HCL Technologies, once a laggard among India’s IT leaders, has been nosing ahead of bigger rivals Infosys and Wipro quarter after quarter, and its secret sauce is diversification.
The Noida-based software and BPO major founded by Shiv Nadar has clocked a higher growth rate for several quarters in a row, thanks largely to the fact that it is not overly dependent on a narrow base in terms of region, service line or client segment.
When Infosys and Wipro struggled to reduce their dependence on the US that was hit most by the financial crisis of 2008 by boosting their European presence, HCL Tech was already there, scaling up from its beach-head. And, while lucrative financial services and insurance sector clients fumbled much to the difficulty of the Bangalore giants, HCL was making inroads in infrastructure services involving computer maintenance.
The big clincher in Europe was in 2008, when HCL Tech converted the global crisis into an opportunity by buying out UK-based consulting firm Axon, audaciously outbidding Infosys.
“It was the time when European market was largely unexplored and a headway has helped HCL Tech consolidate its position,” said Ankita Somani, IT analyst at Angel Broking.
During the January-March quarter of 2014 HCL Tech’s revenues from Europe grew 26% and in terms of services, revenues from infrastructure services rose by 31.5%. In comparison infrastructure services grew by 8% for Infosys and 11% for Wipro during the same period.
“HCL Tech’s higher revenue and margin growth is largely due to infrastructure services,” said Dipen Shah, analyst at Kotak Securities, a brokerage firm.
Anant Gupta, chief executive and president of HCL Tech, said diversification has meant that even if one of the regions or business verticals under-performs in a given quarter, the company is still able to maintain its margins and sustain its growth momentum.