HCL Tech eyes buys

HCL Technologies, the country’s fifth largest IT company, is in the early stages of acquiring three to four captive carve-outs in the financial services sector.

Under the captive carve-outs, as the company terms them, HCL Technologies will take over the assets and manage their services. The outsourcing deal is ideally based on a revenue-sharing basis.

“We are in talks with a few of them in India and the APAC (Asia-Pacific) region. We have done similar deals earlier as well, for instance, the Deutsche Bank,” said Prem Kumar S, corporate vice-president, financial services, HCL Technologies.

Such carve-outs can be done through a complete buyout, a joint venture or even as managed services solutions, he added.

In view of the depreciating rupee, the company said it expected some impact on the next quarter results. Speaking at the company’s analysts’ meet, HCL Technologies CEO Vineet Nayar said the impact would not be too significant.

HCL Technologies has hedged positions worth $1.9 billion as of June 30, 2008. Of this, the company has made a mark-to-market (MTM) provision of $600 million as of June-end.

“However, this $600 million is fast eroding and it will be around $300 million for the quarter ending September 30, 2008,” said Anil Chanana, the company’s CFO. HCL Technologies has hedged at an average rate of Rs 41 to a dollar.

Chanana feels that the company’s Europe revenue will have an impact of 2.9 per cent due to the dollar getting stronger against other currencies. Currently, Europe contributes 29 per cent to the company’s revenue.

HCL Technologies’ exposure to the top five banking and financial companies in North America is minimal.

“Almost 60 per cent of the revenue is contributed from the insurance vertical. Asset and wealth management and exchanges contribute 25 per cent, whereas the capital market makes up just about 15 per cent,” said Kumar.