. BANGALORE: For years, bigger rivals have viewed HCL
Technologies as an aggressive bidder ready to take that extra risk while
pursuing large and complex outsourcing contracts from customers such as Xerox.
And analysts have continued to warn against the company's strategy of chasing
growth by risking profitability. With Tata
Consultancy Services,infosys
Technologies and Wipro
reporting profit margins topping 25%, a comparison with peers does raise
questions about HCL's strategy.
On its part, HCL has maintained that by
taking over customer risks that includes transfer of staff - along with other
transitions - the company is able to position itself better. But such total IT
outsourcing engagements come with additional risks of revenues linked with
annual or quarterly achievements of agreed targets, which at times affects
monies owed by customers to HCL.
"HCL has always been most aggressive
among all our bidders when it comes to taking on risks, but they always want
more volume of business for that extra risk," said one of the top outsourcing
customers dealing with multiple Indian vendors. "You do not want to put all your
eggs in the same basket always, so sometimes they prevail, but we normally tend
to go with Infosys and Cognizant for any application development work," he adds.
Having signed contracts worth nearly $2 billion during past four
quarters, HCL is not paying too much heed to criticisms . For brokerage analysts
advising investors, HCL must grow revenues and improve profits at the same time,
something multinational rival Cognizant has achieved by reinvesting profits in
excess of 20% into the business.
ANIMA SINHA
PGDM - 2 sem
Technologies as an aggressive bidder ready to take that extra risk while
pursuing large and complex outsourcing contracts from customers such as Xerox.
And analysts have continued to warn against the company's strategy of chasing
growth by risking profitability. With Tata
Consultancy Services,infosys
Technologies and Wipro
reporting profit margins topping 25%, a comparison with peers does raise
questions about HCL's strategy.
On its part, HCL has maintained that by
taking over customer risks that includes transfer of staff - along with other
transitions - the company is able to position itself better. But such total IT
outsourcing engagements come with additional risks of revenues linked with
annual or quarterly achievements of agreed targets, which at times affects
monies owed by customers to HCL.
"HCL has always been most aggressive
among all our bidders when it comes to taking on risks, but they always want
more volume of business for that extra risk," said one of the top outsourcing
customers dealing with multiple Indian vendors. "You do not want to put all your
eggs in the same basket always, so sometimes they prevail, but we normally tend
to go with Infosys and Cognizant for any application development work," he adds.
Having signed contracts worth nearly $2 billion during past four
quarters, HCL is not paying too much heed to criticisms . For brokerage analysts
advising investors, HCL must grow revenues and improve profits at the same time,
something multinational rival Cognizant has achieved by reinvesting profits in
excess of 20% into the business.
ANIMA SINHA
PGDM - 2 sem
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