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February 17, 2016updated 31 Aug 2016 5:23pm

HCL Tech buys Volvo’s external IT business for $130m

News: Company also takes on 40 Volvo European customers.

By Joao Lima

Volvo has sold its external IT business unit to Indian firm HCL Technologies (HCL), from whom it will outsource IT services until 2021.

With the acquisition, HCL has added to its portfolio 40 former Volvo customers based in Sweden and France.

The company claims the buyout to be one of the largest IT deals signed by any Indian IT company.

Pankaj Tagra, head of Nordics business at HCL, said the acquisition of the carmaker’s IT arm started on October 19 last year at a value of $130 million in cash, with derived revenues exceeding to $190 million.

He said: "We are buying out Volvo’s external business, and that IT business was also serving external customers, so we are also buying those external customers, 40 of them. We are buying customers, assets, employees related to it, it is a complete buyout."

HCL will establish an Automotive Centre of Excellence in Gothenburg and will also work on a technology transformation roadmap using over 3,500 applications, over 20 data centres, over 11,000 servers, 12 PB of storage, 20,000+ MIPS of mainframe capacity and over 15,000 network devices.

As part of this roadmap, it will also serve over 65,000 Volvo end users with access to other solutions, such as Microsoft Office 365.

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According to Tagra, all the assets lie in these data centres, and the company will be doing a business transformation journey in the next 18 months "to make sure we enable Volvo to meet the new business challenges which every business is facing in terms of automation, digitisation and cloud".

Tagra said the company will start providing its services to Volvo in April this year. On that same month, nearly 2,500 Volvo employees will be transferred to HCL.

He said: "There is no redundancies planned in this for the simple reason that we have been experiencing an exponential growth in the Nordics and we need this to support our growth."

Speaking on further expansion, Tagra said that the company is "definitely open" to acquiring more businesses, "but we do not want to just acquire a company for the sake of revenues or just to increase the size of the company".

"We are looking at the missing skills and if there is a match happening between our organisation and a given organisation, then we can add one plus one, which is equal to three, then we will go and acquire," he said.

"This activity is definitely on, we are continuously evolving. I cannot put a timeline on it, but I can say we are in a continuous process of evaluation and the moment we find something that is right, we will definitely take it."

 

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