HCL Technologies buys Volvo group's external IT business

NEW DELHI: HCL Technologies has closed a $1 billion-plus deal with Volvo Group that includes acquisition of the external IT services arm of the Swedish automobile giant and end-to-end internal outsourcing of the group.

HCL claims that the deal is one of the largest IT deals signed by any Indian IT company and definitely the largest in HCL’s history so far.

Though the company has not disclosed the total value of the deal that is spread over five years, it is estimated to be in the range of $1.75 billion, or about Rs 11,900 crore.

The letter of intent for this deal was signed in October last year.

In October, HCL had said it is acquiring Volvo’s external IT business for $130 million and the group derived revenues of $190 million from this business. The total worth of Volvo’s internal IT contract, spreads across the company’s entire global operations, is “much more”, the company said.

Post the deal, 40 clients of Volvo’s IT services arm from the Nordics and France region will move to HCL along with 2,500 Volvo employees across 11 countries.

Ashish Gupta, head — diversified industries and infrastructure services, EMEA, at HCL Technologies, said the deal is adding two significant capabilities to the company – deep knowledge of the automobile industry and mainframe capability.

“Indian IT companies were never very good at this technology. Looking at the way the world is disrupting right now, this platform is very important for us to service large banks, insurance companies, healthcare firms, etc.,” he said.

HCL has also announced an automotive centre of excellence in Gothenburg based on the domain expertise of the Volvo team, to serve the former’s global automotive and manufacturing customers.

“Combining the strengths of HCL with those of the transferred parts of Volvo IT will result in an organisation with formidable capabilities and an intimate understanding of Volvo Group needs and opportunities,” said Olle Högblom, CIO of the Volvo Group and president of Volvo IT.

Post the deal, HCL claims to be the largest IT services provider of Indian origin in the Nordics. “This addition enables HCL to achieve an even stronger presence in the Nordics and the wider European region, and accelerates our journey in these markets,” said Anant Gupta, CEO of HCL Technologies.