6. HCL Technologies BPO Services: True Global Dreams

FACT FILE COO Ranjit Narasimhan POSITIONING A broad-based BPO services company, with high exposure to telecom STARTED IN 2001 OWNERSHIP HCL Technologies, HCL TA REVENUE (2002-03) $29.3 mn NO OF PEOPLE 2705 (as on 31 Oct 2003) CORPORATE ADDRESS HCL Technologies BPO Services Ltd, A-104, Sector 58, Noida—201301 WEBSITE www.hclbpo.com

ISO 9001:2000 certified across all functions and processes Purdue benchmark wherein ranked second in global peer group Completed baseline audit of COPC across multiple centers/channels/processes

LOCATION

FACILITIES: 6 (Noida—3; Chennai—1; Belfast, UK—1; Selnagor; Malaysia—1) SALES & MARKETING: US (4); UK (2)

HCL Technologies, though a comparatively late entrant to BPO, has managed
to get into the big league by a healthy mix of organic and inorganic growth,
a rarity among Indian companies. It created a stir when it acquired BT’s
Apollo Call Center in Belfast, Northern Ireland. Till now, that has been the
only big ticket acquisition by an Indian BPO company. The acquisition was
followed by the company bagging a $160 million, five-year deal to handle BT’s
directory services. This is by far the biggest BPO deal for an Indian
company.

A higher billing rate for the Belfast center (the company’s biggest
facility) means the company’s average per employee revenue realization,
when measured against that of its peer group in India, is much higher.

HCL BPO is also the only Indian BPO company that can be said to have a
true global ambition. According to sources, the company had been hunting for
a US front-end acquisition, but that is yet to materialize. Meanwhile, it
has set up a small facility in Malaysia–again a first among Indian
companies.

Despite fast growth, large contracts, big reference clients, and above
all the HCL name, the company’s positioning has been a little shaky. Many
observers have questioned the rationale of getting into a BOT deal with BT.
A BOT arrangement for BT in Noida where HCL BPO is responsible for only the
process execution part, leaves the company with little scope for doing
high-value work. While it may be a good short-term strategy for a relatively
unknown player, HCL is among India’s top IT companies and is a big brand
globally.

The fact that it has changed its name thrice in less than three years has
also not helped in building its image. Initially called E Serve
Technologies, it first changed its name to HCL E Serve before becoming HCL
Technologies BPO Services, a progression that has diluted its own identity
as a BPO company and has created an image of being a division of HCL
Technologies, though it is still a separate (wholly-owned by HCL) company.
The company also does not have a full time CEO after its founder CEO Sujit
Baksi left a few months back.

Yet, measured in pure financial terms, HCL Technologies BPO Services, is
a company with strong fundamentals. Its revenue of $29.3 million with 1685
people on 31 March 2003 shows higher growth (at 244 percent) than most other
industry players. Its client concentration is also healthy with the top
client contributing only about a fifth of its revenue. Though the telecom
exposure is a little high, it is a growing segment and that is good news for
the company.

HCL BPO needs to quickly decide and state whether it wants to grow
independently or aligned with the parent. Both the models have their pros
and cons and the growth strategy of the company could be in sync with the
model. Confusion, however, does not have any positives.