HCL ups the ante to dislodge Wipro from number 3 position

Anil Chanana let the cat out of the bag at an analyst call earlier this year. The chief financial officer of HCL Technologies said he expects half the growth for the current fiscal to come organically. “If I take 10.5% as being the middle of the range, I am cutting it exactly in half — 5.25% is organic and 5.25% is inorganic.”

For an industry that has been shying away from writing large cheques for transformative inorganic growth, it was quite an announcement. This aggressive inorganic growth agenda of HCL’s seven-quarters-old chief executive, C Vijayakumar (CVK), may have industrywide ramifications.

After all, the Noida-headquartered HCL is now just $222 million in revenue short of displacing Azim Premji flagship Wipro as the third-largest software major in the country. It’s big for Indian tech giants, the holy trinity — Tata Consultancy Services (TCS), Infosys and Wipro — of which is rarely ruffled.

The last time there was a change in the pecking order for the $167-billion industry was more than a decade ago, when Satyam Computer Systems fell off a cliff following a fraud in 2009 and HCL Technologies was bumped up. But in 2018, 50-year-old Shiv Nadar’s soft-spoken Tamilian lieutenant is sending out a message loud and clear.

If HCL indeed breaks into the elite group sometime this financial year, as is expected based on company growth projections, then this M&A blueprint seems to be clearly paying off, at least for now. CVK has been equally gung-ho about the intellectual property (IP)-driven partnerships with the likes of IBM that are clocking the numbers and also giving HCL an edge over its rivals. The company has been topping Nasscom’s revenue predictions for several quarters now and in the March quarter, the revenue gap between the third and fourth players was just $24 million! To put things into context, five years ago, this gap was $359.2 million.

Wipro Technologies (Wipro Ltd)