtaining contracts for the entire IT
business of customers–software R&D, apps development and BPO services–as
well as IT infrastructure (by its sister company HCL Infosystems), the company
began to track customer needs, using any one of its services and offering the
rest.

The strategy helped and revenues picked up. Another factor which affected
revenues was the appreciation of the rupee.

In December 2002, HCL Infosystems announced the proposed demerger of its
software development business, to be merged with HCL Technologies. Once approved
by the court, revenues from Softex would be part of HCL Technologies, with
effect from January 2003. In another transaction, the technical help desk
business of HCL Infinet Ltd, a subsidiary of HCL Infosystems, was acquired by
HCL Tehc’s BPO subsidiary HCL eServe for Rs 2 crore.

The 100% BPO subsidiary–HCL eServe–got a shot in the arm with a
$160-million contract from British Telecom. E-serve, which accounted for 6% of
the company’s revenues, is expected to contribute about 15% next year. A bulk
of the company’s BPO revenues came from customer interaction services.