HCL to spend $500 mn on buys
India’s fifth-largest software and services firm HCL Technologies is looking at acquisitions of up to $500 million in the US and Europe.
By Deepshikha Monga, TNN |
NEW DELHI: India’s fifth-largest software and services firm HCL Technologies is looking at acquisitions of up to $500 million in the US and Europe.
The company is eyeing software product development companies and BPOs with their own platforms. “We don’t need acquisitions for growth -- we have an innovation model for that -- but for value.
Companies that have their own intellectual property and frameworks or in case of a BPO, one which has its own platforms, are what we are interested in,” said HCL Technologies CEO Vineet Nayar. Nayar, who was the company president before taking over as CEO early this week, however, refused to comment on whether it has initiated talks with any acquisition targets.
The company has been quiet on the acquisition front for a long time. “We have spent the last two years digesting the companies, we had acquired earlier -- eight in the last five years,” says Nayar. Its past acquisitions include British Telecom’s call centre and Answer-Call Direct call centre from PricewaterhouseCoopers .
More than acquisitions, HCL Technologies is looking at collaboration as the way forward. “Collaboration is step two of the transformational journey we started on two years ago. The first step of cultural transformation is complete,” the CEO says.
By collaboration, HCL Technologies means developing intellectual property with customers which, once tested, can be sold to others. “We fund the IP creation. The customer shares his ideas with us and tests the IP by using it. Once it’s tested, he gets it free and we can sell it to others,” Nayar said.
HCL Technologies developed a network management platform with Cisco where it gets a royalty from the platform sales. The company has also had collaborations in the areas of master data management, insurance platforms and lifesciences.
The company has earmarked an investment of $100 million in creating IP through collaboration till 2010. “We started this IP creation process two years ago and right now, less than 5 per cent of our revenue comes from it. We have announced a target of 50 per cent of revenue from new service lines by 2010, which includes all businesses that were not present in 2005—IP creation, software as a service, technology disruption frameworks,” he said.
HCL Technologies has no ambitions to get into consulting. “We have to choose our battles. We don’t have the scale and size to be in the consulting business and we don’t see any ground for disruption in that space,” he added.
The company is eyeing software product development companies and BPOs with their own platforms. “We don’t need acquisitions for growth -- we have an innovation model for that -- but for value.
Companies that have their own intellectual property and frameworks or in case of a BPO, one which has its own platforms, are what we are interested in,” said HCL Technologies CEO Vineet Nayar. Nayar, who was the company president before taking over as CEO early this week, however, refused to comment on whether it has initiated talks with any acquisition targets.
The company has been quiet on the acquisition front for a long time. “We have spent the last two years digesting the companies, we had acquired earlier -- eight in the last five years,” says Nayar. Its past acquisitions include British Telecom’s call centre and Answer-Call Direct call centre from PricewaterhouseCoopers .
More than acquisitions, HCL Technologies is looking at collaboration as the way forward. “Collaboration is step two of the transformational journey we started on two years ago. The first step of cultural transformation is complete,” the CEO says.
By collaboration, HCL Technologies means developing intellectual property with customers which, once tested, can be sold to others. “We fund the IP creation. The customer shares his ideas with us and tests the IP by using it. Once it’s tested, he gets it free and we can sell it to others,” Nayar said.
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HCL Technologies developed a network management platform with Cisco where it gets a royalty from the platform sales. The company has also had collaborations in the areas of master data management, insurance platforms and lifesciences.
The company has earmarked an investment of $100 million in creating IP through collaboration till 2010. “We started this IP creation process two years ago and right now, less than 5 per cent of our revenue comes from it. We have announced a target of 50 per cent of revenue from new service lines by 2010, which includes all businesses that were not present in 2005—IP creation, software as a service, technology disruption frameworks,” he said.
HCL Technologies has no ambitions to get into consulting. “We have to choose our battles. We don’t have the scale and size to be in the consulting business and we don’t see any ground for disruption in that space,” he added.
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