HCL Tech set to clinch $1 bn outsourcing deal

Information technology services provider HCL Technologies is close to clinching a $1 billion (about Rs 3,950 crore) outsourcing contract from a European telecommunications company.

According to sources, the application development deal could be spread over a period of six years and touch $1 billion from its initial value of $500 million (about Rs 1,950 crore).

A Newswire18 report quoted a note by UBS Investment Research to investors. Analysts reacting to the note hinted that the European company could be BT, formerly British Telecom.

HCL Technologies executives, however, refused to comment, but a report suggested that the telecom company is already a client of Infosys Technologies and Tech Mahindra. 
 

RECENT DEALS
TCS - Nielsen	$1.2 bn (10 yrs)
Tech Mahindra - BT	$1 bn (5 yrs)
Diligenta (TCS BPO) - outsourcing deal with	£100 mn  (over $200 mn)
Sun Life Financial of Canada - UK operations
IBM - Idea (total outsourcing)	$600-800 mn
IBM - Bharti (total outsourcing)	$1.7 bn (approx)

Therefore, the question some have been asking is whether the HCL contract would impact the revenues of these companies. Analysts said that it would likely be an additional outsourcing contract.

They were expecting an announcement on the HCL deal in a couple of months.

HCL has been aggressively pursuing multi-million dollar deals on a "transformational journey".

In the quarter ended December 31, 2007, the company bagged three mid-sized deals with Mysis, Ques Diagnostics and Merck & Co Inc, all three into the life sciences business.

In the quarter ended September 30, 2007, HCL signed an integrated services deal worth over $250 million (about Rs 990 crore), its third $200 million-plus deal in 24 months.

The company also signed a multi-million-dollar contract with chemical manufacturer, Hercules Inc, in this period.

In April-June 2007 also the company inked seven multi-service, multi-year, multi-million-dollar deals in the aviation, finance and media sectors.

HCL is, however, not the only aggressive player on the block.

India's second largest IT services provider, Infosys, announced last year that it expects to close 15 large deals in the first half of 2008, each in the region of $100 million or more.

In one of the largest acquisition-cum-outsourcing deals by an Indian information technology company, Infosys Technologies bagged a $250 million (about Rs 990 crore) contract from Royal Philips Electronics.

Shares of HCL Technologies dipped 0.41 per cent (or Rs 1.15) on the Bombay Stock Exchange on Tuesday, to close at Rs 276.70.