HCL

Introduction to the Company:

HCL is a global technology and IT Enterprise company based in Noida, India. The company comprises of two publicly listed companies, HCL Technologies and HCL Infosystems. HCL was focused on addressing the IT hardware market in India for the first two decades of its existence with some activity in the global market. On termination of the joint venture with HP in 1996, HCL became an enterprise which comprises HCL Technologies (to address the global IT services market) and HCL Infosystems (to address the Indian and APAC IT hardware market). HCL has since then operated as a holding company.

History
In 1976, Shiv Nadar, Arjun Malhotra, Subhash Arora, Badam Kishore Kumar, T.V Bharadwaj, & Arun Kumar H started Microcomp Limited. The focus of the company was design and manufacturing of scientific calculators. The venture provided its founders money to start a company that focused on manufacturing computers. The company name "HCL" used to stand for "Hindustan Computer Limited" but now HCL is the only one name that the company goes by. HCL received support from the Uttar Pradesh government to setup manufacturing in Noida In 1981, NIIT was to cater to the increasing demand in computer education. By early 2000s, Nadar divested his stake in this venture

Present status in industry

Today, HCL Technologies ranks fifth amongst India's leading global IT service companies in terms of market capitalization and sales. It has forged its overseas base that caters to over 450 clients and operations that span across 17 countries. HCL Technologies along with its subsidiaries delivers software led solutions in IT services, BPO services, and IT infrastructure management services. The company has consolidated its position amongst the top five BPO companies in India. According to NASSCOM, it is the largest BPO

operation in Northern Ireland (UK) and is the first BPO organization in the world to achieve Maturity Level 3 in the People Capability Maturity Model (PCMM). It has also been running bull on off--shoring remote infrastructure management services (RIMS). In quarter ended June 2007 the company bagged six big deals in RIMS. Today, HCL has 45,000 employees of diverse nationalities, operating across 17 countries including 360 service centers in India. HCL has global partnerships with several leading Fortune 1000 firms, including several IT and Technology majors. HCL Technologies has been ranked as America's 39th largest Healthcare Information Technology (HIT) Company by revenue in the 2011 Top 100 listing in Healthcare Informatics magazine.

Summary of business areas and products / services

Business Areas Aerospace and Defence Automotive Consumer Electronics Energy and Utilities Financial Services Government Healthcare Medical Devices Telecom Industrial Manufacturing Independent Software Vendors Media & Entertainment Retail & Consumer Semiconductors Server and Storage Travel, Transportation & Logistics Hospitality Business Lines Engineering and R&D Services Hardware Engineering, Embedded Engineering, Mechanical Engineering, Software Product Engineering Enterprise Transformation Services Business Transformation, Technology Transformation, ... Business Services

 Custom Application Services Application Development, Application Re-engineering & Integration, Application Support & Maintenance, ... Enterprise Application Services SAP, Oracle, Microsoft Dynamics, ... IT Infrastructure Management

a. Organization structure (high level)

b. Overview of sectors in which company operates

Vision and Mission statements & analysis

Vision: Together we create the enterprises of tomorrow" Mission: "To provide world-class information technology solutions and services to enable our customers to serve their customers better" c. Current objectives and analysis

d. Details of the strategy currently followed

The current strategy being followed is chasing growth by risking profitablity. For years, bigger rivals have viewed HCL Technologies as an aggressive bidder ready to take that extra risk while pursuing large and complex outsourcing contracts from customers such as Xerox. And analysts have continued to warn against the company's strategy of chasing growth by risking profitability. With Tata Consultancy Services, Infosys Technologies and Wipro reporting profit margins topping 25%, a comparison with peers does raise questions about HCL's strategy. On its part, HCL has maintained that by taking over customer risks that includes transfer of staff along with other transitions the company is able to position itself better. But such total IT outsourcing engagements come with additional risks of revenues linked with annual or quarterly achievements of agreed targets, which at times affects monies owed by customers to HCL. Having signed contracts worth nearly $2 billion during past four quarters, HCL is not paying too much heed to criticisms . For brokerage analysts advising investors, HCL must grow revenues and improve profits at the same time, something multinational rival Cognizant has achieved by reinvesting profits in excess of 20% into the business.

Corporate governance in the company

HCL believes that strong corporate governance practices should be integral to all activities of its Group Companies to ensure efficient conduct of the affairs of the Companies, while upholding the core values of transparency, integrity, honesty, and accountability. The annual Directions meet where the CEO of HCL Technologies interacts with all employees and arrive at the strategic direction the company needs to take, and the HCL Global Meet where its customers, investors, analysts all interact together in a free flowing discussion, are just two examples of how transparency has become a part of the HCL Enterprise culture. The HCL corporate governance practices have matured over the 32 year journey of the Enterprise; and are in compliance with the requirement of the revised guidelines on corporate governance

stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges Snapshot of CG at HCL Technologies: Certified by Big-4 Global Auditing Firm

Corporate Governance Structure 6 of the 8 directors are independent non-executive directors. The Board has four committees viz. o Audit Committee, o Compensation Committee, o Shareholders' Committee and o Employees Stock Options Allotment Committee All members of Audit Committee are Independent Directors. Internal Audit Function is independent and reports to Audit Committee. External Audit is done by Big-4 Global Auditing firm Inspite of being an Indian listed Company, voluntary Audit under US GAAP for better understanding of financials by global stakeholders.

Financials - US GAAP Financials - Indian GAAP Corporate Governance under Clause 49 of Listing Agreement with Indian Stock Exchanges. Corporate Governance Report includes the following sections: o Board Committees o Board Composition o Board Functioning and Procedures o Management Review & Responsibility o Shareholders Information o Certifications

(If the company has conducted a Balanced Scorecard exercise, some details of this Optional

Industry Driving Forces

1.POLITICAL FACTORS:

 Political stability: Indian political structure is considered stable enough expect the fact that there is a fear of hung parliament (no clear majority). U.S. government has declared that U.S companies that outsource IT work to other locations other than U.S. will not get tax benefit. Government owned companies and PSUs have decided to give more IT projects to Indian IT companies 2.ECONOMIC FACTORS: Global IT spending (demand) is on an all-time high. Domestic IT Spending (Demand): Domestic market to grow by 20% and reach approx. USD 20 billion in 2008-09 - NASSCOM Attrition: Due to recession, the layoffs and job-cuts have resulted in low attrition rate. ECOMONIC ATTRACTIVENESS due to cost advantage and other factors.

3.SOCIAL FACTORS: Language spoken: English is widely spoken language in India, English medium being the most accepted medium of education. Thus, India boasts of large English speaking population. Education: A number of technical institutes and universities over the country offer IT education. Working age population: As per NASSCOM Strategic Review report, India is one of the few countries to have an increasing share of working population.

4.TECHNOLOGICAL FACTORS: Telephony: India has the worlds lowest call rates (1-2 US cents). Total subscriber base of about 500 million (2010). India has the second largest telephone network after china. Enterprise telephone services, 3G, Wi-max and VPN are poised to grow. Internet Backbone: Due to IT revolution of 90s, Indian cities and India is well connected with undersea optical cables. New IT technologies: Technologies like SOA, Web 2.0, Highdefinition content, grid computing, etc and innovation in low cost technologies is presenting

5.LEGAL FACTORS: IT SEZ requirement: IT companies can set up SEZ with minimum area of 10 hectares and enjoy a host of tax benefits and fiscal benefits. Contract / Bond requirements: Huge debates surrounding the bonds under which the employees are required to work, which is not legally required. IT Act: Indian government is strengthening the IT act, 2000 to provide a sound legal environment for companies to operate esp. related to security of data in transmission and storage, etc.

 Companies operating in Software Technology Park (STPI) scheme will continue to get tax-benefit till 2010.

