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HCL Tech exceeding market expectations

Jens Butler | Sept. 8, 2009
HCL Tech announced a very positive set of results, including a 17 per cent increase in revenues, for the first time cracking the US$2 billion barrier.

Success will not be measured simply on SAP deals won, but on how much of the outsourcing services within the HCL portfolio are pulled through into both existing accounts and penetrating new logos. To date, there has been over $60 million worth of wins from Axon customers, plus gaining entry into traditionally non-HCL verticals such as oil, gas and power, aerospace and defence, including a substantial infrastructure deal with a top utility.

Consolidation time?

With the recent acquisitions, one could allow HCL the luxury of a pause to fully integrate these entities. However, plans to spend as much as $2 billion to acquire companies in the US or Europe by 2011 have been announced.

Given the current climate, there still remain concerns that the pipeline looks rather light, repeat business is dropping off (94 per cent to 88 per cent) and potential ex-Axon employee retention may derail the good news delivered to date.

But flexibility and innovation continue to differentiate HCL Tech, supporting the commitment to Nayyars broader capability-driven strategy, both through the development of alliances and partnerships for entering various markets: geographically in New Zealand with the recent Optimation deal, and within service offerings, such as partnering to use the Tibco Silver delivery platform in cloud deployment, as well as its ongoing stand-out innovative pricing and engagement models.

Jens Butler is principal analyst, IT Services at Ovum.


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