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INTRODUCTION

HCL Technologies Ltd. (HCL), a leading global IT and engineering services provider, today announced that it has been named as a leader among North American SOA Systems Integrators by Forrester Research. According to the May 2009 report, The Forrester Wave: North American SOA Systems Integrators, Q2 2009, a 62-criteria evaluation of North American service-oriented architecture (SOA) systems integrators, authored by Senior Analyst Tim Sheedy, HCL is making great strides within its client base in the U.S. in delivering wellthought-out SOA-based solutions. HCL delivers business transformation to its clients globally, offering an integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and research and development services and business process outsourcing. In particular, HCL has seen great growth in its North American client base in 2009, including 167 SOA projects in 2008. HCL has already announced several multi-million, multi-year client engagements in 2009, including agreements with Xerox, Readers Digest and Nokia. Cumulatively, these three deals represent $550 million (U.S.) in revenue for HCL. Forrester acknowledged that this report was completed prior to the December 2008 announcement by HCL of its 440m acquisition of UK-based SAP implementation company AXON. Forrester noted that any increase in HCLs scale of operations, geographical reach and vertical expertise as a result of the acquisition has not been taken into consideration in our evaluation. The merger of AXON and HCL SAP practices has already resulted in great opportunities to bring new capabilities to the market with a truly global delivery model providing the full lifecycle suite of services. This merger further strengthens HCLs SOA systems integration capabilities, increasing its time to value and global reach. Forresters rating reflects our expanding position as a leader among North American SOA systems integrators, said Shami Khorana, president, HCL America. During the past several years, we have aggressively expanded the depth and breadth of our service offerings, including those we can now offer through HCL AXON. These service offerings are backed by proven methodologies which help our customers enhance business agility, reduce costs, leverage and reuse current IT investments and focus on IT innovation.

According to the Forrester report, HCL is making great strides within its client base in the US in delivering well-thought-out SOA-based solutions. Additionally Forrester noted, [HCL] is developing a good set of SOA-based software components for a number of industries to accelerate the implementation of solutions. EXECUTIVE SUMMARY This study was taken up for analyzing HCL., which was started by Steve Jobs and Steve Wozniac on April st 1976. Since then the company has gone on to become a $32.48 billion enterprise and is ranked 71st in Fortune 500, as in 2008. OBJECTIVES OF OUR STUDY To present a detailed study of product range of HCL. Discuss companys vision & mission, Core competency, SWOT analysis, PESTanalysis, environmental scanning. Comparative analysis with HCL Infosystems of India, which again wasfounded by Shiv Nadar in 1976. .HCL was taken up for comparison because its a growing company and has asimilar product portfolio as of Apple. HCL started in 1976, similar to Apple andtherefore gives us ample comparison data. HCL has a good domestic presencein India while Apple has a strong global presence and that is why we couldeasily compare it through tools like SWOT, PEST, etc

Vision Statement:
"To be the technology partner of choice for forward looking customers by collaboratively transforming technology into business advantage."

Mission Statement:
We will be the employer of choice and the partner of choice by focusing on our stated values of Employee First, Trust, Transparency, Flexibility and Value Centricity."

Environmental Scanning

External Environment-PEST Analysis:


PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.

It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro environmental factors that the company has to take into consideration.

It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

POLITICAL

ECONOMICAL

SOCIAL
Factors of pest analysis
Political factors

TECHNOLOGI CAL

Political factors are how and to what degree a government intervenes in the economy.

Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability.
Political factors may also include goods and services which the government wants to

provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bads).
Furthermore, governments have great influence on the health, education, and

infrastructure of a nation. Economic factors


Economic factors include economic growth, interest rates, exchange rates and the

inflation rate.
These factors have major impacts on how businesses operate and make decisions. For

example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy.

Social factors
Social factors include the cultural aspects and include health consciousness, population

growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and lesswilling workforce (thus increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers. Technological factors
Technological factors include technological aspects such as R&D activity, automation,

technology incentives and the rate of technological change.


They can determine barriers to entry, minimum efficient production level and influence

outsourcing decisions.
Furthermore, technological shifts can affect costs, quality, and lead to innovation

Environmental factors
Environmental factors include ecological and environmental aspects such as weather,

climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones. Legal factors
Legal factors include discrimination law, consumer law, antitrust law, employment law,

and health and safety law.


These factors can affect how a company operates, its costs, and the demand for its

products.