6.ENVIRONMENTAL FACTORS: Energy Efficient processes and equipments: Companies are focusing on reducing the carbon footprints, energy utilization, water consumption, etc.

Analysis of the competitive environment using Porters Five Forces

threat of substitutes- threat of substitutes is low due to:

1. Other offshore locations such as Eastern Europe, the Philippines and China, are emerging and are posing threat to Indian IT industry because of their cost-advantage. However, this should have an impact only in the medium to long term. 2 .Price quoted for projects is a major differentiator, the quality of products being same. Bargaining Power of Customers- this is very high due to: 1. Large number of IT companies vying for IT projects resulting in high competition for projects. 2. Huge decline in IT expenditure: Indian IT sector is dependent on USA and BFSI in particular for majority of its revenues, and with the recent financial crisis, the new spending from these has reduced tremendously. 3. However, for the existing products and services, the clients continue the old companies Barriers to entry: barriers to entry are low due to: Low capital requirements. Large value chain, space for small enterprises. MNCs are ramping up capacity and employee strength

Bargaining power of supplier: this is low due to:

1. Due to slowdown, the job-cuts, the layoffs and bleak IT outlook. 2. Demand and supply of IT professionals is no longer that favorable to employees. 3. Availability of vast talent pool fr es h er s

and ex
p

erienced RIVALRY AMONG FIRMS: this is high due to: 1. Commoditized offerings 2. 'low-cost, littledifferentiation' positioning. 3. high industry growth 4. Strong competitors few numbers of large companies

Key Success factors of the Company: these are as follows: Powerful Brand Image- HCL has a strong brand image in India and abroad.It has invested in building a brand recall in the mindsof its customers through advertising and quality products.HCL brand image coupled with its strongcustomer relationship and cutting-edge solutionshave helped the company in creating value for itsclients.It has collaborated with many companieswhose products and solutions are in line with itsbusiness segments,such as Nokia in telecom,AMDin hi-tech solutions to provide better customerservices.Brand image was leveraged by HCLto win some big contracts in the UK market. Experienced Team- One key differentiator that helps HCL to standapart from its peers in the UK has been itssuperior human resource quality.The UK teamcarried with it a rich and diversified experience.This ensured a thorough understanding of clientrequirements.The company also lays specialemphasis on developing the skills of its employees.It provides regular training to its employees fordeveloping their skills.The experience and sounddomain knowledge equips employees with anin-depth understanding of problems and helpsin providing quality inputs that lead to betterquality solutions for its customers. Blended Solutions

HCL has been able to offer its different servicesunder one umbrella.There is a synergy betweenthe different operations of the company.It is amongthe few companies that provide support servicesto its clients through its office located in Ireland.The company leverages its support operationsin Ireland and in India to provide valuable supportsolutions to its clients.It provides supportsolutions for its European clients through itsIreland centre due to local skill presence.Thecentre transfers its low-end functions to its sisteroperations in India,thus freeing its resourcesto concentrate on high-end functions. Focus on Key Business Areas The company has focussed on five major verticalmarkets - Banking and Financial Services,Life Sciences,Retail,Telecom,and Hitechnology.Theseverticals form the core operational strength of thecompany.It has concentrated in these verticals,which have in return facilitated the company tobe a strong niche player in these verticals.In theUK,the company provides solutions to its variousclients in banking and financial services,whichinclude the insurance sector (AA InsuranceService),the retail sector (DSG International Plc)and the telecom sector (British Telecom). Global Strategy The company has established subsidiaries acrossthe globe to sustain growth.It has set upsubsidiaries in the USA,Japan,the UK and Australiaetc.which aided in penetrating the global market.The company believes in the philosophy of think global and act local.Its global delivery system isbased on the strength of its local employees,whounderstand the geography of its subsidiary andprovide services in collaboration with itstechnological competence. 14

