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When looking at the growth opportunities, another dimensionto explore is that of new propositions such as cloud computing,virtualization, platform-based BPO, green IT, digital technology& marketing, industry-specic smart Solutions, and advancedbusiness analytics. Of all these propositions, Cloud computingis being touted as the most disruptive proposition that hasthe potential to change the way IT services are delivered. Thekey reason for that are the trends of the Industralization andConsumerization of IT.Industralization of IT refers to the standardization of IT servicesand covers predesigned and precongured solutions that willbe highly automated, efcient, repeatable, scalable, reliable,and available. Consumerization of IT refers the changing buyerbehavior in IT. Buying centers will shift from IT to business.Buyers will buy services instead of skills – Infrastructure as aService, Application as a Service, Platform as a Service, or evenBusiness as a service. The key driver for the Consumerizationof IT is the movement towards decreased IT hardware/softwareassets. Virtualization is making underlying hardware (and itsownership) non-strategic. Buyers are looking for scalability,pay-as-you-go, and freedom from infrastructure build-out andless capex sensitivity.Industry OutlookThe rst decade of the 21 st Century was somewhat unique.It saw everything from highly volatile Oil prices, increasinglyrising commodity prices, bulls and bears of stock markets,focus/defocus on climate change, and debates/concernsabout scarcity of natural resources. It started with a recessionand it is ending with a recession. But, there is big differencebetween the two. While the previous recession was led by theslowdown in business spending, the current recession is ledby the slowdown in both business and consumer spending.Consumer condence has completely shaken due to increasingjob losses, salary freeze/cuts, and memory of loan foreclosures.Consumers are taking precautionary approach to spending andreducing their debt levels. They are spending on what they needrather than what they want. Banks have started adopting tightercredit and stricter lending standards towards consumers, asthey side-step Risk with ‘Be Prepared’ approach instead of a‘Just do it’ approach. All this is leading to the phenomenon of‘New Normal’.The ‘New Normal’ means we will be living in a world of moderatedbusiness growth during next few years. The businesses acrossthe world won’t be growing at the same pace as they weregrowing from 2005-08. The customers will be demanding morefor less. They will look for business benets than IT benets.They would want vendors to put skin in the game and co-investin the transformation initiatives.Indian IT Industry will also witness lesser growth rates inthe next decade than in the last decade. As per NASSCOMMckinsey 2020 report, the total global sourcing industry willgrow at a CAGR of 15% from 2008 until 2020. It is likely toexpand more than ve-fold by 2020 from $80 bn in revenuesin 2008 to $450 bn by 2020 (based on a penetration of 40%of the total addressable market of $ 1.1 trn). The Indian globalsourcing industry will grow at a slightly lower CAGR of 13% andis likely to expand four-fold by 2020 from $40 bn in revenuesin 2008 to $175 bn by 2020. This will imply a decline in India’sshare of the global market from 51% to around 40% by 2020.The companies with disruptive business models will be able tobuck this trend and grow at much faster growth rates.HCL StrategyHCL’s strategy of focusing on growth, service innovation,and unique positioning in the marketplace has improved thecompany’s competitive standing. HCL has achieved protablegrowth over the last ve years, including through the recession.HCL’s transformation journey starting in 2005 was the productof choices. By 2005, the Indian IT industry had come of age,but HCL was lagging. Y2K-related work and expanded globaldelivery offerings fueled industry-wide growth from 2000 to 2005– and HCL itself grew its annual revenue from $207 m to $764 mduring the period – but HCL’s market share in Indian IT exportshad fallen. At risk of drifting into irrelevance in the industry – andmindful of intensifying competition from the likes of IBM andAccenture in India – HCL charted a multi-pronged strategy todifferentiate itself in the marketplace. To make up for its loss inmarket share, HCL chose to focus on growth and workedto diversify its revenue base through new service offerings.To rejuvenate its employee base and be seen as an employerof choice, HCL launched a portfolio of initiatives aroundEmployees First Customers Second. To deliver increasedvalue for clients, HCL created new operating processesand methodologies for customer relations through Trust,Transparency, and Flexibility and offered outcome-basedengagements before its peers. The company also worked tonurture customer intimacy through initiatives such as the annualGlobal Customer Meet. After falling behind Indian competitorsduring the rst half of the decade, HCL increased its marketshare from 2005 to 2010.Over the course of the last ve years, HCL has acquiredcapabilities and adapted organizationally to a changing marketand intensifying competition. HCL has been able to upgradesome lines of business, such as infrastructure services andengineering and R&D services, organically. Infrastructureservices, for example, offered network and security servicesin 2005 but has since added world-class architecture andconsulting capabilities. HCL identied Enterprise ApplicationServices as a promising line of business as clients shiftedfrom custom to packaged applications, but saw gaps in itscapabilities that could not be lled organically. The companyacquired Axon, the biggest acquisition in the history ofthe Indian IT industry, to add consulting and solutioningcapabilities to EAS and successfully retained Axon’s top leadersthrough a reverse merger. Organizationally, HCL simplied andconsolidated its fragmented structure and established clearlines of accountability. Through Dual GTM, HCL presentedits horizontal and vertical depth to potential customers.New offerings, domain depth, and consulting capabilitiesenabled HCL to position itself as a provider of end-to-endservices, not just skills.Just as HCL was catching up to its Indian rivals, the nancialcrisis and recession of 2008-09 hit the Indian IT industry. Thepain of the recession was particularly acute for HCL and itspeers because it was the industry’s rst major recession.HCL responded to the recession by demonstrating valueto its existing customers and ensuring security to itsemployees. Through the assurance that no HCLite wouldbe left behind and a collaborative process of consulting with10,000 employees before imposing new policies, HCL managedinternal strain through the recession. The company also saw5
