Posts Tagged ‘HCL’

Khaitan, Greenberg sell Volvo IT to HCL for $138m

October 27th, 2015

Khaitan & Co advised IT and software outsourcing company HCL Technologies on its acquisition of Swedish multinational group Volvo’s external IT business for $138m (Rs 895 crore) in an all cash deal. London based law firm Greenberg Traurig Maher LLP represented Volvo.outsourcing14

Khaitan Delhi partner Joyjyoti Misra, senior associate Shruti Singh and associate Sanchit Agarwal acted for HCL

The two companies have also signed a letter of intent under which the Volvo Group will also outsource its IT infrastructure operations to HCL Technologies for an undisclosed amount for five years. Around 2600 Volvo personnel affected by the transaction would be offered to move to HCL according to report by Firstpost.

The transaction will be closed during the second quarter of 2016 and will provide both cost savings and a capital gain, Volvo said.


Wipro joins Infosys for a bright second half

October 22nd, 2015

Wipro Ltd, India’s third-largest information technology (IT) services firm, on Wednesday joined larger rival Infosys in forecasting higher growth in the second half of the current financial year than the first. The company, however, cautioned that lower productivity for clients during the holiday season in the US and Europe could hit business in the October-December quarter.outsourcing8

The firm reported seven per cent net profit growth in the September quarter to Rs 2,235 crore. With a revenue of Rs 12,513 crore, it met the lower end of its guidance. Margins, at 20.7 per cent, were slightly lower than the 21 per cent reported in the previous quarter. The impact of wage increases given in June also showed in the results for the September quarter.

Wipro’s 3.1 per cent revenue growth for the quarter was lower than those of larger rivals TCS (3.9 per cent) and Infosys (5.9 per cent). While HCL Technologies’ dollar revenue had grown a mere 0.5 per cent on a sequential basis, TCS, Infosys and Wipro reported growth rates of three per cent, six per cent and 2.1 per cent, respectively.

Wipro forecast its revenue in the December quarter to be in the range of $1.84 billion to $1.88 billion — year-on-year growth of 0.5 per cent to 2.5 per cent — as it anticipated unprecedented closure at its clients in the manufacturing, retail and banking sectors during the holiday season. The Street had been expecting a growth guidance of 2-4 per cent.

Analysts say Wipro might meet the upper end of its guidance due to stability in the energy vertical, which had been down due to low oil prices and reduced global demand, and client additions.

“It seems the company was hinting that the financial year (2016-17) will be a better one. The commentary remains similar to those of other players. Wipro, too, is saying that the second half will be better. TCS, Infosys and HCL Tech have maintained that their order books are much stronger,” said Sarabjit Kour Nangra, IT research head, Angel Broking.

Wipro added 67 customers in the September quarter to take its total tally to 1,100.

Infosys expects its full-year growth to be between 10 per cent and 12 per cent. Its CEO Vishal Sikka had said on October 12 after announcement of the September quarter results: “Even if we are flat (in July-September) we will end up at the higher end of the 10-12 per cent guidance… the second half traditionally has seasonal dips in growth, so we are going to work very hard to make sure we buck the trend.”

TCS, which does not provide revenue forecast, was cautious. On October 13, its CEO N Chandrasekaran said: “In terms of our outlook for the rest of the year, we expect a tapering of sequential revenue growth in the second half, like in earlier years.”

Indian IT services firms are faring better than their global peers, even as their biggest market, the US, is showing higher economic growth. On Tuesday, IBM, the world’s largest computer company, saw its third-quarter revenue declining 14 per cent to $19.3 billion, a 14th straight quarter of shrinking sales. IBM’s services revenues, which Indian IT firms benchmark with, were also down. Its global technology services fell 10 per cent to $7.94 billion. IBM Chief Financial Officer Martin Schroeter said the strategy shift towards cloud computing and data analytics had an impact on existing business, but the future seemed bright.

Wipro CEO T K Kurien said in an interview on Wednesday: “We see that the US market is clearly on the upswing for us. If you see the share of the US as part of the overall business, it has grown to 52 per cent from around 48 per cent a year and half ago.”

Wipro said it was witnessing faster growth in businesses using digital technologies, with more transactions from customers in lower value deals, but there was an opportunity to mine those for increased business. This was also due to a reduction in larger deals from customers who traditionally rolled out tenders of hundreds of millions of dollars to IT vendors.