Generic strategies adopted by the company :

the strategy to gain market share in difficult times and reap benefits when the industry recovers has come at a cost. For instance, industry analysts say that HCL has given massive discounts in the products business to gain market share. In addition to the PC segment, the company also took several innovative initiatives in other sectors to boost revenues. Take for instance the strategy of the company in the notebooks segment. The move to enter newer segments like education and consulting in the notebooks business has yielded great results. Proof of success lies in the fact that HCL has already bagged big orders from the Indian School of Business and PricewaterhouseCoopers. The second part of the notebooks strategy has been to aggressively woo the SME segment with newer, cost-effective models. The telecom business has also recorded impressive growth. For instance, the company bagged telecom equipment orders from IIT Kanpur for 5,000 lines of MD Ericsson EPBAX and 500 lines of an ADSL solution. Looking at the robust growth from this segment, the company has set up the India remote support centre for providing support services to all HCL Infosystems customers. And while there have been doubts on the long term viability of the retail ISP business, HCL Infinet, the fully-owned subsidiary of HCL Infosystems, is betting big on its technical expertise to boost revenues. Positive indications can be seen in the fact that the subsidiary has acquired 30 new corporate clients for VPN implementation. These new clients come from

different verticals such as manufacturing, finance, and the FMCG industry. Company officials are also betting on the VoIP segment, which has recently been opened up to ISPs for Net telephony, but there is still doubt on whether this sector will generate enough volumes for any ISP, leave alone HCL Infinet. To take advantage of the boom in the call centre business, the company has also started aunit that it terms as call centre consulting. Under this initiative, the company will helpprospective clients wanting to enter the call centre business with its knowledge base ofhardware and systems integration, and experience in call centre operations itself.

Strategic Alliances and collaborative strategies followed by the company

HCL's alliances & partnerships are focused on best-of-breed industry products with a focus on existing white spaces in the Financial services Landscape. Product Partnership is a key element in HCL's product portfolio and complements HCL's product acquisition and product development initiatives. Some of its alliances are with the following companies: Guidewire- Since 2004, HCL has been offering business benefit oriented solutions for Guidewire products through robust frameworks, methodologies and solution accelerators, to companies across the globe. FRS Global- HCL is an implementation partner for FRS Global, an industry leading risk and regulatory solutions provider for the global financial services marketplace. GemStone Systemc,Inc.- HCL's Products Engineering division in the BFSI space has partnered with GemStone Systems during June 2008.

Strategic Functional Systems- SFS and HCL together develop and deliver the most comprehensive insurance industry solutions available. Chordiant Software Inc.- The partnership will leverage the strengths of both organizations in the financial services space and will provide Consulting and System Integration services to global customers. In-Solutions Global- HCL's has partnered with In-Solutions Global, a leading payment solutions provider and a major player in the cards industry. Prima Solutions-HCL has partnered with Prima Solutions to offer solutions to insurance industry

WallStreet Systems- HCL is an implementation partner of Wall Street Systems, a leading provider of treasury and asset management software for corporations and financial institutions for WSS Suite which provides financial institutions and corporate treasuries with a strategic enterprise application platform that combines depth of functionality with seamless integration by enabling all cash management, trading, funding and investment activities to be automated, audited, consolidated, and accounted for, instantaneously and globally.

SAGE- HCL and SAGE, a Switzerland-based software development company for the financial services industry, have a strategic alliance to develop Prospero, which is a private wealth management application Misys Plc.- HCL is an implementation partner for the delivery of two leading products from Misys, namely Summit and Opics Plus.

Clear2Pay- HCL is an implementation partner of Clear2Pay.Clear2Pay is an innovative payments technology company focused on delivering globally applicable solutions for secure, timely and streamlined payments processing. ebaoTech-HCL has partnered with ebaoTech which is one of the leading core insurance software providers in the world ChellaSoftware- Chella Software provides comprehensive risk management solutions for clearing corporation, direct market access, securities brokering houses, treasuries and investment houses.

