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Rachael Stormonth, Senior Vice President at BPS analyst house NelsonHall, discusses the latest business trends in F&A BPS with Professional Outsourcing magazine, and describes how some companies are using it as a platform for business transformation.
published on Jan 20, 2025
This NelsonHall key vendor assessment consists of 70 pages and provides a comprehensive and objective analysis of HCLTech's IT and business process services offerings, capabilities, and market and financial strengths
NelsonHall's Key Vendor Assessment on HCLTech is a comprehensive assessment of HCLTech's offerings and capabilities, designed for:
The report provides a comprehensive and objective analysis of HCLTech’s offerings, capabilities, and market and financial strengths, including:
HCLTech articulates its strategy around the following principles:
Portfolio Management
HCLTech’s portfolio management approach unveiled in 2016 was based on model 1 (mature IT services, ER&D, and BPS), 2 (digital, cloud, and analytics), and 3 (software products and IP partnerships). The approach is now phased out, and HCLTech does not break down its services mix anymore. However, it does emphasize that Digital (which also includes cloud and security) represented 37.3% of revenues in FY24, a significant progression over the years.
Large Deals
HCLTech’s growth has relied on an emphasis on big deal wins, addressing significant deals at renewal time and targeting IBM/Kyndryl, DXC, Atos, Fujitsu, and local champions (such as Tietoevery and NNIT). The company estimates that big deals (above $50m) bring 2 to 3 pts of additional growth each year. HCLTech has been more successful with big deals in IT infrastructure services and ERS and selectively in BPS. An area of improvement remains application services big deals, where the company now offers bundled services across its portfolio. Examples of mega-deals wins include Verizon Business ($2.1bn), Xerox (~$1.3bn), Nokia (~$1bn), Ericsson (~$600m), and Broadcom. The company complements such mega-deals with large contracts whose TCV ranges from $200m to $300m.
Account Mining and Cross-Selling
Like most of its peers, HCLTech focuses on Global 2,000 enterprises in its Services business (i.e., all units apart from HCLSoftware). The number of:
Delivery Network Competitiveness
Since the pandemic, HCLTech has aimed to reshape its pyramid age with a larger base. To do so, the company has favored hiring freshers, reaching ~20k during the peak of the Digital Catch-Up in FY22. The company has continued this effort. Nevertheless, hiring freshers has a cost: a short-term impact on its operations, as the company needs to train them for up to two quarters before they are billable.
Margin Improvement
HCLTech has for several years been targeting an EBIT margin of 19-20%, a range the company has not achieved since FY20 (19.6%). This has been a disappointment given its ambition to grow its EBIT by 50% when it announced the IBM deal in late 2018. However, after the acquisition, during the pandemic, the company suffered from dropping revenues and extra costs in its digital portfolio. During the Digital Catch-Up, it suffered from increasing personnel costs arising from attrition and country and portfolio investments.
Geographical Expansion
HCLTech articulates its target countries in three buckets:
