HCL Tech renews contract with state of Virginia; stock down

BANGALORE: In a year when India's top tech firms are pushing harder to gain a share of the $100-billion US government outsourcing market, HCL Technologies has renewed its contract with the state of Virginia, as more government departments seek to lower costs by giving away non-core work.

At 9:40 am, shares of HCL Technologies were trading 1.96% down at Rs 457.00 on the Bombay Stock Exchange.

Government sector contracts are being outsourced to Indian IT firms as more US states look to gain greater efficiencies and reduce costs. Experts say this could get a bigger boost as the US federal budget proposes to cut more than $61 billion from current spending levels this year.

When contacted by ET last week, Michael Novak, sourcing specialist at the Virginia Information Technologies Agency, confirmed that the state has renewed its contract with HCL through November of this year.

"IT services firms could see a significant increase in business as government agencies look to IT services providers to help them gain efficiencies. The federal budget proposal focuses on three major initiatives, including modernising legacy systems and applications; streamlining or consolidating data centre operations; and adopting new infrastructure technologies including cloud computing and virtualization," Shami Khorana, president, Americas, HCL Technologies said. HCL had signed a contract with the Virginia Information Technologies Agency for enterprise content management (ECM) systems integration that has been renewed after it got over in 2009.