Bundled deals buoy HCL Tech

Written by Kiritika Suneja | New Delhi | Updated: Jan 21 2013, 07:51am hrs
The countrys fourth-largest IT firm HCL Technologies which posted better-than-expected results on Thursday is buoyed by large deals in the enterprise application services (EAS) segment with at least six $100-million contracts being signed in the last two quarters in that space.

According to Steve Cardell, president of EAS, the firm has signed large, meaningful deals in Europe and the US by bundling change-the-business (CTB) applications with run-the-business (RTB) services.

At present, the company gets 70% of its business from RTB and the rest from CTB in the EAS segment. The service line contributes 19% to the companys total revenues, which stand at $1.1 billion for the quarter just gone by. The EAS practice was strengthened after HCL Tech made the $658-million acquisition of UK-based SAP consulting firm Axon in 2008.

In EAS, HCL Tech is getting three kinds of deals consolidation deals for global companies that are anywhere between $30 million and $100 million, contracts around emerging technologies like social media, analytics, mobility and cloud which range from $1-3 million and bundled deals, for which the company has seen an increased demand in the last few quarters.

These bundled deals are transformation plus BPO deals or transformation plus ITO. These have started flowing in because there is pent up demand for CTB, but the companies do not have the budget for it. These contracts involve refreshing old technologies. With a higher component of RTB, we are more exposed to discretionary spend of our clients. The opposite is true for custom application services, Cardell said.

These bundled deals are coming from verticals like financial services and public services in the US and Europe, he added. In the quarter ended December, HCL Tech added 39 new clients and won six large transformational deals with a total contract value of $1 billion.