HCL sees smaller deals in enterprise space

Written by Kirtika Suneja | Diksha Dutta | Diksha Dutta | New Delhi | Updated: Jan 27 2012, 09:00am hrs
With more than half of its client wins coming from smaller projects of $10-30 million in enterprise application services (EAS), HCL Technologies now has its sights trained on such projects in line with the prevailing market trend. The countrys fourth largest information technology (IT) company says that now the deal sizes have shrunk and larger deals are being split into smaller ones where projects move on a piecemeal basis.

The big deals of $100 million which would be executed over 18 months are now broken into smaller projects to be completed in six or so months. Almost half of our new clients have done this, said Steve Cardell, president-EAS. Hence, a $100 million deal which previously would be executed in 18 months, will now be broken into three projects of six months each.

EAS, which grew at 6.5% and contributed 20.3% to the companys total revenues for the second quarter ended December 31, was one of the key factors for the companys stellar performance in the quarter.

HCL Tech won 18 multi-year, multi-million dollar deals in the quarter with the total contract value exceeding $1 billion. Cardell explained that the trend began when credit crunch hit the market and IT budgets became uncertain and quarterly. When one large project is to be executed, the longevity and the sales cost increase. However, in case of smaller projects, both the cost and long term revenue decline, he added.

Most of the growth in the segment is coming from four areas like big data, mobility, cloud and in-memory computing, especially financial services, retail and pharmaceuticals. While the US is continuing with such deals, the UK and Nordics have settled down.