Group 3 Division H

ROHIT ZENDE
SAKSHI WAIGAONKAR
AISHWARYA DESHMUKH
ANURAG SAMANTA
VIJAYSHANKAR RAMAN
NISARG MAHEDHWRI
AGENDA

1 2 3 4 5 6 7 8

Industry Business Competitive

Overview Description Positioning
 Industry Overview

Industry Segmentation Revenue share by Verticals (%) Revenue share by Geography

55% 70%
Project 62% 62% 62%
Oriented 45% 60%

35% 50%
IT Services Outsourcing
40%
25% 28% 28% 28%
Support & 30%
Training 15%
20%
5% 10% 10% 10%
10%
Horizontal
Specific 0%
Service BPM
Vertical BFSI Hi-Tech/Telecom
Specific Manufacturing Emerging* US Europe ROW
Source-IBEF Source-IBEF

ER&D

Engineering Embedded
Exports & Domestic Trend($Bn) Composition of Exports ($Bn)
R&D Software
140 126
IT-BPM 117
PES (Incl. 120 107.8 28.3
System OSDP) 97.8 25
Software 100 87.3 22.4
20 28.4
Software 80 17.7
24.4
26
Products 14.1 22.5
Enterprise 13 20.4
60 11.4 17.8
Application 8.8 10 14.1
15.9
40
21 21.7 24 25 11.7 66 69.3
19 9.9
43.9 49.2 55.3 61
Vertical 20 33.5 39.9
25.8 25.8
Application
0
eCommerce

Hardware
Exports Domestic Software Products, Engineering Services, R&D ITeS-BPO IT Service
HCL’s Presence
Source-Nasscom Source-Nasscom Source-Nasscom
*Emerging - Retail, Utilities, Construction, Healthcare, Services, Transportation
 Industry Overview

IT and ITES Industry Exports & Domestic Trend($Bn) Composition of Exports ($Bn)

Business
IT services Process
Management

Software
product and
Hardware
engineering
service

The industry revenue for FY 2019 was

around 181 U.S billion dollars (144
from export and 37 from domestic)
and accounts for around 8%of GDP.
HCL’s Presence
Trends and Growth Drivers
Structural Shift in Demand Recent Trends

• Rise of on-shoring of work

Fall in automation costs and rise of digital technologies has led to higher onshoring in the Industry.
18% Onshore revenue of Indian IT firms has grown from 48% in FY 12 to 59% in FY 18
38%
62% • Growth in non-linear models
82%
Related to growth in employees - Movement from Linear model(rising headcounts to increase
revenue) to non-linear ones
• Changing business dynamics
FY19 FY25E
Shift from few large deals to multiple small size ones
Source-Nasscom Source-Bloomberg

Growth Drivers

Structural Shift Established Infrastructure Cheap & Skilled Labor Disruptive Innovation Adoption of GTM Strategy
Pick up in Global Demand

• M&As for capability

• Significant cost • Cloud computing, social expansion, ecosystem
• Robust infrastructure- media and data
• Peaking developed • Transition from Over 1,000 global advantage for India partnerships with
traditional to digital (5-6x w.r.t. US) analytics, are disrupting startups, academia,
market economic cycle delivery centers in about the way businesses are
especially in US and services 80 countries set up by • Presence of skilled & peers for keeping
• Born Digital Business English Speaking conducted customer eccentricity
European Union Indian Companies
• Paradigm shift from workforce at the center of
BPO to BPM business
 Business Description
About the Company Primary Arms Powerful Brand Image

