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HCL Technologies bets on acquisitions to drive growth

Last Updated 23 October 2016, 16:32 IST

India’s fourth largest IT services firm HCL Technologies is aggressively looking at acquisition opportunities in areas like engineering and R&D services, as well as digital technologies to drive growth.

In the past few months, it has announced acquisition of companies like Geometric (for $200 million) and Butler America Aerospace ($85 million).

“In certain areas like engineering and R&D services, there are opportunities to consolidate,” the newly-appointed CEO of HCL Technologies, C Vijayakumar, said.

“So, wherever there are niche providers, which is adding to our strategy or helping us further our strategy, we will be very open, we announced Geometric, we announced Butler. Potentially, we could be looking at others as well,” he said.

The company also sees opportunities in the infrastructure services space, he added.
“On the digital and new-age technologies, we will continue to look at small capability-led acquisitions,” he said.

Vijayakumar, who took over as the chief on Friday, exuded confidence in the company’s ability to get business at a time when its larger rivals, TCS and Infosys have given a cautious outlook for demand in IT services.

The companies cited macroeconomic challenges softness in client spending, especially in sectors like banking and financial services and slower ramp-ups as reasons for the muted outlook.

Infosys reduced its yearly guidance for the second time this year and said it now expects revenue to grow by 8-9 per cent on constant currency basis. HCL, on the other hand, has maintained its outlook for 2016-17 at 12-14% on constant currency basis.

However, this does not include the earnings from the two acquisitions. If the deals close within this fiscal, the growth could be higher than the stated outlook.

Vijayakumar said that while spending on traditional IT services may be affected, clients are also enhancing their “discretionary” budgets on disruptive technologies to boost business and stay ahead of competitors.

“If you kind of focus on that (discretionary spending), you will find the business going down... If you focus on disruptive technologies, I think there is enough business. I think that’s where you will see little bit of duality in the conversations with some of the other providers and us,” he said.

HCL Technologies is “very sharply focussed” on how it can address this “disruptive transformation spend”, he added.

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(Published 23 October 2016, 16:32 IST)

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