Change-in-Progress

Shiv Nadar founded HCL in 1976, taking advantage of the law passed by the government that discouraged multinational corporations from doing business in India. He environed developing the company into becoming a global leader in the manufacturing of computer systems. However, the sailing wasn't smooth for HCL as the company found it difficult to gain an entry into the global markets. Consequently, Shiv Nadar reorganized the company and split into two separate companies: HCL Infosystems and HCL Technologies, with the former focusing on the domestic markets and the latter on their international counterparts. As a whole, HCL focused heavily on R&D and Technology with the belief that the dot-com revolution would take it to the next level. Unfortunately, in doing so, the company missed the opportunities that came with Y2K and Application Development. The 2001 dot-com burst saw the company grappling for a new growth engine, which led to a slew of transformation initiatives. These included a change in focus from single-service to multi-service deals. These changes proved to the shot in the arm and enabled HCL Technologies to transform itself from a marginal IT player to a well differentiated full services player focused on large deals. Investment Rationale Three-pronged Transformation Unlike other IT companies, HCL was heavily dependent on the internet boom and the 2001 dot-com bust saw the company struggle to generate revenues. Other IT companies had already jumped into application development and HCL was left far behind. Then in 2005, the company outlined a three-phase transformation strategy to enhance its overall growth: Phase 1

This article was originally published on November 18, 2008.