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August 12, 2013

Q&A: HCL’s growth in Europe comes from renewal contracts

Ashish Gupta, head of Infrastructure Services at HCL Technologies, tells Amy-Jo Crowley how the IT provider exceeded investors expectations for its last financial quarter.

By Amy-Jo Crowley

Ashish Gupta

The company’s revenue has leaped by 19.9% and your infrastructure unit is the biggest revenue earner. What do you put this down to?

It comes from our infrastructure service market approach, concept of collaboration outsourcing and our global perspective that started back in 2003 and 2004 that has really helped us become centre stage when customers look for options for traditional outsourcing. Besides that, over the last eight or ten years across the world, the infrastructure unit has been able to win big brands in each of the markets we’re working in, with the number of references we have from our clients always increasing.

For example we started a contract with Nokia based in Finland, our biggest market, and that made us more credible for bigger outsourcing bids. It’s continuous work, focus and we’re extremely local in the way we interface with our clients. It also boils down to sensing the big belt markets, and following it up with investment ant the right people on the ground.

There has been a fall in demand for your enterprise application services. Why did this happen and how do you plan to improve it?

The enterprise applications service is totally dependent on discretionary spending and discretionary spending has curtailed over the last couple of years. And you’ll see that’s true with a lot of other players in the market. So in this market, we’ll just have to continue focusing on maturing our service lines and penetrating more markets. And as discretionary spend comes back, we should be well positioned to take a larger market share. Also, if you look at the enterprise application services over a three year period, you’ll see that the CAGR is actually is positive.

What plans for future product and service development do you have in Europe?

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We’ll continue with a lot of what we are doing and further strengthen our geostructures inside the European market place and continue penetrating some our now strong service, like infrastructure and enterprise applications. The emergence of cloud-based services, for example MyCloud, in the next few years will become more important. The second area is enterprise functional services. People now want to take a whole function and the idea associated with the hardware, which is very common in financial services organisations.

What other regional markets and industry sectors will be your focus in the coming years?

From a European perspective, we are focusing on the UK and Nordics and markets around Germany, The Netherlands and France are growing markets and we’re making lots of investments there.

We’re also focusing on emerging markets in the Middle East and places like South Africa. South Africa especially as it has a market with extremely large organisations with great needs for IT, and over a period of time they’ll become even more important. Plus over the last couple of years in South Africa, we’ve already made some significant investments, for example, we’ve created a telecoms centre in Johannesburg.

Three years ago, you signed a $350m seven year contract with Reader’s Digest that has now filed for bankruptcy. How is this affecting you financially?

That’s part of business. Some customers will do extremely well and some will not. But it’s not really affecting us as it’s a very small percentage of the overall revenue and we continue to secure a lot of other contracts.

How are you setting yourself up against larger rivals such as Tata Consultancy and Infosys in the coming months?

I think we are competing extremely well and I see significant growth happening, so we’ll just continue operate a model that focuses on the customers that delivers them more value.


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