“We continue to see strong competition around large deals and there is pressure on pricing with respect to new deals. The deal sizes are getting smaller and the number of multi-hundred-million-dollar deals has reduced in the market place,” said Kurien.

Like peers TCS and Infosys, Wipro also said its digital business was doing well. Wipro HOLMES, its cognitive intelligence platform, is engaged in 12 projects in business-critical areas for marquee customers. “There is no large outsourcing deal in the digital business. It is a series of small deals that drive business,” Kurien said.

What continue to be pulling down the company are its energy and utilities verticals (constant currency growth of 0.3 per cent) and the Europe geography. The company, however, said the verticals like health care and life sciences had bounced back with 4.2 per cent sequential growth. Global media and telecom grew by 4.4 per cent sequentially, though the company did see some pressure going ahead. The US grew 3.6 per cent and Europe was soft at 1.4 per cent.

During the September quarter, the company’s headcount increased by 6,607 to 168,396.

Ahead of the announcement of the quarterly results, the Wipro shares on Wednesday closed at Rs 577.9 apiece, 1.04 per cent higher than their previous close. The BSE IT Index rose 47.8 points, or 0.43 per cent, to close at 11,284.36.


Managed Private Cloud on the Rise as Data Center Outsourcing Service

August 28th, 2015

Managed virtual private cloud services are gaining popularity as part of data center outsourcing contracts enterprises make with the likes of IBM, HP, or Dell.Outsourcing31

That’s according to the market research firm Gartner, which published its annual Magic Quadrant report on the North American data center outsourcing market published late last month.

Gartner puts managed private cloud in the category of “Infrastructure Utility Services,” or services that companies pay for based on resource usage or number of users served. “Increasingly, IUS are based on managed virtual private cloud services,” the report read.

Industrialized infrastructure services are what is going to drive future growth in the data center services market in general, according to the analysts. That growth will come at the expense of growth and margins for traditional services, which Gartner expects to face further pressure.

This category of services includes both Infrastructure-as-a-Service and Platform-as-a-Service.

IBM and HP remained top data center outsourcing providers on the latest Magic Quadrant for North America, ahead of everyone else in terms of both vision and execution. Other providers Gartner named leaders were Dell, HCL Technologies, and CSC.

Here’s Gartner’s 2015 Magic Quadrant for Data Center Outsourcing in North America:

Gartner Data Center Outsourcing MQ NAM 2015

While it named HP one of the leaders in the category, Gartner estimated that its data center outsourcing and infrastructure utility services revenue in 2014 was down about 5 percent from the prior year.

HP’s key strengths in the outsourcing market are its infrastructure scale – close to 80,000 physical servers across about 30 data centers – its ability to provide just about every kind of data center outsourcing service imaginable, and strong management and budget oversight in service engagements.

While a leader in every other respect, however, HP’s cloud services haven’t done as well as the company may have hoped, according to Gartner. HP says its managed cloud server offering called Helion has seen double-digit growth, but the penetration of its virtual private cloud, utility, or managed private cloud offerings remains below 15 percent, according to the analysts.

HP’s rival IBM is the largest player in the market for both cloud and traditional enterprise data centers. Gartner estimates that Big Blue makes about $3 billion in annual sales on its data center outsourcing services.

Its main strengths are focusing on solving specific business issues for clients rather than simply providing standard technology and support services, breadth and depth of resources, and willingness to switch to new service models.

One of Gartner’s cautions about IBM was the potential for impact on existing interfaces and processes of the company’s recent restructuring, which included melding of its former Strategic Outsourcing and Integrated Technology Services. The new unit, called Infrastructure Services, combines everything from networking to mobility.

IBM’s Global Technology Services segment, which includes Infrastructure Services, lost more than $1 billion in revenue in 2014, according to Gartner’s estimates. The analysts attributed this loss to new and emerging providers in the market who are agile and extremely competitive.

Gartner said IBM needs to review its strategy and be more open to enabling its clients to use competitors’ cloud services, such as AWS and Azure, as opposed to driving them squarely to its own SoftLayer cloud.


India prods China on IT, ITeS access

May 28th, 2015

New Delhi will soon send a reminder to Beijing on the hurdles faced by Indian IT/ITeS firms in getting greater market access in China. This follows concerns raised by industry bodies Nasscom and CII in meetings with the Union government about the difficulties in qualifying for bids put out by Chinese government and state-owned enterprises (SOEs) for IT/ITeS projects.Outsourcing10

In the aide memoire to be sent to China, sources said, India would also urge China to strengthen its intellectual property (IP) regime to protect Indian firms’ IP rights.

