My Best Pick 2013

Well balanced

Focus on large contracts and strong positioning of IT infrastructure business make HCL Tech a great buy

Soumik Kar

HCL Tech sums up its winning formula very well on its website. There are more than 3,000 technology companies in the Bloomberg database, but only seven with revenues of more than $2.5 billion, a market capitalisation of over $5 billion, and a sales CAGR higher than 23% over the past five years. HCL Technologies is one of those seven companies. What has been the source of HCL’s success in this period of economic turmoil? Its website describes it like this: “‘Employees First’, a unique management approach that unshackles the creative energies of our 85,335 plus employees, and puts this collective force to work in the service of customers’ business problems.” There’s no denying it has been a remarkably successful approach. HCL Tech’s management has been able to deliver one of the strongest revenue growth rates in the Indian IT sector over the last eight to 10 quarters. 

The key to this achievement could be the company’s relentless focus on large contracts, the strong positioning of its IT infrastructure business and its good execution capabilities. HCL Tech also announced new contracts totalling $2 billion in the first half of CY12, which is good evidence that the company’s business momentum remains favourable. Now that the rebid (old outsourcing contracts coming for renewals) market is opening up and infrastructure features prominently in all these deals, HCL Tech is strongly positioned to reap a healthy share of the pipeline. In fact, the company ha

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