HCL Technologies vice-chairman & CEO Vineet Nayar in an interview to FE’s Diksha Dutta and Kirtika Suneja said integrated deals and platform services is the future of the industry
What are reasons for higher revenue and increased net income?
The US is demanding transformational deals and integrated business and we have put all our investment in this. Simultaneously, engineering services and enterprise application is growing in the US. Europe was under cost pressure, so we accelerated our ‘run the business’ i.e engineering and application services in the continent. Japan is also getting threatened by China, thus we are focusing on engineering services there. There were increased sales in the rest of the world as well.
You mentioned disinvestment of some businesses…
In 2005, we disinvested almost 75 clients because they were not strategic to us and we are thinking on similar lines for 2010 to 2015. What we decide not to do will be more critical than what we do and the power of no is more important at HCL. The disinvestment will be in business lines, customers or geographies.
What will be the growth areas?
We are seeing growth in areas like on demand utility and the cloud. Geography-wise, Continental Europe, South America and Mexico along with Africa, Australia and Japan are under leveraging capabilities and skills from India. I believe with the right proposition and emphasis on investment, we should be able to capitalise on this opportunity.
What is your strategy to tap the domestic market?
We are focussing on three areas viz insurance, banking and power. We are heavily concentrating on the smart grid projects in power.
What about the BPO business? Is it picking up after the $100 million deal?
BPO is presently 7% of our revenues which is inconsequential but will become consequential by 2015. It needs to be transformed into business services and platform is the future. There will be losses of $6 million per quarter for the next four quarters in the BPO business because of investment in platform business and some disinvestment in clients with a motive to move from voice to non voice service lines. We plan investments in partnerships to build delivery platforms.
It is moving towards business services, software business and utility pricing. We might disinvest in the contact centre business which is not doing that well.
What about acquisitions?
We have a five year perspective for acquisitions. We are looking at strategic acquisitions which are small in nature and are platform based of around $50 million besides carve outs of existing enterprises or capability acquisitions in the cloud or IT space.