As per the 2013 Nasscom-KPMG study, of the estimated $46-billion Chinese IT/ITeS market, India’s share is less than $1 billion, despite its global reputation as a major export of IT-related services. China’s IT/ITeS market could cross $84 billion by 2020.

An aide memoire in diplomatic parlance means a note summarising in an informal manner (sans the usual courtesy phrases) the discussions between both sides. It is meant as ‘an aid to memory’, and a gentle reminder, seeking the necessary action on the points discussed. Indian IT firms operating in China include TCS, Infosys, Wipro, HCL, Tech Mahindra, NIIT (Education), Zenzar, Geometric, Mphasis, Mindtree, Birlasoft and KPIT.

In China, the government (at the federal and state/local levels) and SOEs are among the largest buyers of IT-related services. The Nasscom-KPMG study says by 2020 demand from SOEs is likely to be 45% of the total Chinese demand.

To qualify for bids of large projects, an applicant company needs to show that they have helped in the implementation of Chinese government/SOE projects of similar size. “We have suggested that China should ascribe more value to the experience of companies in government projects of similar sizes outside China, ” Gagan Sabharwal, director (global trade development), Nasscom said.

India had, on many occasions earlier and even during Prime Minister Narendra Modi’s recent visit to that country, taken up these issues with China. However, the fact that Beijing was yet to respond favourably to New Delhi’s concerns was recently discussed at a meeting held by the Indian commerce ministry, official sources told FE. The ministry then prepared the aide memoire and forwarded it to the Prime Minister’s Office to be sent to the Chinese authorities, they said.

Nasscom has also suggested that India and China should, on a reciprocal basis, allow easier movement of highly skilled professionals through long-term visas and work permits to enable Indian and Chinese companies to send across such experts to work in each other’s territory.

CII had pointed out that insistence on local entities in some provinces in China to avail subsidies was reducing competitiveness of Indian IT/ITeS firms. Besides, CII said, Indian IT/ITeS firms are facing challenges in staff mobility between provinces in China due to the ‘hukou’ system (a system of household registration that restricts internal mobility of people and ties their future prospects to their place of residence), necessitating local offices in each project area.

To showcase technological expertise of Indian IT firms, CII said certain pilot projects can be chosen to be jointly executed with Indian and Chinese companies. Also, both sides can jointly develop a platform on policy updates and business opportunities for Indian and Chinese companies, it said.

CII and Nasscom also want India to push for a totalisation agreement (on social security payments) with China. This, they said, will help avoid social insurance fees being paid twice by companies for Indian employees being deputed to China — once in India and then again in China. These industry bodies also want New Delhi to take up the issue of the lack of clarity in withholding tax imposed on repatriated profits. Among issues affected the Indian outsourcing firms, CII has pointed out resistance to outsourcing within China due to lack of understanding of benefits and perceived job loss fears in SOEs.

Entering the dragon
* Size of Chinese IT/ITeS market = $46 bn
* India’s current share = below $1 bn
* China’s IT/ITeS market size projected to be $84 bn by 2020
* Chinese govt & soes among potential big buyers of IT services
* By 2020, soes to make 45% of Chinese demand
* Indian IT majors in China: tcs, Infy, Wipro, hcl
* India seeks long-term work visas for IT workers in china
*  Totalisation pact with china proposed


IT stocks gain on weak rupee, positive US economic data

May 21st, 2015

Six IT stocks rose by 0.85% to 3.24% at 13:20 IST on BSE on positive economic data in US and weakness in rupee.Outsourcing44

Meanwhile, the S&P BSE Sensex was up 204.09 points or 0.74% at 27,849.62.

Among IT stocks, Infosys (up 1.32%), MphasiS (up 0.85%), HCL Technologies (up 2.56%) and Wipro (up 1.2%) gained.

TCS rose 1.66% after its client, Euroclear Finland launched platform, Infinity powered by TCS BaNCS for market infrastructure. The company made the announcement during market hours today, 20 May 2015. Tata Consultancy Services (TCS) announced that its client – Euroclear Finland – the central securities depository (CSD) for the Finnish capital markets, has launched a new transaction processing platform known as ‘Infinity’. Infinity is a multi-year program powered by TCS BaNCS for Market Infrastructure, and is a key component of Euroclear Finland’s outsourcing its securities settlement processing to TARGET2Securities (T2S) as part of the European Central Bank’s fourth migration wave in February 2017.

