Categories Analysis, Research Summary, Technology

Is HCL Technology a safe bet to invest your money? Find out in this article

We’ve delivered strong double digit growth in all the three verticals on a year on year basis. Financial services business grew 5.1% sequentially and 14.4% year on year in constant currency. Manufacturing grew 3.6% sequentially, and 16.5% year on year. Life sciences grew 13.4% year on year. These have been due to great execution of large deals, which translated into revenue. This has helped significantly offset the discretionary spend reduction in these verticals.

C Vijayakumar, CEO

Stock data

ExchangeBSE and NSE
IndustryIT- Software
Price Performance:
Last 5 days+2.03%
Last 1 year+45.13%

Company description:

HCL Technologies Limited is a global IT services and consulting company headquartered in Noida, India. Founded in 1976, the company is part of the HCL Group and has established itself as a leading player in the IT services industry. HCL Tech provides a wide range of services, including software development, infrastructure management, cybersecurity, and business process outsourcing (BPO) to clients worldwide.

Business Segments:

  1. IT Services:

HCL Technologies’ IT services segment is its core business. It offers a comprehensive suite of IT solutions, including application development and maintenance, infrastructure services, cloud computing, and digital transformation services.

  1. Engineering and R&D Services:

This segment focuses on providing engineering and research and development (R&D) services to clients in industries such as aerospace, automotive, and telecommunications. It helps clients innovate and develop cutting-edge products and solutions.

  1. Business Process Outsourcing (BPO):

HCL Tech offers BPO services, including customer support, finance and accounting, and supply chain management. These services help clients streamline their business processes and improve operational efficiency.

  1. Products and Platforms:

HCL Technologies has developed a range of products and platforms, including DRYiCE (an AI-powered automation platform) and Mode 1-2-3 (a business strategy framework). These products and platforms are designed to enhance client offerings and drive digital transformation.

Business Model:

HCL Technologies operates on a business model that emphasizes innovation, customer-centricity, and global expansion. Key aspects of its business model include:

  1. Innovation and Research: HCL Tech places a strong emphasis on innovation and research, investing in cutting-edge technologies and solutions to meet evolving client needs.
  1. Global Delivery Model: The company leverages a global delivery model, with delivery centers and offices in various countries, enabling it to provide services efficiently and cost-effectively.
  1. Customer-Centric Approach: HCL Technologies maintains a customer-centric approach, tailoring solutions to individual client requirements and building long-term partnerships.
  1. Diversified Portfolio: The company’s diversified portfolio of services and products allows it to serve clients across multiple industries, reducing dependence on any single market segment.

Client breakup:

During FY22 the number of $100 million clients increased to 16, and $50 million clients increased from 29 to 44% of the company’s revenue growth came from 50 accounts, 40 of which are Fortune 500 or Global 500 accounts.

New Deals:

During the year, HCL signed 50+ deals and the total contract value of these deals stood at $8.3 billion. These include- European ISV, a large European Bank, a healthcare provider in the US, a Europe-based leading consumer groups and retail company, a Europe-based health and biosciences company, etc. 


During FY22, the Company’s step-down wholly owned subsidiary, HCL Technologies Germany GmbH acquired a 51% stake in Gbs-Gesellschaft für Banksysteme GmbH through a Joint Venture Agreement. Additionally, the Company’s step-down wholly owned subsidiary, HCL Hungary Kft., has acquired 100% stake in Starschema Kereskedelmi és Szolgáltató Korlátolt Felelősségű Társaság.

In May 2020, the Company signed a definitive agreement to acquire Cisco Self-Optimizing Network (SON) products and associated business from Cisco System, Inc., for a consideration of Rs. 367 crores.


In the financial year 2021-22, the company incorporated 4 new step-down wholly owned subsidiaries namely – HCL Technologies Costa Rica Sociedad De Responsabilidad Limitada, HCL Technologies Bahrain W.L.L, HCL Technologies Slovakia, and HCL Technologies Morocco Limited. Various subsidiaries of the Co. were merged as well as closed down during the year.

Collaboration with various Companies:

HCL Tech’s ecosystem consists of close to 100 companies in various technology areas and it has formed go-to-market alliances, specialist partnerships for niche technologies, and teaming partnerships for specific customers.

  1. HCL’s Top Global Strategic Alliances: Microsoft, Cisco, EMC, SAP.
  2. Other Strategic Alliances: Oracle, IBM, VMware, TIBCO, HP, ServiceNow, CA Technologies, Amazon Web Services, CSC.
  3. Specialist Partnerships: Salesforce, Informatica, SAS, Splunk, BMC Software, Net App, VMware, Pega, MicroStrategy, Teradata, Avataq, Misys, eBaoTech, JDA, Guidewire, Hybris, Appian.

HCL Technologies has merged as the fastest growing large technology company globally for the fourth consecutive year. It is the third largest IT services company by revenues from India.

Expanding footprint:

HCL is intending to increase its footprint in the global wealth management market by acquiring Confinale. Recently, it inaugurated a new state-of-the-art delivery center in Vancouver, Canada to expand its local delivery footprint. 


What we like:  

  1. Order pipeline remains robust:

During Q1FY24, HCL won 18 major deals with contract value totaling $1,565 million, including seven in the services business and 11 in the software business. Therefore, the pipeline continues to grow strongly at 26.6% YoY (+17.7% QoQ). Additionally, the management expects to receive more deals beginning in Q2FY24, which will lead to diversification across regions and within its industries.

  1. Focus on Generative AI and newer technologies:

HCL continues to invest in AI, Quantum Computing, and IoT platforms. The company is well positioned to leverage opportunities in these emerging technologies. Recently, HCL Tech signed a partnership in Generative AI with a leading hyperscale. Additionally, HCL Tech and Microsoft expanded their partnership to adapt generative AI with Azure Open AI service, enabling businesses to achieve better outcomes.

  1. Valuations to offer a margin of safety:

Higher exposure to Cloud, which comprises a larger share of non-discretionary spending, offers better resilience to its portfolio in the current context, with higher demand for Cloud, Network, Security, and Digital workplace services. Given its capabilities in the IMS and Digital space, along with strategic partnerships and investments in Cloud, we expect HCLT to emerge stronger on the back of healthy demand for these services in the medium term

  1. Strong Client Relationships:

The company has built enduring relationships with a diverse client base, enhancing its revenue visibility and long-term growth prospects

Factors to consider:

  1. The IT services industry is highly competitive, with numerous players, which can exert pressure on pricing and margins.
  2. The company’s global operations expose it to currency exchange rate fluctuations, impacting financial results.
  3. HCL Technologies’ performance is influenced by global economic conditions, and economic downturns can affect client spending on IT services.


HCL Technologies Limited is a leading global IT services company known for its innovation, diverse service offerings, and strong client relationships. While it benefits from a global presence and financial stability, it operates in a competitive industry and faces challenges related to currency exchange rates and global economic factors. Investors should conduct thorough research and consider their investment objectives and risk tolerance when evaluating HCL Technologies as a potential investment opportunity. Staying informed about the company’s performance and industry trends is crucial for making informed investment decisions.

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