• HCL is a leading global technology and IT
firm. It has two companies listed in India,
HCL Technologies and HCL Infosystems.
• Range of offerings include product
engineering, technology and application
services, BPO, infrastructure services, IT
& hardware, systems integration, and the
distribution of technology and telecom
products.
• The HCL team comprises over 30,000
professionals of diverse nationalities,
operating out of 15 countries.
• HCL Technologies is a next-generation global
technology company that helps enterprises
reimagine their businesses for the digital age.
• HCL Infosystems Ltd. is a premier Distribution,
IT Solutions and Services Company, enabling
organizations attain and sustain competitive
advantage by leveraging Information and
Communication Technologies.
• HCL Healthcare, a delivery arm of HCL
Groups, is a nationwide network of multi-
specialty clinics with a key focus on corporate
health.
• HCL has a strong brand image in India and
abroad. It has invested in building a brand
HCL
recall in the minds of its customers through
advertising and quality products.NSE
• HCL brand image coupled with its strong
customer relationship and cutting-edge
solutions have helped the company in
creating value for its clients.
• It has collaborated with many companies
whose products and solutions are in line
with its business segments, such as Nokia
and Brand image was leveraged by it to win
some big contracts in the UK market.

Financial Performance Revenue % by Geography Stock movement (5 years)

42669
48641 51786
9% 225

37841 200
32821
175
6528 7342 7469 8606 8722 29% 150

63% 125
FY 14 FY 15 FY 16 FY 17 FY 18
Revenue PAT 100
US Europe ROW
In Cr Rs. HCLT IN Equity NIFTY Index
Source-Annual Reports Source-Annual Report Source-Bloomberg
 Competitive Positioning
PESTEL
PESTEL

Political: Economic: Social: Technological: Environmental: Legal:

Increased Protectionism Favorable Forex Language Barrier, Changing business model & Reduction in Carbon Employment Laws,
from US and Europe environment would lead to Cheap Labor, mobile technology, government footprint and energy IT Act, e-
affordable & Increased Education level spending utilization governance
adoption
Competitive Positioning
Porter’s 5 forces
High - Since similar offering, niche players
coming up, margins moderating since last 3-
4 years, industry growth stable

Low – Traditional services being replaced by Medium- Since low customer consolidation,
digital; however, we also offer digital solutions Availability Bargaining already reasonable costs v/s benefits to be
of power of derived
substitutes customers
Existing
Competition Low- Employee benefits forms the largest cost
Medium- Customers do not prefer to switch
due to high involvement
Threat of Bargaining base; however due to automation and
new power of oversupply of talent the bargaining power is low
entrants suppliers
Strategy
1 Improvement in US and EU outlook
• According to IMF US is expected to grow at 2.7% and EU is expected to
grow at 2.1% in FY19
• Combined market share of US and EU is 90% as a result of which an
increase in growth will have a direct impact on the increase in demand
3 IP Partnership and Alliances
• 15-year partnership with IBM for making industry-leading Experience
enhanced,Automation and DevOps solutions
• Partnership with Siemens on Industry 4.0 solutions and Mindsphere, a cloud–
based open IoT OS, comprising technology, application development,
connectivity solutions, system integration and go–to–market strategy
5 Better ROE and Revenue/Employee
• Ability of the management to generate industry leading ROE
• Better ability to utilize the employee provides confidence that it will be
able to make optimum utilization of resources
2 Niche Acquisitions
• Going to acquire select IBM software products for $1.8b to enhance Mode 3
offerings
• Acquired Actian Corp for $330mn to enhance data management products and
platforms
• Acquired Geometric for $190mn to increase Capabilities in PLM consulting,
mechanical and manufacturing engineering
4 Increase in adoption of technology
• Changing technology narrative – move towards digital
• Global technology spends to increase at over 8.5% in 2018
• Digital revenue share to double by 2025 to reach ~$325 Billion (Nasscom)
6 DRYiCE Platform
• DRYiCE-comprehensive Autonomics & Orchestration platform, is the core
force behind HCL’s Mode 1 and 2 offerings
• Its modules has usage across infrastructure, applications, business processes
and engineering and enables delivering IT Automation, Cloud & DevOps
Automation, SDLC / PDLC Automation and Robotic Process Automation
Source-IMF, Bloomberg, Annual Reports , Investor Presentations
 2015 2016
Umbrella Strategy
Sr. Target Segment Country
Digitalization No.
1 Geometric Ltd PLM and United States
Global sourcing model
Engineering
services
Cloud migration