Tech Mahindra gained 3.24% after company said Ontario Ministry of Energy and the company invested in innovative Smart Grid solution powered by analytics. The announcement was made after market hours yesterday, 19 May 2015. Tech Mahindra announced that it will build an Intelligent Electric Vehicle Charging System (IEVCS) designed to help build Ontario’s clean energy future. The project, sponsored by the Ministry of Energy and funded in part through the Ontario Smart Grid Fund initiative, will analyze the effects of electric vehicle charging on transformers by creating a real time transformer monitoring and analytics solution.

Meanwhile, a report in US yesterday, 19 May 2015, showed a sharp increase in housing starts last month, pondering the effect it might have in determining the course of the Federal Reserve’s interest rate policy. Investors will get a closer look at the US Federal Reserve’s thoughts about interest rates and economic data when the minutes of the Federal Open Market Committee meeting from its meeting held in late April 2015 are released in the global day today, 20 May 2015.

US is the biggest outsourcing market for the Indian IT firms.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 63.82, compared with close of 63.68 during the previous trading session. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion’s share of revenue from exports.


IT shares trade firm; HCL Tech, Tech Mahindra up 3%

May 21st, 2015

Shares of information technologies (IT) companies were trading firm on the bourses, gaining upto 4% each, on the back of positive corporate announcements and weakening rupee.Outsourcing43

HCL Technologies, Tech Mahindra, Tata Consultancy Services (TCS), Persistent Systems and Cyient rose 3%-4% each, while Infosys, Wipro, Hexaware Technologies, Polaris Consulting & Services and MindTree gained 1%-2% each on the National Stock Exchange (NSE).

At 1311 hours, CNX IT index was the largest gainer among sectoral indices, gaining 1.8% compared to sub-1% gain in the benchmark CNX Nifty.

Tech Mahindra spurted by 3% to Rs 640 after the company said Ontario Ministry of Energy and the company invested in innovative Smart Grid solution powered by analytics.

Tech Mahindra announced that it will build an Intelligent Electric Vehicle Charging System (IEVCS) designed to help build Ontario’s clean energy future. The project, sponsored by the Ministry of Energy and funded in part through the Ontario Smart Grid Fund initiative, will analyze the effects of electric vehicle charging on transformers by creating a real-time transformer monitoring and analytics solution.

TCS gained 2% at Rs 2,563 after its client, Euroclear Finland launched platform, Infinity powered by TCS BaNCS for market infrastructure.

Infinity is a multi-year program powered by TCS BaNCS for Market Infrastructure and is a key component of Euroclear Finland’s outsourcing its securities settlement processing to TARGET2Securities (T2S) as part of the European Central Bank’s fourth migration wave in February 2017, TCS said in a statement.

Meanwhile, the rupee depreciated by 11 paise to 63.78 against the US dollar at the Interbank Foreign Exchange in early trade today as the American currency appreciated in wake of strong economic data, the PTI report suggests.


You have to look at HCL on a year-on-year basis

February 9th, 2015

Krishnan Chatterjee is a multi-disciplinary strategic marketer with experience straddling across consumer goods and technology industries. Currently, senior vice-president and head of strategic marketing at HCL Technologies, he is acknowledged for incubating the global marketing team and evolving a differential positioning for HCLT, India’s fourth-largest software services exporter by revenue. The company’s strong focus in developing next generOutsourcing63ation propositions around digitalisation, engineering platform services and targeting operating model for enterprise IT have allowed it to gain significant market share in the global IT services market. “The nature of spending in technology is dramatically changing. As technology is becoming a source of competitive edge, businesses are increasingly participating in the buy side,” he tells Sudhir Chowdhary in a recent interaction. Excerpts:

Give us a sense of the big story emerging out of HCL Technologies. Where is it headed?

In order to understand HCL’s big story, you have got to start with a little game we play, which we call ‘One Five Fifteen’. When we closed fiscal 2014, the company crossed a billion EBIT, $5 billion revenue and $15 billion market cap. There are only 8 companies in this metrics. So it’s a pretty good place to be for at least 14 years, since the company visibly made its presence felt in the market. Historically, this is a company which has always had to depend on innovation. It never had the bulwark of, let’s say, the commodity EDM kind of business in our sector to fall back on.

If you go back in time, the company has always been strong in engineering and R&D services, so it was a product company moving into services.

