HCL Technologies

Prepared by – Chandrika Kanwar

Brief Overview of the Company:

HCL Enterprise is a leading Global Technology and IT enterprise that comprises two companies
listed in India - HCL Technologies & HCL Infosystems. The company was founded in 1976 and is
one of India's original IT garage start-ups. It’s team comprises approximately 46,000
professionals of diverse nationalities, who operate from 17 countries including 360 points of
presence in India. HCL has global partnerships with several leading Fortune 1000 firms, including
leading IT and Technology firms.
HCL Technologies was established on November 12th, 1991.
For the year ended 30th June 2007, HCL Technologies, along with its subsidiaries had revenues of
US$ 1.4 billion (Rs. 6034 crores) and employed 42,000 professionals.
The Company’s total revenues grew from $55.8 million in fiscal 1996 to $ $976.0 million in fiscal
2006, representing a CAGR (Compound Annual Growth Rate) of 33.13%, while net income grew
from $3.2 million in fiscal 1996 to $ 144.1 million in fiscal 2006, representing a CAGR of 46.3%.

Leadership Team

Vineet Nayar is the CEO of the $1.5 billion HCL Technologies Ltd

Ranjit Narasimhan is Executive Vice President, BPO Division

Shiv Nadar is the Chairman of HCL

Ajai Chowdhry is the Founder of HCL and the Chairman and CEO of HCL Infosystems

Business Solutions:

Business Process Outsourcing

HCL's BPO division is one of the leading offshore BPO companies in India with proven credentials:
• It won the largest engagement in Indian BPO history
• It is the largest provider of Telecom BPO services in Asia
• It is the first Indian BPO to be COPC certified for Collection Services
• It pioneered blended-shore operations for Indian BPO service providers

It offers a comprehensive range of voice/web based contact and front office services like Order to
Cash, Procure to Pay, Technical Help Desk, Knowledge Services, Supply Chain Management,
Finance and Accounting Services and Customer Life cycle Management.
Consistently ranked among the top ten call centers in India, HCL BPO Services operates out of
various locations in India, as well as Malaysia and Northern Ireland.

A snapshot of their BPO capabilities is given below:

Custom Application Services

HCL offers services ranging from custom application development, deployment, and integration
to corrective maintenance, new releases management, and back-up recovery management.
HCL provides a multi-service platform that is a mix of customized application services with other
key services like packaged application services, remote infrastructure management, and
enterprise transformation services.
• They have more than 10 000 professionals and consultants with domain and technology
expertise supporting more than 100 clients spread across almost all geographies
• Dedicated CoEs (Centre of Excellence) in Enterprise Content Management, Independent
Verification and Validation, e-Business, Data Warehousing, and Business Intelligence, .NET,
J2EE etc.
• Technology Partnerships nurtured with leading global solutions providers like Microsoft,
TIBCO, WebMethods, Oracle, Digite, IBM, SUN Microsystems etc
• 100% transparency to clients through CXO dashboard for online SLA tracking and status
reporting.

Engineering and R&D Services

HCL has a rich product engineering genealogy for the past 30 years. As one of India’s original
technology start-ups, HCL developed the first 8-bit microcomputer at the same time as Apple in
1978; released the world’s first RDBMS in 1983; and released a multi-processor UNIX-3, in 1989,
before Sun and HP.
• Breadth of service offerings
o Hardware Engineering
o Embedded Engineering
o Mechanical Engineering
o Software Product Engineering
• Domain-specific Processes
 o Certifications - ISO 13485, AS 9100
o Compliance – DFR, FDA, MDD; FAA, DO178B, DO254

HCL provides Full lifecycle product engineering services, spanning from requirements definition
to prototype architecture, development, testing, and technical help desk from L0 onwards, field
support, maintenance and upgrades.
• Concept-to-Manufacturing for Hi-tech and Manufacturing companies including environment
testing and compliance
• Low volume manufacturing and associated services including supply chain integration,
vendor management, and transfer of technology
• Post-manufacturing services including product lifecycle services and high-level technical
support
• Software product engineering solutions including web-enablement for SaaS, digital
protection services, Web 2.0 services and R&D services for OEMs
• Engineering Portfolio Optimization (EPO)

Enterprise Application Services

HCL’s Enterprise Application Services line of business is focused on providing package and
platform-led services ranging from blue printing, development, deployment, global rollouts,
helpdesk support, to application maintenance in areas such as ERP, CRM, SCM, and Middleware.
The EAS group uses a platform-focused approach to provide technology-based business
optimization.
Technology-based business optimization is the cornerstone of their enterprise applications line of
business. This optimization is achieved in two ways: Stage-based offerings which are focused on
application consolidation, global single instance, platform development, and service enablement,
and Process-driven optimization which deals with processes like partner integration, unified
customer view and single sign-on to deliver business optimization.

