HCL bullish on retail growth

HCL Technologies, the New Delhi-based information technology company, is increasing its focus on the retail segment.

The company will be taking its total outsourcing offering to the retailers in the small and medium enterprise (SME)category, whereas for the large retailers, it will pitch the best-of-the-breed target solutions to cater to specific problems.

While the company has been working with global retail chains, it is also increasing its focus in the domestic retail market. The company is also in the process of working with its technology partners to create models such as pay-per-use or software-as-a-service for the SME segment.

Under its outsourcing platform, the company will provide application development and maintenance (ADM), business process outsourcing and infrastructure management.

Sidhartha Chowdhury, associate vice-president, HCL Technologies, said,"We see the outsourcing model really picking up among the retail players. We are in talks with almost all the top players in the Indian retail segment," said Chowdhury.

The company has close to 45 customers (both locally and globally) in the retail segment. Chowdhary said that the typical size of a large retail deal will be in the range of $200-250 million for a period of 3-4 years. Whereas, an SME outsourcing deal will be around $4-5 million a year.

Chowdhary points out that the domestic retail growth story and IT adoption is an interesting study. While the large retailers are looking at solutions for particular problems such as auto replenishment of goods, space and floor management solutions, it is the SMEs who are looking for complete automation. However, he believes that cost is still a concern among the small players.

Currently, retail contribution to the company's revenues is close to 15 per cent. For 2006-07, the segment generated business worth $150 million (around Rs 650 crore).

"The retail segment has been growing at a compound annual growth rate (CAGR) of 60 per cent and we want to continue the growth," said Chowdhury. HCL Technology has tie-ups with retail solution providers such as JDA, Infor, SAP and others.

The growth in the retail segment can be gauged from the fact that Chowdhury in the last two days of India Retail Forum, has received queries from 20-25 potential customers.

"Earlier we had to approach a retailer and educate them about the use of technology, but now queries are coming from the customers side," said Chowdhury.

According to Springboard Research, IT revenues from the retail segment was at $253 million (Rs 1,037 crore) in 2006, and is expected to grow to $1.07 billion (over Rs 4,300 crore) by 2010, with a CAGR of 44 per cent.

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Retail contributes close to 15 per cent to the company's revenues. For the fiscal 2006-07, this segment generated business worth $160 million (around Rs 650 crore)

The segment has been expanding at a compound annual growth rate of 60 per cent

The typical deal size of a large retail deal is in the range of $200-250 million over the next 3-4 years