HCL joins hands with Canada’s Celestica to tap OEM demand

NEW DELHI: HCL Technologies is planning to form a joint venture (JV) with Canada’s Celestica, a $4-bn electronics and manufacturing services player, to provide concept-to-manufacturing solutions for original equipment manufacturers (OEMs). The move is likely to boost HCL’s revenues by around $100m over the next few years.

“Till now, we were only designing products from our engineering and R&D services division, which has about 7,500 people, and generating revenues of $250m. Now, while we will design the product, Celestica will manufacture it. This will help us get an additional $100m as we expect more business for not only design-related work but also complete concept-to-manufacturing solutions,” Vineet Nayar, president, HCL Technologies, said.

So, for instance, if a client wants to redesign a set-top box (to help cut cost of the box from say $700 to $500), HCL will do the design while Celestica will manufacture the product out of its Chinese or Indian manufacturing facilities.

Mr Nayar added, "design services constitute just 5% of the total product development effort. We don’t have competence in manufacturing or supply chain management, which Celestica will bring in. It is a new market for HCL and we will target electronic product designing and manufacturing in the aerospace, medical electronics and consumer electronics space.”
Historically, outsourcing has involved multiple suppliers handling various aspects of the product lifecycle.

The joint venture will provide a fully integrated product lifecycle solution to OEM customers, including product concept, design, engineering, manufacturing, fulfilment, sustaining engineering, reverse logistics and after-market services.

Meanwhile, HCL said that the joint venture furthers the existing three-year relationship between the two companies, through which HCL and Celestica have provided integrated solutions to customers across the telecom, enterprise, consumer, medical, aerospace and semiconductor sectors.