the downturn as a rare opportunity to acquire new businessand quality customers, and HCL’s performance during theperiod surpassed many rivals. HCL grew at 23% YoY in CY09,whereas most Indian/Global peers witnessed negative revenuegrowth during the same period.Going forward, HCL will continue to focus on revenue growththrough existing and new customers. HCL will continue toevolve Account Management practices to make them “best inclass”. HCL will offer increased value to its existing customersthrough ecosystem alliances and partnerships. HCL willdo joint solution development with Partners to build Industryspecicand cross-industry solutions that are high value anddifferentiated. HCL will offer increased portfolio of services forexisting clients, thus blocking new entrants into its client base.HCL will target new customers with a focused program forsourcing advisors. HCL will have dedicated hunters who willfollow a Named Account strategy to target Fortune Global 500clients. HCL will continue to make investments in high valueservices and Global delivery model.Company OverviewAbout HCL Technologies LtdHCL is a global technology enterprise and a name to reckon within the industry. The passion of its founder and the entrepreneurialzeal of its employees have made its software services arm, HCLTechnologies, a leading provider of business transformation,enterprise and custom applications, infrastructure management,business process outsourcing, and engineering services. HCLdelivers solutions across a wide range of verticals like nancialservices, manufacturing, consumer services, public servicesand healthcare. Its global delivery model is spread across 26countries around the globe and its empowered ‘transformers’are busy working with over 500 forward looking customers,seeking to shift paradigms and transform the way business isbeing done.Change has been the winning formula at HCL. The abilityto transform businesses across the world comes from theorganization’s own readiness to transform itself in its relentlessdrive to better serve its customers. In 2005, HCL commencedon its transformation journey based on the foundation of‘Employees First’. Today, this unique management philosophyhas been recognized and praised worldwide for empoweringemployees to become the drivers of growth. And this in turnhas led to extraordinary growth in the past 5 years, where HCLexperienced:• Tripling of revenue and operating prot• Twenty percent year-on-year growth in market share• Seventy percent of deals being won against the Big Fourinternational IT companies• Fivefold increase in the number of large ($20mn+)customers• Nearly fty percent decline in employee attrition rates• Seventy percent increase in employee satisfaction scoresThe phenomenal performance has won its share of approval.Today, HCL is proud to be on Business Week’s 5 mostinuential companies to ‘watch’ list; considered ‘disruptive’by IDC; ranked in the top 10 outsourcers with the ‘highestaccountability, transparency and trust’ by Wall Street Journal;ranked #1 employer of 2009 in a study done by Hewitt; #1among the top 50 best managed global outsourcing vendorsof 2009 by Brown & Wilson’s Black Book of Outsourcing; listedas one of the 44 Most Democratic Workplaces in the worldby WorldBlu and featured as a case study in Harvard, LondonBusiness School, Darden Business Publishing, and morerecently, David G Thomson’s book, “Blueprint to a billion - 7essentials to exponential growth”.Indeed, HCL is more comfortable in forging its own trailrather than following the expected – thereby bringing aboutunexpected and path breaking results.Service OfferingsHCL believes in the good practice of regularly re-structuringand re-energizing its diversied portfolio of service offerings.By re-evaluating and realigning this portfolio from time to time,HCL is able to develop a robust and resilient business model.No single service line contributes more than 32% to the totalrevenue even while maintaining a leading edge in key verticalswhere HCL chooses to focus.Custom Application ServicesThe Custom Application Services division at HCL leverages adomain-driven approach to design, and implements scalable,reliable, robust, secure, and easily maintainable applicationsthat provide our customers with business differentiationthrough IT. Service offerings include application development,management, support, re-engineering, modernization, migration,and independent verication and validation. With more than10,000 domain and technology experts supporting more than100 clients across geographies, this group contributes over29% of HCL’s revenues, and services at least two of the topve players in various industries like retail, banking, insurance,media & publishing, gaming and life sciences.A customer centric focus keeps HCL continuously investing andinventing robust methodologies, tools, and processes. HCL’sBAIT is a new framework that allows the efcient alignment of ITwith business; it provides a unied view of all business processeswith the underlying IT landscape and helps reduce cycle timewhile providing the lowest IT cost on a business transaction.Our unique Knowledge Transfer methodology - ASSET TMensures minimum cost with a smooth transition to offshore, forcustomers. And right now HCL is investing signicantly in nichetechnologies and areas like cloud computing, pay as you goservices and hosted services.With our dedicated CoEs, skills are continuously beingupgraded, and customers are enjoying faster time to marketas they leverage our extensive research and development6
Page 2 and 3: CONTENTSBoard of Directors 2Managem
Page 4 and 5: MANAGEMENT DISCUSSION AND ANALYSISI
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Page 17 and 18: DIRECTORS’ REPORTDear Shareholder
Page 19 and 20: DEBENTURESDuring the year, the Comp
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AUDITORS’ CERTIFICATEREGARDING CO
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