HCL Tech buys Volvo Group’s external IT biz, inks IT pact

The country’s fourth-largest software services firm HCL Technologies on Tuesday said it has acquired Volvo group’s external IT business and has signed a five-year outsourcing deal with the commercial vehicles maker. The acquisition, for which the companies signed a letter of intent in October, will add 40 new customers in the Nordic and France regions and 2,500 highly skilled employees from 11 countries to HCL’s portfolio.

Sources said cumulatively, the transaction will bring in revenue upwards of USD 1.8 billion over the next five years to the Indian firm. HCL declined to comment on the deal size. The Noida-based firm had agreed to buy the external IT business of Sweden’s Volvo group for USD 138 million (around Rs 895 crore) in an all-cash deal.

Volvo’s IT business is an important addition of HCL’s portfolio as it brings in an annual billing of about USD 200 million, sources added. On IT outsourcing deal, HCL said it will deliver on a technology transformation roadmap that spans over 3,500 applications, over 20 data centres and 11,000 servers, 12 PB (petabyte) of storage, 20,000-plus MIPS of mainframe capacity and over 15,000 network devices.

“The deal is one of the largest IT deals signed by any Indian IT company, and a first in the industry to use principles of Vested Sourcing as the basis of the relationship for an IT outsourcing engagement of this size and magnitude,” it said in a statement. As part of this roadmap, HCL will also provide over 65,000 Volvo end-users with access to productivity and user enablement solutions like Microsoft Office 365, HCL added.

The relationship will enable HCL to create an automotive Centre of Excellence in Gothenburg, based on the domain expertise of the Volvo team, to serve HCL’s global automotive and manufacturing customers. “Combining the strengths of HCL with those of the transferred parts of Volvo IT will result in an organisation with formidable capabilities and an intimate understanding of Volvo Group needs and opportunities,” Olle Hogblom, CIO of the Volvo Group and President of Volvo IT, said.

This, and the cultural fit between our two organisations, is the foundation for a partnership that will provide long term and strategic benefits for the Volvo Group, he added.