M&A strategies of the company

HCL has been following an aggreesive M&A strategy .some important ones include acquisition of AnswerCall Direct, a Northern Ireland-based contact center, for Rs 29.4 crore. On the IT services front, HCL acquired the remaining 16.3% stake in HCL Enterprises Solutions (HES), its joint venture with US-based Computech, to make it a wholly owned subsidiary. The company is now fully owned and managed by HCL Technologies (Illinois). The acquisition enabled HCL Technologies to gain a strong onsite presence in the US ERP market. The company acquired Capitalstream, a US BFSI product company for US$40 million in February 2008.[5] Capitalstream's FinanceCenter product is an addition to HCL's current product addressing the BFSI market - Penstock, the product that HCL launched in 2007.[6]

The most recent one has been the acquisition of Axon. On 15 December 2008, HCLT acquired the UK based AXON Group for US$658 million, which was renamed HCL Axon. Axon is one of the leading players in the enterprise application services (EAS) segment. Axon caters to needs of organizations that have chosen System Application Products (SAP) as their strategic enterprise platform. Axon has offices across Europe, Americas and the Asia Pacific.

Outsourcing strategies
HCLs Strategic Outsourcing team has extensive expertise in addressing Consulting, IT & Business Operations Outsourcing requirements in both corporate & government organizations across India on various win-win commercial models. Few areas of HCLs Outsourcing Services have been detailed in the following pictorial representation.

HCL's outsourcing readiness assessment is a combination of qualitative analysis and statistical modeling of various parameters and characteristics like business criticality, technology complexity, and application stability, to significantly reduce the subjectivity of the recommendations The focus for HCL's IT Sourcing Strategy (Figure) service is to assist customers in identifying and prioritizing applications within their portfolio that can be outsourced, to reduce cost of application management, improve efficiency, and enable customer focus on core tasks

Some of its outsourcing deals in the past are listed below: one of the largest banks in UK has selected HCL as a strategic vendor. HCL will be providing IT services solutions for the banks core systems that support its various business units HCl has signed a 5 year strategic IT & SAP Offshore Delivery Center Agreement in Europe with Danfoss. HCL has entered into an agreement with Memcom Group Plc. for outsourcing a significant portion of Memcoms IT operations

International Business level strategies

HCl has a global presence in 31 countries including Sweden, Germany, Belgium, London, Washington etc. By being locally incorporated in each country, HCL is able to serve customers as a local business, with all attendant benefits. It is also a tax-

paying citizen, conforming to all local lawsand with a significant global workforce. We believe that every part of the world has different ways of doing business and, therefore, unless we make the investment of becoming a local player, the move from being a mere vendor to a valuecreating partner would be a difficult transition. The company has established subsidiaries across the globe to sustain growth. It has set up subsidiaries in the USA, Japan, the UK and Australia etc. which aided in penetrating the global market. The company believes in the philosophy of think global and act local. Its global delivery system is based on the strength of its local employees, who understand the geography of its subsidiary and provide services in collaboration with its technological competence.

Innovation strategies
The innovation strategy is evident in its following corporate values: Employee first- it focuses on employee led innovation. It provides a platform to propose and implement new ideas impacting customers business its a Corporate wide initiative to promote, facilitate and manage customer specific innovation Value Portal is an intranet based tool to manage innovative ideas across its lifecycle from Ideation to Implementation Periodic ideation workshops, Innovation labs at an engagement level to evangelize, assess and guide teams Investment to the tune of minimum 6% of yearly revenues for each vertical and horizontal in IP initiatives Special focus on investments in latest technology trends led IP like High performance computing, Enterprise Mobility, Biometrics and Green IT Collaboration with leading product vendors like SAP, Microsoft for joint IP development Collaboration with academia- joint R&D with MIT, IIT Madras, IISc. Bangalore, Wharton, INSEAD, World Economic Forum

BCG matrix for the company and analysis:

Based on the growth, HCL can be categorized as Cash Cows since it has a relatively high market share.