Operational Review

Offshore centric business steady - contributed 71% to revenues.Well balanced client concentration. Top 5, Top 10 and Top 20 customer contributions to revenues at 25 %, 38 % and 50 % respectively. Revenue from Europe continued to grow ; up to 11% in Q3. 21 new customers added during this quarter Some of the prestigious new clients acquired during the quarter include United

Technologies Corporation, Parker Hannifin, Visteon and Metapack amongst others Key Developments in Q3 2001-02: Non-linear growth strategy continued to yield results, with fresh acquisitions and alliances. Joint venture formed with Answerthink Inc., leading U.S.-based provider of technology-enabled business transformation solutions. Strengthened presence in the CRM domain, by entering into a strategic alliance with Zamba Solutions, a US based CRM solutions consulting and systems integration company. In continuation of strategy to forge long-term alliances with customers, 2 new Offshore Development Centers (ODC) set up during the quarter. Renewed thrust on 9 high-potential verticals spanning Automotive, Aerospace, Petrochemicals,

Pharmaceuticals,

Semiconductor,

Manufacturing,

Retail,

Banking, Insurance and Funds Management 311 professionals added to company rolls this quarter.

PORTERs FIVE FORCE MODEL OF COMPETITION


Threat of new entrant

Sellers bargaining power

Rivalry among firms

Buyers bargaining power

Threat of substitute DIAMOND MODELLING OF HCL Acer

Lenovo

HCL

Compaq

FUJITSU DELL

Sony

1.Threat of new Entrant:


Does not require very high investment- New Entrant Fujitsu-DELL headquarterd in TOKYO specializing in semiconductors, computers. Tough competition- DELL-MNC based in round rocks sells PCs, servers, data storage devices, softwares.

2. Sellers bargaining power


Supplier power- supplies products have high switching costs.

Supplier industry is denominated by a few firms- unorganized assemblers.

3. Buyers bargaining power


Bargaining power is high- Mi Leap branded laptops and notebooks under the new ME brand. Buyers expectation is high- HCL laptop Z39, powerful configuration along with excellen features like energy savers. Force high quality Switching cost.

4. Threat from substitutes


Technology changes- smart phone, cost, portable, presentation, internet surfing. Substitute can replace the product.

HCL
Executive Summary
The highlights of the financial performance for Q3 ended March 31, 2002 compared with the corresponding quarter of the previous year are: Gross revenue increased by 13 % to aggregate Rs 4.1 bn. Net income (after non cash charge) grew by 2% to reach Rs 1.3 bn. Acquisitions and Alliances contributed around 13 % to total revenues during the quarter.

2 new alliances, in pursuance of the non-linear growth strategy, to strengthen offerings in the Applications space.

BUSINESS STRATEGIES
HCL Tech continued its strategic focus on key operating strategies, and simultaneously fine-tuned its offerings and services for enhanced effectiveness in the emerging global IT environment. I. EMPHASIS ON QUALITY REVENUE MIX HCL Tech recorded an increase of 13% in gross revenues for Q3 to reach Rs 4.1 bn and continues to enhance its services repertoire for value-added offerings. The company has achieved a higher quality revenue mix using a de-risked business model. With technology development at the core of HCL Techs business, we expanded our portfolio and enhanced focus on application development, domain expertise and IT enabled services. The contribution of end user applications increased significantly to 48% of total revenues, from 38% in Q3 of last year. Our client relationships remained broad based with the Top 5, Top 10 and Top 20 clients contributing 25%, 38% and 50% to revenues respectively.
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Offshore centric revenues recorded 23% growth over Q3 of last year to cross Rs 2.9 bn, accounting for 71% of total revenues. HCL Tech continued to supplement its client base with several globally renowned names. This quarter the company added 21 new clients including United Technologies Corporation, Parker Hannifin, Visteon and Metapack amongst others. HCL Tech added two new client dedicated ODCs during the quarter, taking the total number of ODCs to 47.

II. EMPHASIS ON EARNINGS LED GROWTH 1. Quality revenue mix together with an emphasis on increasing exposure in emerging IT service segments, led to improved earnings growth in JFM02 as compared to JFM01. Gross revenue increased 13% to reach Rs 4.1 bn. Net income (after non cash charge) up by 2% to reach Rs 1.3 bn.

2. Within the new thrust areas of application development, domain expertise and IT enabled

services, focus continued on quality earnings. Accordingly initiatives were taken to strengthen HCL Techs services portfolio around high-potential industry verticals based on the following factors - domain attractiveness as a function of IT services spend, predictability and maturity of outsourcing.

