Posts Tagged ‘HCL’

IT stocks fall on concerns of a weak euro affecting realisations

January 6th, 2015

IT companies’ stocks fell in trade on Monday, as fears of lower revenue growth in a seasonally weak December quarter became more pronounced.
Continuing their underperformance over the past few months, the shares of Tata Consultancy Services (TCS), Infosys and HCL Technologies fell by 1.5-2 per cent on Monday, while that of Wipro ended flat. Tech Mahindra, too, fell by a similar margin.

Steeper correction due to rich valuations affected the shares of mid-tier players such as Persistent Systems, which fell 6 per cent, while MindTree slipped nearly 2.5 per cent. So, a combination of weak sentiments and profit-booking seems to be at play.

Cross-currency headwinds

Although the rupee has been fallen against the dollar to ₹63-64, which is expected to help margins, most IT companies still face challenges due to cross-currency volatility.

The euro also has been quite weak against the dollar, and hence realisations for software companies are likely to be affected for the December quarter. In general, the third quarter tends to be a soft period for most IT companies.

With more stimulus indicated by the authorities in the European Central Bank to set the Euro Zone on the growth path, the currency is expected to further weaken against the dollar.

Firm-specific concerns

Indian IT companies derive 20-30 per cent of their revenues from Europe, with the UK being the largest market.

Apart from currency challenges, there were also company-specific concerns with TCS indicating a weak December period while HCL Technologies had indicated a 200-bps impact on its revenue during the quarter.

There are also reports that lower oil price is leading to some large global refiners possibly reducing capex, affecting their IT outsourcing spends as well.

The markets appear to be factoring in a pretty weak scenario across the board for most IT companies. It is interesting to note, however, that revenues from the European geography have been growing at a healthy clip compared to the North American Region over the past three-four quarters for most IT companies.


IT stocks gain on weak rupee

December 30th, 2014

Five IT stocks rose by 0.37% to 0.85% at 13:35 IST on BSE as rupee edged lower against the dollar.Outsourcing32

Meanwhile, the S&P BSE Sensex was up 199.16 points or 0.73% at 27,440.94.

Among IT stocks, Infosys (up 0.6%), Tech Mahindra (up 0.56%), TCS (up 0.59%), HCL Technologies (up 0.85%) and Wipro (up 0.37%) gained.

A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion’s share of revenue from exports.

In the foreign exchange market, the rupee edged lower against the dollar due to appreciation of the greenback against other currencies overseas. The partially convertible rupee was hovering at 63.68, compared with its close of 63.57 on Friday, 26 December 2014.

Optimism about growth of US economy also supported IT stocks, US is the biggest outsourcing market for the Indian IT firms.


De Beers selects HCL for IT infrastructure transformation engagement

October 31st, 2014

HCL Technologies, a leading global IT services provider, today announced that the company has signed an IT Infrastructure transformation contract with The De Beers Group of Companies, the world’s leading diamond business.Outsourcing56

Leveraging its Enterprise of Future (EoF) offering, HCL will deliver end-to-end IT infrastructure solutions including data centre operations, multi-lingual service desk, LAN management, security services, service management including tools, desk side support and project services to transform De Beers’ IT Infrastructure across the globe. HCL already manages the IT Infrastructure of Anglo American, the majority shareholder of De Beers and the current deal allows a tighter integration across the two companies with common technology platforms and IT service management.

Craig Charlton, Group CIO, De Beers Group said: “Where we have previously had several service providers in each local region, this agreement affords us more comprehensive management of our underlying IT environment and enables us to run a more industrialised infrastructure service that underpins our broader IT strategy.”
“This deal marks HCL’s continued expansion in emerging markets like South Africa and many locations across Africa, Latin America and Asia. It further strengthens HCL’s presence in the mining vertical,” said Ashish Gupta, Executive Vice President & Head – EMEA, HCL Technologies ISD. “This deal is also a reaffirmation of the work HCL has done over the last 18 months with Anglo American to move them from a Gen 1 outsourcing contract and significantly improve services while driving a relationship culture focussed on delivering work beyond the contract.”

The engagement involves supporting De Beers’ global presence in Botswana, Namibia, South Africa, the United Kingdom and elsewhere around the world with HCL taking responsibility for eight data centres across five regions. The scope of the work includes some extremely remote locations such as offshore diamond mining vessels along the Namibian coastline and Snap Lake mine in Canada, accessible only via ice roads in winter.

De Beers will benefit from reduction in operating costs, improved processes and SLA-driven services, integration with the Anglo American environment, and benefits of advanced IT frameworks and processes such as HCL’s EoF, Cloud-based Service Management tool – Service Now, a common platform for all service providers within the De Beers environment; migration to cloud-based e-mail service and Office 365.

