Today in Tech: HCL's latest numbers & new COO; McKinsey's report on social tech

NS Ramnath
Updated: Oct 1, 2012 01:26:34 AM UTC

HCL Tech delights markets, gets a new COO

HCL Technologies announced its results yesterday, and delighted the market. Looking at how HCL Tech has been performing against its rivals over the last five years tells us why the market is happy. It has been showing good growth in revenues for several quarters, and in the latest, net profit grew more than expected.

TCS-Infy-HCL-Tech-Revenues

 

TCS-Infy-HCL-Tech-Revenues

 

However, two things must be borne in mind.

One, accounting for the currency effects, and considering that HCL Tech is yet to give pay hikes, the net profit growth, in reality, looks less robust than the previous chart suggests. Besides, it’s not clear if HCL Tech can sustain its earlier levels of growth in absolute terms in dollar revenues. See the chart below.

TCS-Infy-HCL-Tech-Revenues

 

Two, while Nayar loves attributing HCL’s performance to his ‘employee first’ strategy, it more likely came from the big acquisition he made in 2008 (and from making the best use of favourable currency and from aggressively pursuing certain growth segments). This growth engine has not gone out of his radar. Nayar told Financial Express that HCL Tech will focus on big acquisitions, and that it's a five year play.

That will take time, will be risky, but that just might give the next thrust to HCL Tech’s growth.

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[caption id="" align="alignleft" width="280" caption="Vineet Nayar"]TCS-Infy-HCL-Tech-Revenues[/caption]

The other significant news from HCL Tech is appointment of Anant Gupta, a HCL Tech veteran, as COO. Nayar says, it has to do with size. "I needed a COO. It's too much for a $4-billion firm not to have a COO, especially with the rising need to act as an interface between different division", he told ET. But then, bigger companies like TCS and Infosys don’t have one.

The move is likely to be seen as a signaling of who will follow Nayar after he steps down. It will also give him more time on strategic issues and his favourite themes. “We need to significantly increase our incubated business revenue and identify the businesses we have to incubate in the future. Besides, we also have the ‘employee first’ initiative, the primary reason behind our growth. We need to get our hands on budgets that are not necessarily IT (information technology) ones," he told Business Standard

McKinsey's new report on social technologies

McKinsey has just published a report called "The social economy: Unlocking value and productivity through social technologies." Here is a summary of the key findings.

  • Consumers are adopting social technologies at an unprecedented pace. We have not seen the full potential yet.
  • $900 billion to $1.3 trillion can be unlocked through use of social technologies, primarily by improving communications and collaboration within and across enterprises. Productivity of knowledge workers can go up by 20-25%
  • If you don’t invest in social technologies, you will be outpaced by those who do.

 

The report should come as a validation to the many IT services companies that are hoping to ride on this wave. (They hope to provide solutions to companies looking to integrate these technologies in their businesses.) At Infosys, social – along with mobile, cloud and big data – form the key elements of Infosys 3.0. For Cognizant, it’s so important that Francisco D’Souza, it's CEO is personally in-charge of emerging technologies business. TCS is probably ahead in this game compared to their peers, according to a report by JP Morgan.

But the problem is no one is clear when it will really start yielding results. Some executives I have spoken to said while these topics dominate the conversations with clients, it’s not clear how fast the adoption will be. Typically, client organisations seem to be more receptive of cloud – and to an extent of big data. But, there are more questions about social technologies than answers in the clients mind. And that's delaying the adoption. I am not sure if this report will provide some of the answers, but the numbers do look impressive. Have a look.

 

Also of interest

  • Hacking experts find new ways to attack Android phones: Reuters
  • Facebook Widens ‘Bug Bounty’ Program To Combat Internal Breaches: Bloomberg
  • Newsweek Owner Says Magazine Will Eventually Shift Online: Bloomberg
  • Why I think OS X Mountain Lion is worth an upgrade: Gigaom
  • The News Isn’t Good for Zynga, Maker of FarmVille: New York Times

 

The thoughts and opinions shared here are of the author.

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