HCL Tech in strategic JV with Celestica
HCL enters into a joint venture with Canada-based Celestica to design, manufacture and sell electronic components, reports Prerna K Mishra.india Updated: Nov 14, 2006 19:04 IST
HCL Technologies (HCLT), testing new ground as part of its "Blue Ocean" strategy, said on Tuesday that it had entered a joint venture with Canada-based Celestica to design, manufacture and sell electronic components, with the prospect of adding $100 million to its revenues over the next five years and a strategic entry into high-profit engineering services.
Under the agreement, the two firms will work together right from the concept and design of a component to its manufacturing, supply chain management and post-production maintenance.
Beyond the revenues outlined already, the deal is strategic for HCL as it gives the country’s fifth largest software exporter access to all Celestica clients. The Original Equipment Manufacturer (OEM) is among the top three vendors in the world of electronic manufacturing.
The venture is driven by strong cost advantages. If a company is manufacturing a component at a cost price of $1,000, HCLT, along with its partners, will offer to make the same product with same or better specifications at around $700. Initially, the company will address medical electronics, consumer electronics and aeronautical sectors.
HCL Technologies' President Vineet Nayar told Hindustan Times that the company already had six such deals under a "multi-service" delivery model but the Celestica deal gave it access to a widespread offering in the engineering segment.
"With this new JV, we will be able to handhold the clients through the entire product cycle with help on the manufacturing front from Celestica," Nayar said.
HCL plans to hire 200 software experts for the venture which would operate out of Chennai.