HCL continues to have a good run in Europe

Despite the euro zone crisis, HCL Technologies, India’s fourth-largest information technology services company, has seen a huge success in Europe in the past year in clinching deals. Watchers say the share of Europe in its overall revenue in 2011 improved from the previous year by five percentage points to 27 per cent.

Though HCL entered later than its Indian rivals, it has logged the highest growth in the region over the past three years. The European business grew 22 per cent through 2008-11, compared to Wipro’s 13 per cent, Tata Consultancy Services’ 11 per cent and Infosys’ five per cent in the same period, show industry estimates.

According to Ankita Somani, research analyst with Angel Broking,“Of the Indian Tier-I vendors, HCL gets its highest revenue (as a percentage of the total) from the European region. Though a late entrant, it enjoys an edge over competitors due to its local presence, through the acquisition of Axon in 2008.”

In the past three months, the company has signed two major deals in Europe, one of these being the biggest outsourcing one in the region over the past year.

“HCL has seen continued traction in Europe, with many first-time outsourcers,” said Avinash Singh, senior vice-president, IT, at Enam Securities, in a recent report. “We expect the new deal wins to be consistently led by, among other things, strong presence in continental Europe, where the deal pipeline appears to be picking up.”

In the calendar year 2011, revenue from the European region grew 15.5 per cent for TCS over 2010, while it was 13.4 per cent for Infosys and 20 per cent for Wipro. HCL reported 23.9 per cent growth in Europe in 2011 over 2010.

Strong local presence
“When I moved to Europe 12 years ago, the total business was just $6 million and we had only 100 people working out of there. Now, we get $1 billion revenue from Europe, with 4,500 people working for us out of there,” said Rajeev Sawhney, president and in charge of Europe for HCL.

One of the biggest differentiators in Europe was its acquisition of UK-based IT services and consulting company Axon. HCL acquired it in 2008 for £440 mn, helping it attract more business. “We operate through our local arms in Europe. Over the decade, we have invested a lot there,” said Sawhney.

In 2009, when it won the Nokia deal, it established a 100-seat delivery centre in Helsinki. Earlier this year, its deal with Statoil saw creation of a Global Excellence Centre at Stavanger, Norway. Its deal with UPM last month involved the creation of a data centre in Espoo and the transfer of 250 employees.

“Europe is a closed culture. It has now opened up to the concept of outsourcing now. So, companies with a local team and presence would definitely benefit in the long run,” says Somani of Angel Research.