The Enterprise Application Services group’s unique service offerings include:

• State-based offerings like Upgrade Competency Center and eZ.Migrate
• Integrated offerings like iERP (integrated applications, infrastructure and helpdesk
support)
• Competency-based offerings that include:
o Middleware integration competency center for WebMethods and Tibco
o SOA-driven integration
o Siebel CRM service center
• Platform-based services like SAP NetWeaver and Fusion Middleware
• Consulting services like Application Portfolio Optimization and platform section

Enterprise Transformation Services

HCL’s Enterprise Transformation Services (ETS) assist their forward-looking customers to develop
a transformational roadmap and an execution plan to escort them to the business world of
tomorrow. The ETS practice at HCL is articulated to render offerings in each of these five key
areas, namely, Business Transformation, Technology Transformation, Application Transformation
and Data Transformation as depicted below:
HCL's ETS offering help customers in
• Reducing IT intensity (IT Spend to Revenue ratio)
• Helping customers achieve operational excellence
• Helping customers achieve business goals through IT alignment
• Working to improve customer's customer intimacy

Key Methodologies
o MergeIT - Evaluate the impact of the key business processes, people and
technology —before and after the M&A activity. Define the deployment strategy,
governance model and the post M&A migration solutions
o Step-Up-IT - Technology Transformation methodology focused on cost savings.
Depending on customer IT stack, it defines an Outsourcing Strategy first and builds
the customer's long term IT strategy leading to IT Portfolio Optimization and
Management
o BPR Methodology — 5 Phase methodology covering the following key aspects-
Plan, Discover, Analyze, Remodel, and Implement / Improve. An integral part of this
methodology is Change Management.
o Corporate Performance Management - HCL follows a multi-step framework for
Corporate Performance Management including Balanced Scorecard, Six Sigma,
EFQM and Benchmarking.
o Service Driven Application Modernization Methodology (SDAM) - Proprietary
SOA based legacy modernization methodology
o PROBE and SPEAR — Process Consulting models used to determine the current
issues and concerns faced by an organization and adopt a model as reference in
building and deploying a Quality Management System to enhance the overall
capability of the processes

Major Customers:

Some customers of HCL Technologies include Departments of Insurance and Education in Florida,
Public Service Commission in Missouri, Department of Labour in Connecticut, Arbella Insurance
and Concord Insurance.
Major Events in the company (M&A etc.):

1. HCL Technologies Q1 revenues for 2007 were up 43% and net income was up by 42%.

2. HCL Technologies Ltd was named Meritorious Performance Supplier in Sun Microsystems'
2007 Supplier Awards program. The Supplier Awards recognize companies that make
outstanding contributions to Sun's record of delivering superior technology, quality service
and excellent value to its customers.

3. It got a new CEO as Shiv Nadar, Founder HCL and Chairman, HCL Technologies, announced
that Vineet Nayar, President HCL Technologies would assume the CEO chair with effect
from October 16, 2007. Shiv Nadar will be the Chairman and Chief Strategy Officer of HCL
Technologies.

4. In September, 2007, it expanded its relationship with Celestica, a global provider of

innovative electronics manufacturing services (EMS), to provide SAP deployment and
support. Under the terms of this three-year agreement, HCL will deploy and customize
Celestica’s SAP suite in a global delivery model across Asia, North America, Latin America
and Europe.

5. In July, 2007, HCL announced a 3 year contract for the opening of an Offshore
Development Centre in Chennai with Konica Minolta Group (KM), to provide software
services for KM’s Multi Function Peripherals (MFPs), printers and medical equipment
business lines. The software services provided by HCL will support the Japanese language
in order to communicate accurately with KM’s researchers.

6. In 2005, HCL Technologies acquired AnswerCall Direct for Rs. 29.4 crore. The same year, it
also acquired the remaining 16.3% stake in HCL Enterprise Solutions.

