industry context by hcl: the alternative...outsourcing alternative markets alternative it total...

1 Copyright © 2012 HCL Technologies Limited | www.hcltech.com


Industry context by HCL:

The Alternative


IT Industry Trends We See


CEO Confidence continues to decline: may delay IT services

spending

The fiscal drag coupled with the lingering uncertainty surrounding

the debt ceiling, leads to expect a weak economic start to 2013

Source: Bloomberg, Dec’12

Source: Bloomberg, IDC, Dec’12

The Buyer Intent metric is based on

surveys of 400-500 U.S. CIOs on their

expectations for IT spending growth

during the next 12 months

Eurozone GDP growth still far from giving positive sentiments Asian Business Sentiment well below the peak of 1Q11

Source: Guardian, UK

Source: Global ECS Research

Source: Thomson Reuters, INSEAD, MSCI aaa

No Respite – Fiscal Cliff, Eurozone Crisis Point To Muted IT Services Growth


IT Services YoY Growth Rates* Flat IT spend growth to continue pricing pressures in future

* Includes Top 4 IOPs, Top 3 MNCs and Cognizant

Offshore billing rates declining, well below FY08-09 levels

Source: J P Morgan

Source: HCL Analysis Source: Gartner

Growth Deterioration And Pricing Pressure Is The Industry Reality

Industry Is Heading Towards Commoditization, Differentiation Is The Key Ask

Gartner Worldwide IT Spending Forecast

Source: Gartner

2012a 2011a 2012e,

Jun12

2.3%


Our Business


NOTE: From here onwards, HCL Technologies would be referred to as HCL.

FINANCIALS(YTD NUMBERS)

Total Revenues - $6.3 billion

EBITDA - $700 million

Employees – 90,000

HCL Technologies

• Product Engineering and R&D

• Enterprise and Custom Applications

• Enterprise Transformation

• Infrastructure Management

• BPO Services

GLOBAL MARKET FOCUS

Revenue – USD 4.3Bn

85000 EMPLOYEES

www.hcltech,com

HCL Infosystems

• System Integration Solutions

• Products & Services

• Hardware Solutions

• Homeland Security

• Education and Learning

INDIA & EMERGING MARKETS

Revenue – USD 2.0 Bn

5000 EMPLOYEES

www.hclinfosystems.in

The HCL Enterprise The HCL Enterprise


HCLT’s Balanced Business Portfolio – Q4 FY’12


HCL is a Strong Challenger to the Global MNCs

Deals signed by HCL over the last 2 years MNC Top-3 include IBM, Accenture, HP-EDS

Indian Top-3 include TCS, Infosys, Wipro

2006-11 DEAL SIGNED BY IT SERVICES MAJORS HCL COMPETITION IN DEALS

74%

73%

93%

HCL

MNC – Top 3

Indian – Top 3

Discrete Services Deals ITO

35%

HCL

Deals Wins Global MNCs

Indian Vendors


What has Ideapreneurship

led us to?


Positive Revenue Per Employee Movement and Declining Attrition

HCL’s Revenue Per Employee Grew from 39k in OND07 to 54k in OND12; De-grew for Peers

Revenue Per Employee (USD Quarterly Annualized) HCL Outperforms Peers

OND07 OND12 % Change

HCL 38,797 54,151 40%

IOP 3 50,484 46,363 -8%

17.2%17.0%

16.5%

15.9%15.7%

15.0%

14.0%13.60% 13.6%

OND10 JFM11 AMJ11 JAS11 OND11 JFM12 AMJ12 JAS12 OND12

Declining Attrition

Attrition* Declines from 17.2% in OND10 to

13.6% in OND12


Best in Class Shareholder Value HCL share price up 60% in CY12 and 6.4% in Q2’13 Quarter

11

59.5%

24.9%

14.9% 8.4%

4.2%

-1.1% -16.2%

HCL Accenture CTS TCS IBM Wipro Infosys

6.4%

3.7% 2.8%

-3.4% -4.9%

-9.0%

-11.1%

HCL CTS Wipro TCS Accenture IBM Infosys

Annual Share Price Movement (30th Dec 2011 to 31st Dec’12)

Quarterly Share Price Movement (1st Oct’12 to 31st Dec’12)