Then in 2008, the enterprise systems business with the Axon acquisition was again our first. In 2009, we spotted the rebid market opportunity as the recession descended on the world and the whole ITO rebid what we call IT outsourcing, the rebid market which we have done well over the last few years. Then about 18 months back, we spotted this trend of proactive obsolescence as the cloud started disrupting the economics of IT. That’s when we launched things like ALT ASM which is a proposition that helps shrink the application support work.

What is encouraging is as we stand on 2015 today, there are two very nice disruptive opportunities in front of us. The first is this whole thing of structured engineering outsourcing. The second disruption that is clear upon all of us is the digital business. The digital business transformation and what is happening here is very simple. Today if you are on the board or the CEO of any major company, you are finding that competitiveness is moving towards born digital company. You can’t just set up a digital business model and then not operationalise it, and operationalising it is a very unique process.

What were the key takeaways from the December quarter?
I can tell you there are three key takeaways that I see and again going back to the business model conversation. First is that it’s a solid sustained business performance and if you look at the business model and then come back and look at these numbers, HCL is not a quarterly story. You have to look at it on a year-on-year basis.

The second is that we have a significantly balanced portfolio which is very good as momentum switches. So we saw momentum over the last few years because of the rebid market in infrastructure services, we saw the growth there. Now as momentum is shifting towards engineering services, you are seeing HCL perform well. So as long as you hold the balanced portfolio which is pretty much our service line mix, where the momentum goes so you go there.

The third key takeaway is that we are encouraged by our ability to work in disruptive environments and the fact that there are multiple disruptions. So beyond the rebid of ITO we can see engineering and we can see digital too has disruptive opportunities, which is very encouraging.

Is HCL Tech looking at newer geographies and sectors to ensure continued growth?
The two largest markets are obviously the Americas and Europe. These need to be the focus of a displacement strategy. If you now look at these two markets, in Americas quarter-on-quarter (q-o-q) we grew 6%, year-on-year (y-o-y) we grew 14% which is the highest. Similarly in Europe q-o-q we did 2%, y-o-y we did 14% which is again the highest. Both these geographies are performing well. In America, as you are aware things are beginning to look up. People are looking at deploying technology to actually revisit business models.

Rest of the World is a region we have found very exemplary in terms of building unique new capabilities and harvesting them and then deploying them. If I go back a few years and we worked on the APDRP project, perhaps the largest smart grid implementation in its own way that happened in the world, which is in Uttar Pradesh. That resulted in us taking a leadership position around smart grid and power which got featured into the World Economic Forum.

If you look at breakthroughs in existing industries like payments and financial services, we are doing some amazing work in this region.
Where do you see the increasein technology spending coming from?

The nature of spending in technology is dramatically changing. There is another thing that you have to factor in: who is buying. According to Gartner, back in 2000, 80% of the technology spending in the enterprise was directly in the CIO’s control. Gartner predicts that by 2020, 10% will be what the CIOs directly control. So your buying centres are proliferating significantly which basically is a reflection of the reality; technology is becoming a source of competitive advantage for business. Therefore, business is participating in the buy side, more and more and more.

What is your perspective on the Indian market. Government has announced major plans to adopt technology with its Digital India and other e-governance initiatives.
India market is a big opportunity for new technologies and a fantastic place for creating leapfrog technology solutions. Our strategy is that currently to maximise US and Europe, because this is the time and this is the window wherein those markets, you can create maximum competitive advantage. So overall, change from a strategy perspective we should not defocus that, but leverage the India market to create unique new capabilities which can be deployed globally.

Why is the Internet of Things an (IoT) important topic today? How will it have an impact on businesses in the near future?
If you look at digitalisation and Internet of Things , these are sort of two sides of one coin—these are the two things which will put technology into the heart of business competitive advantage. IoT is not a new discussion. It started back in 2003-04 when IPv6 came in and you had enough capacity to give an IP address to any device of future. I think what is beginning to change is the competitive reality. Because of the IoT, two things are now possible, the front office and the middle stroke back office. On the front office, I can arguably use this technology to

intentionally personalise the resulting action to a customer, channel partner, consumer. So in effect, why the IoT is becoming so critical is now you can leverage data to dramatically disrupt transaction cost models in your any industry both front-end and back-end and make P&L far more competitive than anybody else.

What is important at this stage is companies, who take a leadership position in terms of their ability and understanding to gauge and take advantage of this opportunity for clients, are when it comes are going to shoot. So that’s really where we are focused now.


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