III. FOCUS ON EMPLOYEE DEVELOPMENT AND CONTRIBUTION HCL Tech places immense focus on Human Resources and recognizes it as the cornerstone of its long-term success. The company has consciously evolved unique strategies to increase employee value-add and is today acknowledged in the industry, as an Employer of choice. Total manpower (including subsidiaries) as on March 31, 2002 stood at 5,945 with 4,850 software professionals. Totally 311 employees joined the company (including subsidiaries) in Q3 with 237 of these being software professionals
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Attrition levels in HCL Tech registered a drop to 5.5% in Q3.

IV. FRONT RUN EMERGING TECHNOLOGIES HCL Techs leadership in the technology space, continued to serve as a beachhead in making rapid gains in the high-growth Also, HCL Tech continued to provide high value-add solutions to clients in the emerging and high-growth technology areas of internet/ e- commerce, networking and embedded systems. Significant investments have been made in creating a vast offshore infrastructure to meet the growing demand for offshore services, which reflect a 23 % growth over the previous year. V. EMPHASIS ON NON LINEAR GROWTH MODEL

HCL Tech has successfully deployed the concept of multiple growth windows and the companys non-linear growth model, enables HCL Tech to supplement its organic growth through diverse avenues. Integration process of the acquisitions completed in the last six months is well underway and they contributed 13% to the total revenues in this quarter representing a growth of 20% on a quarter on quarter basis. The total manpower strength of the inorganic business as on 31st March 2002 was 632, up from 607 during the previous quarter.

FINANCIAL RESULTS
Third Quarter analysis based on the unaudited Financial Results for Q3-2001- 02 Income statement as per US GAAP (Amount in Rs. Mn.) Comparison over preceding quarter and same quarter of previous year Particulars Gross Revenues Direct Costs Gross Profits SG&A Foreign Exchange Gains ( loss) EBDITA Depreciation & Amortisation EBIT Other income, net EBT Provision for income taxes EAT Share from equity investment Share of income(loss) of minority shareholders Net Income Stock based sales incentive (Non Cash) HCL Technologies Ltd. JFM'01 OND'01 JFM'02 Growth YOY Growth QOQ 3,632 1,843 1,789 666 2 1,125 110 1,015 218 1,233 89 1,144 131 1,275 (15) 4,014 2,185 1,829 764 9 1,074 143 931 304 1,235 38 1,197 88 27 1,258 26 4,090 2,308 1,782 738 13 1,057 153 904 413 1,317 61 1,256 94 32 1,318 6 3% 5% 10% 5% 7% 7% -11% -3% -6% -2% 0% -3% 13% 2%

Net Income after non cash charge

1,290

1,232

1,312

2%

6%

Key Ratios Gross margin/Gross Revenue Opex/Gross Revenue EBDITA/Gross Revenue Net Income/Gross Revenue

HCL Technologies Ltd. JFM'01 OND'01 JFM'02 49% 18% 31% 36% 46% 19% 27% 31% 44% 18% 26% 32%

SWOT ANALYSIS HCL TECHNOLOGIES 1. STRENGTHS


Wide range of products and services like BPOs, software services, infrastructure management which cater into both large and medium size company Global Coverage in countries like U.S, Europe, Japan etc Strong employees base of upto 50000Pax. Support sales activities by understanding the customer business better. Keep up to date on what competition is doing. Its revenue has increased from 60.7bn in 2007 from 114bnin2009 which shows its increasing trend.

2 .WEAKNESS

One of the key weaknesses of HCL is that it has lost projects in continuation like recently BFCI cut projects. HCL has always a weakness in TIER1 sectors. Total asset turnover is one of the weaknesses of HCL as they has always failed to materialize its assets in right direction. Lack of innovation and distribution network especially in case of laptops has reflected HCLs weakness.

3. OPPORTUNITIES

Acquisitions:-HCL has already done 3 major acquisitions likeLiberta. This enables them to expand and create opportunity for them to wide there spectrum. Key opportunities lies in the countries like Eastern Europe andAPAC(AsiaPacific Region). Mid-Market segment is the opportunity area as againstfortune200 companies. Opportunity of doing better on return on equity from 21.42% by beating satyam(26.08%) Increasing its market share from 9.8% vs 19.7%.

4. THREATS

One of key threat for HCL and the industry as a whole is the ban of outsourcing from India due to new regulations from U.S Dip in quarterly Sales by 5% can lead to loss of market shareand product depreciation. Small Players and manufactures are trying to enter into thesegment where they can provide much cheaper products thenHCL which will be a rising competition for HCl to stand.