YoY Growth Rates *

HCL Revenue Growth Performance Consistently Out-performing top Global and Indian Competition

18%

21%

26%

29%

21%

21%

28%

33%33%

31%

25%

18%

15%

12%11%

13%

-2%

-3% -4%

6%

15%

20%

27%

27% 26%26%

20%

16%

13%

9% 8%9%

10%

6%

-4%

-1%

3%

3%

2%3%

7%

11%

9%

5%2%

-1%

-3%

0%

JFM09 AMJ09 JAS09 OND09 JFM10 AMJ10 JAS10 OND10 JFM11 AMJ11 JAS11 OND11 JFM12 AMJ12 JAS12 OND12

YoY Growth Rates

HCL Average - India Top 3 Average - Global Top 3

* HP latest quarter estimated on the basis of CQGR over previous three quarters


In today’s Dynamic environment-

Will this take us further?


Wave I

The Gorillas

Wave II

The Technology

Disruptors

Wave III

The Business

Model Disruptors

In business of making

the technology obsolete

In business of making

the Gorillas obsolete

In business of

bypassing IT

With this noise, how do you remain relevant?

The Mainstream Is At Risk


Gen+

Gen1:

First time

outsourcer Gen2

Revenue Impact

Cost Impact

Out-

sourcing

Model

Cost

Key

Propositions

Business Driven and Strategic

Managed Services

Managed Services

APO

Consolidation/ Virtualization

EOOTB

Platform BPO

Tactical

T&M

Resource Cost

Staff Augmentation

Program Based

Time

Imp

act

Front, Middle

and Back office

innovation

BUSINESS

COST

Outcome Based

Alternative IT e.g. ALT ASM, From No to Now,

BPaaS, TechCMO

Services Cost Business Cost

The Gen+ Outsourcer Is Looking For Alternative IT


Traditional IT Services

“EXPLOIT”

Total market USD 678bn in 2013

Penetrated Services *

(EAS, ASM and ADM)

Non-Traditional IT Services

“EXPLORE”

Total market USD 92bn in 2013

XaaS

(Transformation led BPO, EAS & ETS)

Social, Mobility And Analytics

20.4%

4%

3 Yr CAGR #

3 Yr CAGR #

3 Yr CAGR #

4.9%

13.1%

3 Yr CAGR #

Proactive

Obsolescence

Agility & Flexibility

Helicopter Landing

Industry Utility

Through Benefit

Realization

Customer

Experience

Alternative

Outsourcing

Alternative

Markets

Alternative

IT

Total market USD 289bn

Total market USD 59bn **

Total market USD 33bn ***

Underpenetrated Services

IMS BPO ERS

$ 231bn $ 112bn $46bn

* IOP4 share <5% taken as under-penetrated

** Includes BPaaS, SaaS, IaaS and PaaS

*** Services market estimated based on software and solution Market

# 3 Yr CAGR from 2013 - 2016

Source: Gartner, IDC, HSBC and HCL Analysis

HCL’s Approach To Alternative IT


Values Behaviors Programs Outcomes

Mirror Mirror, Trust

Through, Transparency,

Inverting Org Pyramid,

Recasting Role of CEO

Seed , Mentor and Harvest

ideas and promote

entrepreneurial energy

Programs aligned to these

beliefs and behaviors

e.g. MAD Jam, MAD Ltd,

Directions,360 degrees, E@R

Strong Business outcomes

further strengthening the

cultural tenets

HCL’s CULTURE

Tenets Of

Ideapreneurship

MAD JAM Celebrating Innovative ideas at HCL level

Value Creation Portal Generating innovative ideas at account level

MAD LTD, Ideathon Celebrating innovative ideas in the

society

White Spaces

Corporate Incubation Program

14000 ideas generated

3000 ideas implemented

USD 130 mn value

generated

647 ideas

1500 Innovators

37 idea films

43000 HCLites engaged

To aim to be the largest service

innovation company in the world

Innovation P

yra

mid

That

Pow

ers

Ideapre

nuers

hip

Resu

lts

How HCL’s culture creates the Alternative


to stay ahead!

industry context by hcl: the alternative...outsourcing alternative markets alternative it total...

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