‘Acquisitions will pay off; more needed in digital space’

Swathi Moorthy New Delhi | Updated on July 27, 2018 Published on July 27, 2018

C VIJAYAKUMAR, CEO, HCL Technologies Ltd

C Vijayakumar, CEO, HCL Technologies Ltd is confident that the acquisition strategy will pay off. The company has been investing significantly in inorganic growth with three acquisitions in the last quarter. In an interaction with BusinessLine, Vijayakumar talks about the way forward and more. Excerpts:

There have been murmurs of discontent regarding the recent acquisitions given their stagnant revenue growth. What is your stand on that?

Both organic and inorganic require a lot of effort. If you are looking at our inorganic, we are not diluting our margins. These are the metrics one should look at when seeing if inorganic growth works or not. We are consciously driving it.

Look at life sciences and consumer services company C3i Solutions. It was part of a company called Merck & Co, a lot of their contracts were pulled as they were unable to reach out to more service providers, revenues were stagnant and valuation was $60 million. But it is adding core capabilities. They have low margins but we will increase that over a period of time. Actian Corporation is in hybrid data space, which is very hot, growing at 50 per cent YoY. Its products are growing but in one significant product line they have discontinued. Also they did not have a channel like HCL. Now it will create momentum and traction.

H&D International acquisition was only about Germany. They are over a 1,000 people and demonstrates our commitment to geography.

Are more acquisitions in the pipeline?

We are looking at digital acquisition even as we are making organic investments. Almost 15-16 per cent of our services category is in Mode 2. There is a lot of market demand. To fulfil it better , a couple of digital acquisitions are definitely needed. We are looking at the marketing space and digital design studios.

What about your Mode 1 services, core businesses like infrastructure and engineering?

We want to make sure that Mode 1 is also growing. For example if you look at the infrastructure business, there are lot of programme to modernise infrastructure for digital transformation. We are trying to pitch for those programmes and win them.

Published on July 27, 2018
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