HCL Tech hopes to resolve dispute with MillerCoors over $100 mn lawsuit

Firm says no material impact on March quarter results, asserts good business ties with US brewer

India’s fourth largest technology services firm HCL Technologies Ltd says it is in talks to resolve a dispute with MillerCoors LLC, its US client that has filed a $100 million lawsuit against the Indian company over a breach of contract in a project to implement business software SAP.

HCL says the lawsuit would not have any material impact on the company’s results for the quarter to March and the Chicago-based MillerCoors continues to be its client.

“This specific project started in December 2013 and ended in June 2016. The Company continues to have good business relationship with MillerCoors. We have other ongoing projects with MillerCoors running smoothly,” HCL said in regulatory filings on Saturday. “We are in discussions with MillerCoors to resolve this matter amicably. “

The brewer has filed a lawsuit in the United States District Court for the Northern District of Illinois against HCL and its US unit HCL America Inc.

The brewer, which hired HCL for an SAP upgrade contract to drive innovation and efficiencies across different breweries, has alleged that the Indian IT services failed to meet project deadlines despite having sufficient number of people. The lawsuit was filed in a federal court in Illinois on March 13 and named HCL Technologies and HCL America.

HCL Technologies was hired for a typical enterprise resource planning implementation in order adopt a set of innovative business processes and implement them in an SAP software solution.

While the contract was initially worth nearly $53 million, later $9.6 million was added to adjust the time frames, Computerworld magazine reported quoting the lawsuit. For such software package implementation contracts, businesses pay the IT services firms based on per man-hour used.

“HCL was unable to adequately staff the project and maintain the project schedule." The lawsuit also alleged defects in the software. MillerCoors in June sent HCL a notice of termination and plans to secure a new supplier, the Computerworld report noted.

Industry experts believe delay happens in such technology transformation projects due to multiple reasons be it lack of right skills or management’s acceptance of new processes on the client side. In such contracts, implementation happens across multiple business units and often different geographies.     

“Large transformation deals require complex changes to business processes, organization structure and roles and integration of multiple technologies. A strong business-led approach to such programmes combined with readiness to change and cross stakeholder alignment is needed to make transformation programmes successful. It is also imperative that the right skill level and mix are deployed from both the client organization and service provider side to ensure success,” said Malay Shah, Senior Director, High Tech sector for Alvarez & Marsal India, a consulting firm and business turnaround specialist.