HCL established its South African operation in 2009 and is a level-three BBBEE contributor. Through a highly targeted focus on specific business, the company has gone about establishing a foothold in the southern African marketplace and made significant inroads into leading South African and multi-national organisations.


IT workers better off with IT service provider, says Lufthansa CFO

October 29th, 2014

IT professionals transferred as part of outsourcing deals could find more opportunities to develop their careers, says Simone Menne, CFO of Lufthansa.
Lufthansa is in final negotiations with IBM Global Services to outsource its IT infrastructure services in a seven-year deal. This will see the German airline’s IT services division broken with the infrastructure element sold to IBM. Besides providing IT services to the airline, Lufthansa Systems has 450 external customers.

With 1,400 employees from the Lufthansa System’s infrastructure division set to move to IBM, Menne said employees moving to IBM will have better job prospects.

“This will also give employees of the Infrastructure division clear job prospects and enable them to participate in future technological developments,” she said when announcing the IBM deal.

The division will continue to supply Lufthansa with IT infrastructure services and there will be opportunities for these staff to move on to other IBM projects.

Large global businesses are already heavy outsourcers with thousands of previously internal IT roles being carried out by third-party suppliers. Today’s trend appears to be mid-sized multinationals moving to outsourcing models, to reduce costs and keep pace with rapidly changing IT demands.

The number of recent transformative IT infrastructure outsourcing agreements in the mid-sized multinational sector is further evidence of this.

Recent deals saw South African diamond-mining and jewellery company De Beers announce plans to transform its global IT infrastructure through a deal with outsourced IT services company HCL. Last month also saw German company Vorwerk outsource its IT infrastructure and application development operations to Cognizant in a six-year deal to centralise and standardise IT.

Despite some examples of big companies, such as General Motors, bringing IT back in-house, it appears that the balance of IT professionals working at suppliers will continue to increase as in-house IT staff numbers decrease.

Modern IT infrastructures today, with developments around automation and cloud computing, will inevitably mean less manual work. Staff carrying out support functions might not be required in as high a volume. But people with IT skills and a good understanding of how IT works in business could play an important role in getting the most out of these new technologies.

There is also opportunities to work in different sectors with a service provider, where existing industry knowledge can be transferred to other sectors of new sector knowledge learned.

Sean Finnan, former head of Europe at IBM Global Services, said suppliers can be a good option and IBM rewards good staff well.

“If  you like a bit of variety in your job suppliers are good and IBM is a real meritocracy that rewards staff that work hard and know there stuff,” he said.

He said one day you can be working on a project for an airline and the next day for a bank.

This IT services sector can offer career development or IT professionals. It can broaden their technology and business skills.

In 2010, Computer Weekly spoke to one IT industry executive who flourished under a transfer to a supplier when his job was outsourced. Bob Scott, who got a mine manager certificate in 1987 and became a fully qualified mine engineer, joined the supply side when his role as part of a mathematical modelling team at British Coal was outsourced to Hoskyns in 1992, which was later acquired by Capgemini.

He has since been the head of Capgemini’s global testing business.

While working at Capgemini, Scott completed a masters at the London School of economics, which was supported and funded by Capgemini. By 1996, Scott was given the task of heading up business development for Capgemini in the UK. He relocated to Paris from 1997 to 2001 to take control of the new e-commerce and internet business at Capgemini. He has since held several senior roles at Capgemini including head of UK public sector business as well as taking charge of market strategy for services related to the police.


De Beers transforms global IT infrastructure in outsourcing deal with HCL

October 27th, 2014

South African diamond-mining and jewellery company De Beers is transforming its global IT infrastructure through a deal with outsourcer HCL.Outsourcing42

The single services supplier will take on De Beers’s IT around the world and enable it to industrialise services.

Previously, De Beers used a number of suppliers in different regions of the world.

The comprehensive agreement will see HCL run datacentre operations, a multi-lingual service desk, LAN Management, security services, service management, desk side support and project services. HCL will take over 8 datacentres across 5 regions.

HCL already manages the IT infrastructure of multinational mining company Anglo America, the majority shareholder of De Beers. The new contract will lead to common technology platforms and IT service management between the two organisations.

“Where we previously had several service providers in each local region, this agreement affords us more comprehensive management of our underlying IT environment and enables us to run a more industrialised infrastructure service that underpins our broader IT strategy,” said De Beers Group CIO, Craig Charlton.

HCL said that, during the course of its contract with Anglo American, it had moved beyond the initial basic contract to add value. “This deal is also a reaffirmation of the work HCL has done over the last 18 months with Anglo American, to move them from a first-generation outsourcing contract and significantly improve services, while driving a relationship culture focused on delivering work beyond the contract,” said Ashish Gupta, EMEA head at HCL Technologies.

