Bengaluru: HCL Technologies has won an IT outsourcing opportunity from Swedish truckmaker Volvo Group that is estimated to be worth $2 billion over the next five years.
This would be the largest deal in the history of the company, and brings the Indian IT vendor into the billion-dollar league.
According to the deal, HCL will acquire the external IT business of the Volvo Group for $138 million (Rs 895 crore). This business counts the Volvo Group, City of Stockholm and Swedish lock manufacturer Assay Abloy among its customers, and had $190 million in revenues from external customers during the last 12 months. That would mean revenues of $1 billion over the next five years. This business offers services in areas like application management and operations, IT infrastructure and operations, networking and communications.
The Volvo Group has also signed a five-year IT outsourcing deal with HCL which sources said is valued at $1 billion. HCL will manage Volvo’s IT infrastructure and operations. IBM too was vying for the deal. The companies declined to disclose the value of the transaction. C Vijay Kumar, president of infrastructure services at HCL Technologies, said, “It’s a game-changing opportunity for HCL Technologies and it’s an industry first.”
The last such publicly known deal won by an Indian vendor was the one between Wipro and Atco. Wipro acquired Atco I-Tek, the IT services arm of Canadian logistics and utilities provider Atco, for $195 million. The acquisition came bundled with a $1.2-billion, 10-year IT outsourcing deal, the largest in the history of the company.
In the HCL deal, approximately 2,600 Volvo personnel globally will move to HCL. “This means that employees within the IT business who join HCL Technologies will have a new affiliation in an environment in which information technology is the core business. I am convinced that this will benefit personnel, supplier and customers,” said Jan Gurander, Volvo’s CFO and acting president and CEO.
In April, the 31-billion-euro Volvo Group had announced plans to find an external partner to assume responsibility for its external IT business and its IT infrastructure operations. The transaction is part of the efficiency programme announced previously that aims to reduce the group’s structural costs by 10 billion Swedish Krona ($1.2 billion).
“HCL’s engagement with Volvo is especially satisfying given that we have the opportunity to create additional value for such a forward looking organization. It is also pleasing to note that skilled personnel will be joining HCL and our culture will further flourish globally,” said Anant Gupta, CEO of HCL Technologies.
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