Business Strategy BEYONDigital

Transform their business models through Next-Gen ITO, IoT and
Digitalization
•Existing Customers
Focusing on strategic verticals and geographies to match Multi-Vendor
strategy of companies
•New Customers
Partnership
• HCL’s strategic partners include SAP, Oracle, IBM,
Partners HP, TIBCO and Microsoft, with whom HCL has
longstanding collaboration across technology areas.
• HCL is well integrated within the partner sales and
solutions ecosystem for joint account planning, co-
Integration development, and go to market efforts. HCL
conducts and participates in partner sales meets and
innovation and partner days on a regular basis.
BEYONDigital offered a blend of:
• Disruptive design thinking manifested through eight
global "Xperience Labs"
• HCL's strong digital "build" heritage, as the world's
largest outsourced engineering services provider
• Digital "run" capabilities drawing on HCL's
infrastructure services leadership
IoT Works
IoT WORKS by HCL, the IoT services unit of HCL
Technologies, allowed organizations to adopt IoT
functioning in their business context, creating entirely
new services that delivered an enhanced experience and10
measurable business outcomes.
 2017 2018
Sr. Target Segment Country Sr. Acquisition Segment Country
No. No.
1 Butler America Aerospace Engineering & United States 1 Security AppScan Test United States
Design management
tools
2 Urban Fulfilment Services, Business United States
LLC Process 2 Unica (on-premise) Marketing United States
Outsourcing automation
3 ETL Factory Limited (Data Automation United Kingdom Rapid
wave) 3 Notes & Domino application United States
• 2017 witnessed digital age rapidly transformed development
technology paradigms • Data security:
• The industry landscape was moving towards the fourth HCL improved its Cyber / Information security posture with emphasis on
industrial revolution protecting data.
• Digital transformation:
• Industries undergoing disruptions fuelled by HCL assisted global enterprises re-imagine and transform business
Automation, Cloud, Artificial Intelligence, IoT and through Digital technology transformation and provided an integrated
Digitalization portfolio of services underlined by its Mode 1–2–3 growth strategy.
• Customer Service:
• HCL is aiming to become the pioneer of next HCL service delivery methodology is flexible to support virtually co-
generation technology by implementing – located teams who collaborate on Agile sprint cycles.
• Mode 1- Core Services • On Premise Solutions:
• Mode 2- Next Generation Services HCL started working proactively with customers to help to migrate their
11

on-premise platforms to the cloud to address the differentiated

• Mode 3- Products and Platforms technology requirements.
 2019
Sr. Target Segment Country
No.
1 H&D International Group IT and Germany
engineering
service provider
2 IBM Select products AI/ ML United States of
America

• Exponential advances across technologies like cloud

computing, artificial intelligence (AI), machine
learning, robotics, IoT, augmented and virtual reality
continue to transform every aspect of human life.
• HCL is accelerating its evolution with the adoption of a
unique road map for growth – the Mode 1-2-3 strategy
• Mode 1: Core Services
Mode 2: Next Generation Services
Mode 3: Products and Platforms

12
 Business Strategy: Mode 1-2-3

Mode 1: Strengthening the core Mode 2: Next Generation Services Mode 3: Products and Platforms Revenue Mix
• Gaining market share in • Consists of new-age • Leveraging expertise in Mode Mode Mode
Mix%
existing products and technologies like Digital building software IP for high 1 2 3
services & Analytics, IOT, cloud automation and cloud
native and cyber security platforms FY16 84% 12% 4%
• Consists of majorly FY17 81% 13% 6%
applications, infrastructure • Outcome oriented and • In FY 2018, 75 patents filed
and business services, experience centric offerings for IoT, machine learning, FY18 77% 15% 9%
engineering and R&D analytics, wireless device.
services • Maintaining key partnership FY17
8% 16% 80%
with players like Azure, • DRYiCE Autonomics and Growth 13
• Changing grounds from cost Google, AWS and Pivotal Orchestration a key offering
01

02

03
optimization to technology- cloud Foundry good enabler leverage power of AI to FY18
6% 29% 68%
led Digital Transformation for providing best available transform entire IT Growth
service to the customers landscapes