HCL Technologies is a global technology company headquartered in Noida, India and is a subsidiary of HCL Enterprise. It helps organizations reimagine their business for the digital age. It has a strong culture of risk-taking and innovation. The company owns a worldwide network of R&D, delivery centers and innovation labs. The company has 1, 27,000+ employees whom they refer as “Ideapreneurs” who are spread across 43 countries. The company serves leading enterprises across various industries which also includes 250 of the Fortune 500 companies.
The company operates across industries like automotive, aerospace and defense, banking, automotive, life sciences, retail, oil, and gas etc. and offers the portfolio of products IOT, Digitization, Cybersecurity, Analytics, Infrastructure, engineering services etc. In Sep 2018, HCL consolidated revenue of USD 8.2 billion.
Strengths In The Swot Analysis of HCL Technologies
1) Core Strategies
The company works on disruptive technologies like Analytics, Digitization, Cloud, Automation etc. and these technologies are the core of any enterprise that wants to reinvent itself. HCL has developed a strategy called HCL’s Mode 1-2-3 strategy which is truly differentiating HCL technologies in the market and is able to gain confidence from the clients. The company focuses on re-skilling, training, and building capabilities to make the strategy future-ready.
2) Global Presence
The company operates out of 43 countries and has people from 140 nationalities working together. HCL technologies have an extensive network of global delivery systems that work together to provide extensive customer service to customers. The strategy to “Think Global, Act Local” has a local interface based geo-adapted ecosystem. In Europe, HCL has developed capabilities in Frankfurt and also in Northern Ireland and Germany. HCL also has capabilities in Malaysia, Japan, and Singapore. The company is a huge conglomerate and is able to serve large accounts with the help of its global presence.
3) Strategic Alliances and Partnerships
The company has strategic alliances that have played a major role in driving the ecosystem-based innovation of the company. The alliances with global technology vendors have helped HCL technology create service offerings and solutions across industry verticals. The alliances have helped the company accelerate time to market, reduce the risk of implementation and also the total cost of ownership. HCL technologies also help the alliance partners to increase their revenue growth, enhance their products and service offerings etc. The strategic alliance has helped HCL technologies create a point of differentiation as well
Weakness In The Swot Analysis of HCL Technologies
1) Competition
The main competitors of HCL technologies are Infosys, Wipro Technologies, and TATA Consultancy Services etc. TCS and Infosys are two larger consultancy firms with revenue of $5.05 billion and $2.83 billion. HCL technologies have recently lost against Wipro to become the third largest software service company in India. HCL Technologies said that it has signed 27 transformational deals with companies from the telecom, retail and financial services. The company must implement strategic decisions to stay ahead of the competition.
2) Struggle to retain existing clients
In 2016, HCL technologies lost $1.5 billion worth of contracts resulting in the slowdown of the revenue growth. This is due to the fact that the company was unable to cross-sell more services to the customers and also the company’s old infrastructure maintenance contracts that are getting overpowered by competitors like Amazon’s Aws and Microsoft Azure. The trend is worrying the analyst so the company aims to seek to get the higher number of contract renewals.
Opportunities In The Swot Analysis of HCL Technologies
1) Expected growth
HCL Technologies is expected to reach 9.5-11.5% in FY19. The company projected a profit of Rs. 2,540 for September and also a year-on-year rise of 16.10 percent. The company remains confident of retaining this trajectory in the coming years. HCL has deep capabilities and mindset of innovation and also a commitment to CSR, inclusion, and diversity and uses this to differentiate itself from the marketplace.
2) Technology adoption
The adoption rate of new technologies is 10 times higher than the smaller business and it is expected that by 2020, 86% of the companies which has more than 5,000 employees will adopt groundbreaking technologies like IOT( Internet Of Things), 64% plan to deploy edge computing, 64% will adopt AI(Artificial Intelligence( and 56% will adopt block-chain enabled technology. Today, the industry wants to move towards digitization and HCL technologies can leverage this opportunity for its success and survival.
3) Engineering & Research
HCL technologies have development centers in over 30 countries and are embracing research-driven digitization. The company has emerged as a global innovation and R&D organization. HCL technology is strategic partners with 7 out of the top 10 OEMs of medical devices. The R&D centers have helped HCL technology develop end-to-end customer engagement strategies, improve experiences etc. With more investment in R&D, the company can become a next-generation enterprise.
Threats In The Swot Analysis of HCL Technologies
1) Risky Bets
The company’s strategy is pinned on investments worth $1.1 billion in licensing the IPs (intellectual properties) from companies and plans to build products for the clients with it The problem is that some of the IPs are very old and losing the share to the offerings provided by the rivals. For instance, HCL acquired IBM’s Lotus Notes and the product is clearly losing relevance in today’s world. Investment in legacy technology is not good for the future, HCL technologies need to invest in technology that can secure its future.
2) Forex risks
HCL Technology may be reporting top and bottom line growth but one factor that severely affects its foreign exchange losses. The company has been constantly posting foreign exchange losses. HCL Technologies has taken huge hedges a few years back which had adversely affected their foreign exchange position and with rupee depreciating the losses are still pretty high. The company needs to develop certain policies that help to average out the profit and losses from the foreign exchanges.
