In 2008, HCL Technologies acquired UK-based consulting firm Axon, in what was the largest acquisition by an Indian IT company. HCL Axon President Steve Cardell, who was earlier the Axon CEO before the deal, talks to Piyali Mandal about how the move paid off for HCL, with the business line now contributing about 22 per cent to HCL’s overall revenue and helping it to bag more deals. Excerpts:
Now that integration issues are behind you, how is HCL Axon doing?
The Enterprise Application Services (EAS) line of business is now contributing 22 per cent towards HCL’s total revenue. If you look at the last four quarters, we have pretty much grown at the company average. We have grown at 7.6 per cent in the last four quarters. The company has grown at 7.5 per cent. So, we are right in the middle of the road in terms of growth of the EAS which is essentially SAP, Oracle, Microsoft and consulting services. If you compare that to how many of our competitors are doing, you will see that we are registering strong growth in EAS.
What are the reasons for such robust growth?
HCL services offerings have broadened because of the acquisition of Axon. Compared to TCS and Infosys our enterprise service offerings are much broader.
Secondly, we are closely aligned with the software vendors. We have very strong partnership with Oracle, SAP and Microsoft.
Thirdly, we have taken an industry focused approach. Our offerings are not generic, they are specific to different target markets which are particularly utilities, local government, life sciences and consumer retail.
Lastly, from a geography point of view, rest of the world has been very strong for EAS. That’s partly because we have acquired new markets for HCL. We are going into new markets and generating growth.
So, you are saying that cross selling is helping both the entities enter newer geographies?
Yes. Essentially, where HCL has an existing infrastructure, we are putting in solutions. So we are using the market connection and the customer base that HCL has got to cross sell EAS services, particularly in places like South Africa, China, Japan, South America and the West Asia.
After the unrest in West Asia, do you think it's still a good destination for business?
Yes. Particularly UAE, Bahrain and Qatar are still good places to look for business. We are already there and looking at expanding.
How are the other markets doing?
We are seeing robust growth in Europe. It remains stronger for us than the US. Rest of the world is running at twice the pace as most matured geographies. Actually, if you look at the macro conditions you would imagine that Europe would be a bad market for EAS. Austerity measures are absolutely biting now in Europe. Their economy has been struggling— Ireland, Spain,
Portugal, Greece are getting worse, not better. And the IMF has downgraded its growth forecast for Euro zone.
However, despite that both government department and private companies are looking at how to be more efficient. So particularly in continental Europe, France and Italy, which has never been that open to the outsourcing model, have now started to look at that as an option.
What kind of growth do you expect from continental Europe?
The growth in Continental Europe will continue. It is expected to grow at around 7 per cent.
Will you look at further acquisitions in Continental Europe and elsewhere?
Yes, we are always on a look out. But, we will not acquire for scale. We will look at acquisitions to add capabilities.
