10 HCL Technologies Global Network

DQI Bureau
New Update


Technologies (HCL Tech) continued to chart its growth route steadily. It

expanded its sphere of influence through HCL Perot Systems–a JV with Perot

Systems Corp, Intelicent–the erstwhile HCL James Martin Inc, and HCL Comnet

Systems and Services–a 100% subsidiary.


HCL Tech identified four key factors to

spearhead its growth in the new millennium. One, choice of the right business

opportunity through identification and investment in emerging and high-growth

technology areas.

Two, de-risk business by avoiding a client concentration strategy. Three, focus

on employee value addition. Four, emphasis on multiple growth windows.

Accordingly, the company shifted its

focus to high-end, high value added services and offshore-centric development in

emerging technologies of internet and ecommerce. Also, while most of the IT

companies worked


  • Focus on emerging technologies
  • Think global and act local
  • Create i-capital and empower talent
  • Balance revenue-mix
  • Exploit multiple growth windows
  • Earnings led growth.


  • Unique business acquisition strategy ensuring annuity revenues of

    $375 million evolved
  • Got listed on the National, Bombay and Delhi stock exchanges–raising

    Rs 823 crore and becoming the largest technology IPO in India
  • Created one of the most sophisticated clean room facilities in India

    for KLA Tencor
  • ESOP cover extended to 99% of staff.

overtime to offer Y2K solutions, HCL

Tech restricted its revenues from this opportunity to a mere 4%. The strategy

also ensured that HCL Tech did not face the threat of declining revenues in the

post-Y2K era. And the growing contribution from internet and ecommerce–from

27% during 1997-98 to 38% in 1998-99 and 42% in 1999-2000–itself proved the

point for the company. What’s more, HCL Comnet, that specializes in

networking, contributed 10% of the total revenue.

In fact, the last fiscal witnessed a

significant improvement in HCL Tech’s operations. Its focus on technology

development services–including embedded systems, application-specific

integrated circuit cores, operating systems and Unix kernels, very large scale

integrator verification and networking–saw the revenue share of this segment

grow to 32.6%, up from 20% during 1998-99.

  • START-UP YEAR: 1994
  • PRODUCTS AND SERVICES: Technology development, applications

    engineering, networking and software engineering
  • EMPLOYEES: 3,236
  • ADDRESS: A-10-11, Sector III, Noida 201 301
  • TEL: 452 0917
  • FAX: 453 0591


HCL Tech also realized that while the

US was definitely a growing market, other markets would also open up soon. This

resulted in rolling out one of the largest marketing channels in the industry–a

global network of 25 sales and project management offices in 15 countries. This

also meant increased sales, general and administration (SG&A) expenses–23%,

to be precise, as compared to the industry average of 15%. Although this did

have a negative impact on profitability, the strategy was well in tune with the

company’s long-term objectives of reducing dependence on select geographies

and customers. Moreover, the company’s spending on SG&A will automatically

get reduced in the long run because of committed revenue inflows through

long-term business contracts.

The company also unleashed its unique

business acquisition strategy and hopes to garner assured annuity revenue of

$375 million from 13 clients, over the next five years. The plan, in sync with

HCL Tech’s focus on creating a low-cost and de-risked alternative to JVs and

partnerships, enabled the company to offer equity options to its clients based

on the revenue stream.

The last fiscal also saw the clean room

facility for KLA Tencor’s semiconductor and wafer inspection systems being set

up. Also, HCL Tech remained bullish on the merger and acquisition front,

constituting a six-member team to scout for potential targets, especially in the

US and Europe.

Amidst all its restructuring,

repositioning and realignment processes, HCL Tech also got listed on the

National, Mumbai and Delhi stock exchanges–raising Rs 823 crore to come out

with the largest technology initial public offering (IPO) in India. DQ