HCL will provide services in remote locations such as offshore diamond mining vessels along the Namibian coastline and Snap Lake mine in Canada, which can be reached only through ice roads in winter.

De Beers said it expects to reduce costs and improve processes with service level agreements (SLAs). As part of the contract, De beers will move to a cloud-based service management tool from Service Now.


In-sourcing of IT operations gains traction

October 24th, 2014

“There has been shift towards in-sourcing by U.S. firms over the past three years in the manufacturing sector and also in specific areas of high intellectual property value in companies.”Outsourcing40

In a reversal of trend, major firms are now looking to move back their information technology functions in-house or what is termed as in-sourcing, from their earlier stance of outsourcing to low-cost providers in India.

Firms such as auto major General Motors, Target, Zynga, Nordea and AstraZeneca have looked to build their own information technology team.

“There has been shift towards in-sourcing by U.S. firms over the past three years in the manufacturing sector and also in specific areas of high intellectual property value in companies. The desire has been to keep vital IP and know-how within the company,” said Mary E. Shacklett, President, Transworld Data, a technology analytics, market research and consulting firm.

British-Swedish pharma major AstraZeneca is looking to bring down its IT outsourcing to 30 per cent in the next three years from 70 per cent now. It works with eight vendors, out of those HCL Technologies mainly handles infrastructure, while Cognizant, Infosys and Accenture do application development and maintenance.

The company’s global IT budget is roughly $1.3 billion, which it aims to halve in the coming years. “In-sourcing is a silent trend. Companies like General Motors are on it for the last three years. This is unlike the earlier outsourcing trend, which had people shouting from rooftops. So, nobody is talking about ‘in-sourcing,’ at least not yet,” David Smoley, Chief Information Officer, AstraZeneca, said. The firm has launched is own captive arm in Chennai which will handle in-house IT work and support its 51,500 employees worldwide.

In 2012, General Motors Chief Information Officer Rondy Mott embarked on a plan to bring back its IT work inwards. At that time, 90 per cent of General Motor’s IT services where provided by Helwett-Packard/EDS, IBM, Capgemini and Wipro and only 10 per cent was in- house. The plan is to reverse this ratio in three years. Mr. Mott is of the view that GM cannot be creative or fast enough with outsourced IT.

When contacted, a GM spokesperson said, “All we can confirm at this point is that GM IT’s in-sourcing strategy is on track”.

AstraZeneca’s Mr. Smoley said that one of the reasons why his firm looked at in-sourcing was to take control from an IT prospective and to improve efficiency in terms of faster delivery of drugs.

Research firm Gartner said it was seeing a fundamental shift in the approach to digital business causing organizations to rethink their approaches to sourcing. “The threat many Indian providers will face is from the shift happening from labour to technology arbitrage. How quickly Indian providers can change gears to grab the opportunity and move forward even if that means constructive destruction of some of the existing business models could define future success,” D.D. Mishra, research director at Gartner, said.

“The shift to captives represents a long-term commitment to offshore-based services. Overall, companies in Europe and the U.S. are looking to perform more work offshore in India, not less. Captives are not a threat for vendors, but, in the short-term, can cannibalize a vendor’s business,” said Peter Schumacher, President and Chief Executive of Germany-based consulting firm Value Leadership Group Inc. “Offshore services firms with strategic vendor status, and those that are organizationally agile and collaborative, are likely to be least impacted – some may even benefit.”


HCL Tech quarterly profit up 32 percent, shares fall over 9 percent

October 20th, 2014

HCL Technologies Ltd, India’s fourth-largest software services exporter, posted a 32 percent rise in quarterly net profit, beating estimates, as sales in the Americas, the company’s biggest market, rose.To match Insight INDIA-OUTSOURCING/

Shares in HCL Technologies, however, closed 9.1 percent lower on Friday, as the technology outsourcing company’s revenue growth of 12.8 percent in dollar terms was below street expectations, stock market dealers said.

For most IT services companies, analysts and investors track the dollar sales numbers as clients oversees get billed in that currency.

HCL earned 18.73 billion rupees ($303.44 million) in profit in the September quarter, compared to 14.16 billion rupees last year. Analysts, on average, were expecting the profit to be at 17.29 billion rupees, as per Thomson Reuters data.

HCL relies heavily on contracts to manage data centres and networks for revenue growth, whereas peers Tata Consultancy Services Ltd (TCS.NS) and Infosys Ltd (INFY.NS) earn a greater proportion of revenue from higher-margin software services.


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