PEST ANALYSIS IN IT INDUSTRY


1. POLITICAL
Tax rates in India for the hardware sector is 20%-30% plus which creates obvious possibilities for the further reform and faster growth. 10Year Special Economic Zones programs and tariffs change to promote the hardware production. 26 new projects as a part of a national E-Government Plan. Tax initiative by government to ask state government to fix VAT at 4% in the hope of attracting investors.

Manufacturing Associations of IT(MAIT) anElectronic Industry Association of India(ELSINA) are also pressing for reduction in land acquisitionsrights by stamp duty exemptions.

2. ECONOMICAL

In last 18months there is growth in sales in PCs andcomputer hardware, mainly due to lower prices.

But as per the trade cycle rotation there will be a possible slowdown in demand. IT plays a important role in bringing 50%of ruralhousehold to the banking innovation. IBM, Dell, Lenovo has announced new investmentto expand capacity Compound Annual Growth Rate is 15% between2005-2010. Due to the depreciation of the Rupee in comparison toDollar the software and outsourcing has suffered negativelydue poor exchange rate .

Industry contributes upto 7% in GDP.

3. SOCIAL
Only 1.3% of people in India own a computer. Age Distribution:- 45% of the population is under 25. Regional imbalance and low incomes. Inward Investment can lead to better job opportunities. Still Abroad is the fascination among the IT professionals to work. IBM, Wipro and Infosys recruit 15000-20000graduates each year. Business practices varies region wise

4. TECHNOLOGICAL

Plans by AMD to set up the countrys 1st chip fabrication(an investment upto US$3bn) to stimulate local production and lower prices.

Multimedia features and Entertainment to bring Bollywood among the masses. Lenovo to build in TV tuner cards capable of connecting to aTV antenna.

During the year Satyam entered into an agreement with US based G-LOG, to offer a supply chain management and supply chain execution solutions to its customer

CASE STUDY
Blue Ocean Strategy (BOS) HCL Technologies India's fourth largest IT Services Company -Performance 2005-2010 2005 was a year of make over for HCL as the baton passed from founder Shiv Nadar to Vineet Nayar as President. Vineet Nayar adopted the Blue Ocean Strategy immediately and his four pronged strategy focused on service innovation, pricing innovation, creation of new markets and technology disruption. Also he adopted the policy of Employee First philosophy and full service co sourcing model. The company saw revenue YoY growth of 26 %( 6200Cr) in 200708, 41% (8764Cr) in 2008-09, and 25% (10983Cr) in 2009-10 under the leadership of Vineet Nayar as CEO. It has been an up and down performance during the time where financial crisis and recession played a spoil sport. Company still sticks to the Blue Ocean Strategy. Initial part of 2007 most of the Indian IT vendors suffered form appreciating rupee and by mid year the financial crisis started unravelling and by end of year it was a big mess which led to bankruptcy of Lehman Brothers and many bank failures across the globe. Key clients of HCL in BFSI cut budgets drastically. 2008 was year when HCL tried to accelerate to growth with acquisitions of Liberata (provides platform based BPO offering in the insurance space) and Control Point Systems (another platform based offering). HCL acquired Capitalstream, a US BFSI product company for US$40 million in February 2008.HCL also acquired the UK based AXON Group for US$658 million in December 2008. HCL also raised $800 million, much of it devoted to the takeover of Axon, the SAP consulting firm. 2009 was year when recession was at its peak when even the Indian IT vendors were handing over pink slips to the employees. HCLs Employee first and Customer Second Philosophy helped them to grow in recession and also gain the No.1 spot in employee satisfaction. HCL invited ideas from employees and launched the cost cutting exercises with the support of employees. Employees actively participated in increasing the revenues from existing

customers by their value addition and significant commitment. SAP offerings also played a crucial role during this time. The tough market scenario forced the company to move away from value to volume growth in 2009 and 2010. HCL signed many deals during this year and volumes came from BFSI and large transformational deals from telecom. Some of the key clients are Nokia, Vodafone, and Electrolux etc. HCL also tried to improve geographical mix as most of the revenue is coming from US (60%-65%) by focusing on Latin America, Middle East and Asia Pacific. European revenues increased on the back of SAP offerings. HCL also have seen margin declines as mainly due to investments of profits back into business primarily in people, sales and marketing. HCL is expecting the JFM and AMJ 2011 quarters to see significant improvement in margins as they invested in SG&A expenses. HCL is expecting its BPO unit to turn profits by March 2012 and the company is also looking at divesting some of the existing business by 2015. HCL is also focusing more on the emerging markets including India and Africa for future growth. Despite the fact the margins may be low in these markets it is expecting good volumes.