Financials:
 NSE
BSE
302.75
Last Traded Price (-3.45)
304.65
(-0.25)
312.00

Previous Day Close

308.00
304.90

310.05
Today's Open
304.00
298.10
Today's High
310.50 Oct 19,2007

Today's Low
298.10
617204
Last Traded Date
Oct 19,2007

Last Traded Time

Volume
93595
Sources of Revenue:

The major share of the Company’s revenues is derived from outsourced software development
services in technology/application/ practice-led, with the rest of the revenues coming in from
networking services and business process outsourcing services. Revenues from the various
operational segments are as follows:

Revenues from the geographic segments, based on domicile of customers are as follows:
Competitors:

The main competitors of HCL Technologies Ltd. are Wipro, Satyam, Tata Consultancy Services,
Infosys, Cognizant Technology Solutions, Accenture and EDS.

The Indian IT services market remains a very competitive space. The Company is facing
competition not only from other large Indian IT vendors but also global vendors who are
increasing their India presence given the popularity of the Indian offshore model. To maintain its
competitive edge in this landscape, the Company has been making significant investment in
software engineering processes and offshore methodologies. All of the Company’s software
development centres are ISO 9001 certified. Most of the Company’s centers have also obtained
Capability Maturity Model (CMM) Level 4 or Level 5 accreditation. The Company has also built a
world class sales and marketing infrastructure to service its global clientele. To achieve
maximum penetration within the various target markets with a high degree of sensitivity to the
culture and needs of the local market, the Company has established locally incorporated
companies in several
countries, which are also managed by locally recruited professionals. It also maintains constant
touch with various specialist analyst firms worldwide through participation in IT conferences and
industry specific events attended
by CIO’s of major corporations. It believes that its rigorous, research oriented approach to
identify, qualify and develop relationships has been a key differentiator in the market place.
Company Strategy:
1. The Company has been growing on the back of a strategy which leverages both the
organic as well as the inorganic route and has undertaken a series of acquisitions in the
previous four fiscal periods. It naturally faces a risk with respect to its merger and
acquisition related transactions. The risk exposures in this area are
a) Increase in cost on account of staffing/advisory fees to consultants
b) Lapses in due diligence
c) Difficulties in integration of acquired entities within the operational fabric
It follows a very structured approach in pursuance of its M & A strategy. Many of the risks
are mitigated by restricting the choice of target companies by applying certain rigorous
selection criteria as also by proper resourcing of the integration effort.
2. The company had launched an innovative “employee first” campaign last year along with
several other initiatives aimed at making it an employer of choice. In addition, it continues
its focus on in-house training and development plans to ensure that its global talent pool is
kept abreast of the latest developments in information technology and constantly
upgraded with other soft skills and leadership training.
3. The company actively books foreign exchange forward covers to hedge completely against
foreign currency fluctuations related to its billed receivables and anticipated realizations
from projected revenues. It does not speculate in foreign currency.
4. The Company does not depend on any specific technology and has competencies in a wide
variety of software operating environments. This ensures that it diversifies its technology-
related risks as also offer the customers the choice of any technology or platform they are
comfortable with.
5. HCL wants to compete on added value and, unlike other traditional Indian IT companies,
not on price. The company positions itself directly in competition with big IT giants such as
IBM and Accenture, as it is also strongly focused on infrastructure management.
6. The verticalization strategy that HCL launched in 2002 confirms its willingness to improve
its customer-centric approach. HCL in Europe targets five sectors (financial services, retail
and utility, telecom and media, high tech and manufacturing, and life sciences), which are
further segmented in a number of micro-verticals.
7. The company has not yet achieved a mature marketing strategy and is therefore working
to improve its efforts in the short term.
Insider Information:
Nature of work is pretty similar to services company like Infy/TCS and onsite opportunities
depend on the projects. The company does not fire anyone. There is a bond period for 18
months.

Major locations for HCL Technologies are Noida, Chennai, Hyderabad, Bangalore, Mumbai and
Kolkata.

The company mainly recruits it’s management graduates from FMS, IIMs (A,B,C and L), Jamnalal
Bajaj Institute of Management (Mumbai), NITIE (Mumbai), SPJIMR, Tata Institute of Social Sciences
(Mumbai) and XLRI (Jamshedpur) in addition to SPJCM of course.