Group 3 Division H

ROHIT ZENDE
SAKSHI WAIGAONKAR
AISHWARYA DESHMUKH
ANURAG SAMANTA
VIJAYSHANKAR RAMAN
NISARG MAHEDHWRI
AGENDA

1 2 3 4 5 6 7 8

Industry Business Competitive

Overview Description Positioning
 Industry Overview

Industry Segmentation Revenue share by Verticals (%) Revenue share by Geography

55% 70%
Project 62% 62% 62%
Oriented 45% 60%

35% 50%
IT Services Outsourcing
40%
25% 28% 28% 28%
Support & 30%
Training 15%
20%
5% 10% 10% 10%
10%
Horizontal
Specific 0%
Service BPM
Vertical BFSI Hi-Tech/Telecom
Specific Manufacturing Emerging* US Europe ROW
Source-IBEF Source-IBEF

ER&D

Engineering Embedded
Exports & Domestic Trend($Bn) Composition of Exports ($Bn)
R&D Software
140 126
IT-BPM 117
PES (Incl. 120 107.8 28.3
System OSDP) 97.8 25
Software 100 87.3 22.4
20 28.4
Software 80 17.7
24.4
26
Products 14.1 22.5
Enterprise 13 20.4
60 11.4 17.8
Application 8.8 10 14.1
15.9
40
21 21.7 24 25 11.7 66 69.3
19 9.9
43.9 49.2 55.3 61
Vertical 20 33.5 39.9
25.8 25.8
Application
0
eCommerce

Hardware
Exports Domestic Software Products, Engineering Services, R&D ITeS-BPO IT Service
HCL’s Presence
Source-Nasscom Source-Nasscom Source-Nasscom
*Emerging - Retail, Utilities, Construction, Healthcare, Services, Transportation
 Industry Overview
Structural Shift in Demand Fixed Revenue % Recent Trends

60% 56% 57% • Rise of on-shoring of work

55% 52% 52%
49% Fall in automation costs and rise of digital technologies has led to higher
50% 47% onshoring in the Industry. Onshore revenue of Indian IT firms has grown from
18% 44% 44%
38% 42% 48% in FY 12 to 59% in FY 18
45%
62% 39%
82% 40% • Growth in non-linear models
35% Related to growth in employees - Movement from Linear model(rising
30% headcounts to increase revenue) to non-linear ones
• Changing business dynamics
FY19 FY25E
Shift from few large deals to multiple small size ones
Source-Nasscom Source-Bloomberg

Growth Drivers

Structural Shift Established Infrastructure Cheap & Skilled Labor Disruptive Innovation Adoption of GTM Strategy
Pick up in Global Demand

• M&As for capability

• Significant cost • Cloud computing, social expansion, ecosystem
• Robust infrastructure- media and data
• Peaking developed • Transition from Over 1,000 global advantage for India partnerships with
traditional to digital (5-6x w.r.t. US) analytics, are disrupting startups, academia,
market economic cycle delivery centers in about the way businesses are
especially in US and services 80 countries set up by • Presence of skilled & peers for keeping
• Born Digital Business English Speaking conducted customer eccentricity
European Union Indian Companies
• Paradigm shift from workforce at the center of
BPO to BPM business
 Business Description

Revenue % by Geography Financial Performance Stock movement (5 years)

In Cr Rs. 225

9% 51786
200 HCL
48641
42669 175
37841 NSE
32821
29% 150

8606 8722 125

63% 6528 7342 7469
100

US Europe ROW FY 14 FY 15 FY 16 FY 17 FY 18 HCLT IN Equity NIFTY Index

Revenue PAT
Source-Annual Reports Source-Annual Report Source-Bloomberg

Business Strategy: Mode 1-2-3

Mode 1: Strengthening the core Mode 2: Next Generation Services Mode 3: Products and Platforms Revenue Mix
• Gaining market share in • Consists of new-age • Leveraging expertise in Mode Mode Mode
Mix%
existing products and technologies like Digital building software IP for high 1 2 3
services & Analytics, IOT, cloud automation and cloud
native and cyber security platforms FY16 84% 12% 4%
• Consists of majorly FY17 81% 13% 6%
applications, infrastructure • Outcome oriented and • In FY 2018, 75 patents filed
and business services, experience centric offerings for IoT, machine learning, FY18 77% 15% 9%
engineering and R&D analytics, wireless device.
services • Maintaining key partnership FY17
8% 16% 80%
with players like Azure, • DRYiCE Autonomics and Growth
• Changing grounds from cost Google, AWS and Pivotal Orchestration a key offering
01

02

03
optimization to technology- cloud Foundry good enabler leverage power of AI to FY18
6% 29% 68%
led Digital Transformation for providing best available transform entire IT Growth
service to the customers landscapes
Source-Annual Reports
 Competitive Positioning
PESTEL
PESTEL

Political: Economic: Social: Technological: Environmental: Legal:

Increased Protectionism Favorable Forex Language Barrier, Changing business model & Reduction in Carbon Employment Laws,
from US and Europe environment would lead to Cheap Labor, mobile technology, government footprint and energy IT Act, e-
affordable & Increased Education level spending utilization governance
adoption
Competitive Positioning
Porter’s 5 forces
High - Since similar offering, niche players
coming up, margins moderating since last 3-
4 years, industry growth stable

Low – Traditional services being replaced by Medium- Since low customer consolidation,
digital; however, we also offer digital solutions Availability Bargaining already reasonable costs v/s benefits to be
of power of derived
substitutes customers
Existing
Competition Low- Employee benefits forms the largest cost
Medium- Customers do not prefer to switch
due to high involvement
Threat of Bargaining base; however due to automation and
new power of oversupply of talent the bargaining power is low
entrants suppliers
Strategy
1 Improvement in US and EU outlook
• According to IMF US is expected to grow at 2.7% and EU is expected to
grow at 2.1% in FY19
• Combined market share of US and EU is 90% as a result of which an
increase in growth will have a direct impact on the increase in demand
3 IP Partnership and Alliances
• 15-year partnership with IBM for making industry-leading Experience
enhanced,Automation and DevOps solutions
• Partnership with Siemens on Industry 4.0 solutions and Mindsphere, a cloud–
based open IoT OS, comprising technology, application development,
connectivity solutions, system integration and go–to–market strategy
5 Better ROE and Revenue/Employee
• Ability of the management to generate industry leading ROE
• Better ability to utilize the employee provides confidence that it will be
able to make optimum utilization of resources
2 Niche Acquisitions
• Going to acquire select IBM software products for $1.8b to enhance Mode 3
offerings
• Acquired Actian Corp for $330mn to enhance data management products and
platforms
• Acquired Geometric for $190mn to increase Capabilities in PLM consulting,
mechanical and manufacturing engineering
4 Increase in adoption of technology
• Changing technology narrative – move towards digital
• Global technology spends to increase at over 8.5% in 2018
• Digital revenue share to double by 2025 to reach ~$325 Billion (Nasscom)
6 DRYiCE Platform
• DRYiCE-comprehensive Autonomics & Orchestration platform, is the core
force behind HCL’s Mode 1 and 2 offerings
• Its modules has usage across infrastructure, applications, business processes
and engineering and enables delivering IT Automation, Cloud & DevOps
Automation, SDLC / PDLC Automation and Robotic Process Automation
Source-IMF, Bloomberg, Annual Reports , Investor Presentations