BPO order lifts HCL Tech

HCL Technologies surged on Monday after the company said that it has won a BPO order worth $160 million from British Telecom.

The scrip of the IT firm was up by 5.9% at Rs 173.50 on the BSE in early-afternoon trades. A volume of 4.65 lakh shares was recorded on the counter in slightly over two hours of trading.

The market was agog with rumours of HCL Technologies having bagged a mega order from British Telecom in the business process outsourcing segment last week, that saw the scrip's recovery in the last few sessions. From a recent low of Rs 151.55 on 31 March 2003, it gas surged by 8.2% in four sessions to 164.05 last Friday (4 April 2003) ahead of the announcement of bagging the order. The rally on the counter was, however, on the back of only modest volumes that ranged from 150,000 to 530,000 shares.

HCL Technologies today announced that it has secured a framework contract worth up to $160 million (Rs 768 crore) for its BPO service operations, from BT, one of the world's leading providers of telecommunications services. The largest ever engagement in the BPO space awarded to an Indian company encompasses a range of services and also leverages HCL Technologies' proven experience and expertise in the area of software development. These services will be delivered from a ‘Next Generation Contact Centre' exclusively set up by HCL Technologies for BT in Noida, but managed by BT managers. The 100% compliant NGCC, amongst a select few in the world, adheres to stringent health, safety and environment norms laid out under UK laws as well as UN GS 18 standards.

Announcing this landmark order, Sujit Baksi, CEO of both the Indian and Northern Ireland BPO units of HCL Technologies, said, "Currently, ours is the only company in the country that offers a three-way communications resilience between India, the UK and the US through our centres located in the three countries. This, coupled with our range of service offerings, proven calibre and emphasis on investments to develop international standards and facilities, has won us this prestigious order from BT."

Despite poor Q2 (ended December 2002 results), some of the IT analysts had taken a positive view of the stock due to company's initiatives on the BPO front. HCL Technologies' BPO services business had performed poorly for the first quarter ended September 2002, when it had posted a 11% increase in revenues but a loss at the EBITDA (earnings before interest depreciation tax and amortisation). During the second quarter ended December 2002, the BPO business turned around at the EBITDA level, with an EBITDA of Rs 2.31 crore. However, HCL Technologies' core software services business remained under pressure during the December 2002 quarter.

Technology development services contributed 31% (33%), networking services contributed 8% (7%), software product engineering services contributed 18% (17%), applications engineering services contributed 37% (38%) and IT-enabled services contributed 6% (5%) of the total revenues in Q2.

One of the key initiatives taken by HCL Technologies has been the proposed merger of software business of HCL Infosystems with HCL Technologies. The software export business of HCL Infosystems will be de-merged and later merged with HCL Technology, subject to the receipt of all regulatory approvals. The management claims that this would help HCL Technologies consolidate its practices in the area of end-user applications and widen its suite of offerings in the fast growing enterprise solutions space.

BSE code: 500179