Analysis of the company culture

HCL strives to attract and retain the best talent and provide an environment where each individual is given the opportunity to build a rewarding career. With offices in more than 300+ locations, it employs a diverse group of people from different backgrounds, yet all connected by a common sense of the HCL culture. HCL values the uniqueness of each individual, relying on the diversity to drive innovation, growth and performance. The culture at HCL BPO promotes customer focus, excellent work ethos, operational transparency and teamwork. Performance Oriented: HCL has a high performance work culture and performance linked incentive schemes. Demanding: HCL BPO gives a challenging and demanding career profile to its employees

Ethics and CSR in the company

Since its inception, HCL has been making significant contribution towards upliftment of living conditions of the local people in the areas where it had established its mines and production units - like providing drinking water, social forestry, rural health camps, and vocational training for the local people on a regular basis. Forty years of sailing through various market trends upwards and downwards the year 2007 saw HCL embracing a CSR map for socio-economic development programs for adjoining mining areas. For the initial stage, five villages from each of the three units were identified for rolling-off CSR activities, focusing on health, general hygiene, sanitation, awareness generation & formation of self-helpgroups, and introduction of alternative farming techniques. With the support of local NGOs and community participation the entrypoint activities were carried out since April 2008. In Rajasthan, three villages were chosen from nearby areas of Khetri Copper Complex (KCC), while the other two were selected from Chaowra, near KCCs water-resourcing unit. Similar work has been carried out in various villages of MP & Jharkhand.

Consolidated SWOT analysis of companys marketing operations

Strengths HCLs' acquisition of Axon enables it to offer the full life cycle of SAP services from consulting through implementation, infrastructure optimization and ongoing managed services and support. HCL Axon has a particular focus and strength in aerospace and defense, high-tech manufacturing, utilities, and travel and transportation.

 As the first SAP partner to be certified in Value Management, HCL Axon has 40 consultants trained in Value Management, and they have full access to SAP's Value Engineering database, HCL Axon was a key partner in helping SAP develop its Value Management HCL clients cite project management, flexibility, focus on delivery, high percentage of senior consultants on project team and its willingness to commit to outcome-based fees as key strengths.

Weakness Clients have experienced some problems with staffing, such as attrition, difficulty finding consultants close to operating locations and staffing for newer products. As a part of HCL Tech, new HCL Axon is creating some confusion in the market on the positioning of this formerly high-end consulting outfit. Opportunities

There is a new and emerging market in China as the country undergoes a huge industrial revolution. There has been a trend over recent years for European and North American companies to base some or all of their operation in India. This is called an offshore service. Essentially there is a seamless link between domestic operations and services hosted in India. Examples include telecommunications companies such as British Telecom and banks such as HSBC that have customer service and support centers based in India.

Threats

India is not the only country that is undergoing rapid industrial expansion. Competitors may come from countries such as China or Korea where there are large pools of low-cost labor, and developing educational infrastructures such as universities and technology colleges. Customers may switch to other offshore service companies in other countries such as China or Korea. Other global players have realized that India has the benefit of low-cost, highly-skilled labor that often speaks English and is culturally sensitive to Western practices. As with all global IT players, Infosys has to compete

for skilled labor and this may have the effect of driving up wage levels, and making it more difficult to recruit and retain staff.

10. Recommendations

for the future

HCL is having large number of channel partners but it is not supporting & taking care all of them equally which results in increasing discontentment among new channel partners because its not possible for company to support all of them equally. Company should take some positive action against it. Company executive should visit dealers on regular basis. They should pay proper attention towards checking of various components of PC before end user delivery. Otherwise it tends towards defame of brand name in comparison to rivals. Need to expend customer care center as the consumer base of HCL Info system is increasing with tremendously fast pace. Proper attention should be paid for advertisement planning otherwise it may lead to problem for dealer as well as for company. Company should tie up with some event management company to organize various promotional activities. Company should make policy for fixed end user price for all dealers so that fair game will be played & dealer would not to compromise on their margin