The Hindu : HCL adopts M&A route for expansion

Online edition of India's National Newspaper
Friday, Jun 28, 2002

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Business

HCL adopts M&A route for expansion

By Our Special Correspondent

NEW DELHI JUNE 27. HCL Technologies has mapped out an aggressive plan of mergers and acquisitions on the global scale in an attempt to pursue a `non-linear growth strategy' to rebalance its portfolio.

With the IT industry in the doldrums, HCL is finding that buy-outs are good business. The strategy is to make a small upfront investment and retain the existing management. But the company is skirting acquisition of companies whose value systems do not coincide. "That is why no acquisition has gone sour,'' maintain officials, adding that acquisitions and alliances contributed around 13 per cent of revenues in the quarter ended March 31 this year. "Currently the timing for acquisitions is good but we are not vacating our current space,'' said senior officials.

HCL's latest move in this direction is a strategic joint venture with the Jones Apparel group, a Fortune 500 company based in Pennsylvania, after a specialised wing of HCL — the Business Acquisition and Integration Team (BAIT) — identified the retail vertical as a high focus area. HCL expects the new joint venture to provide development maintenance and implementation services to various divisions of the Jones Apparel Group as well as other companies in the retail ad wholesale apparel space.

Officials assess the prospects for these type of operations to be favourable. "Because of bottomline pressures, many companies are looking at out-sourcing their businesses,'' they explain. HCL has also strengthened presence in the application development space through two major alliances. A JV with Answerthink of the U.S. will outsource IT requirements to HCL Technologies' offshore development centres while an alliance with another American company Zamba Solutions will offer joint customer relationship management (CRM) solutions to its customers.

The quest for new partners began after the worldwide downtrend in the IT industry. In the IT enabled services sector, the company also has a pact with British Telecom to provide contact centre services in Belfast.

On June 1, HCL acquired full control in the Massachusetts-based Gulf Computers.

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