HCLTech bags $2.1-billion deal from Verizon, over 6 years
On August 10th, HCL Technologies announced that it has entered into a substantial $2.1-billion agreement with Verizon Business. This deal entails HCLTech providing managed network services to Verizon Business’s global enterprise clientele. This strategic partnership is expected to invigorate HCLTech’s performance, providing a significant boost after a relatively sluggish performance in the April-June quarter.
This deal is poised to significantly enhance HCLTech’s deal wins for the current fiscal year (Q1FY24). The company’s recent Q1FY24 performance saw deal wins totaling $1.56 billion, marking a notable decrease compared to the impressive order book of $2 billion and more that the company had achieved over the preceding seven quarters.
In outlining the deal, HCLTech emphasized its anticipation of a positive and substantial revenue impact over the course of the following six years, commencing in November 2023. The estimated total contract value of $2.1 billion over the specified term highlights the significance and magnitude of this partnership with Verizon Business.
This collaboration not only signifies a significant financial boost for HCLTech but also underscores its capabilities in delivering managed network services to a global enterprise clientele. The deal exemplifies HCLTech’s strategic approach to expanding its portfolio and solidifying its position in the IT services industry.
Through this collaboration, the strengths of Verizon Business in networking prowess, solution development, and expansive scale will be synergized with HCL Technologies’ expertise in managed services. This collective effort aims to provide comprehensive and substantial wireline service delivery to cater to the needs of enterprise customers on a large scale.
Verizon Business will take the lead in various critical aspects of the collaboration, including customer acquisition, sales, solution conceptualization, and overarching planning and development in tandem with its customers. On the other hand, HCL Technologies will assume a pivotal role in the later stages of the process. Specifically, HCLTech will be responsible for post-sale implementation and the continuous provision of support to ensure the seamless operation and maintenance of the services.
This strategic alignment between Verizon Business and HCL Technologies leverages the core competencies of both entities, with Verizon focusing on customer engagement and solution design, and HCLTech concentrating on efficient implementation and sustained support.
By combining these strengths, the collaboration aims to deliver a comprehensive and high-quality wireline service offering tailored to the diverse and evolving needs of enterprise customers. This division of responsibilities highlights a well-structured approach to maximize the benefits of the partnership and provide a holistic solution to clients.
In order to facilitate the execution of this collaboration, a specific team from Verizon Business Global Customer Operations will transition to HCL Technologies. This move is aimed at ensuring a seamless and effective implementation of the partnership. It underscores the necessity for close coordination and a delicate equilibrium of responsibilities on a large-scale enterprise level.
C. Vijayakumar, CEO of HCL Technologies, emphasized the significance of this collaboration, stating, “Our data-driven service delivery, advanced network capabilities, and user-friendly customer interfaces, coupled with the distinct strengths and robustness of the Verizon network, will empower enterprises to achieve improved business outcomes and expedited time-to-market.”
Vijayakumar’s statement underscores the overarching vision of the collaboration – to combine the technological prowess of both entities in order to provide enterprises with enhanced services that drive tangible and positive business results. By seamlessly integrating the respective strengths and capabilities, this partnership aims to offer enterprises a unique and valuable solution that positively impacts their operational efficiency and competitive edge.
“HCL Technologies is widely acknowledged as an industry leader in Managed Network Services. By harnessing their IT service acumen and continuous support for our enterprise networking implementations, Verizon Business can enhance our service delivery capabilities while also intensifying our commitment to assisting customers in integrating cutting-edge technologies such as 5G, SD-WAN, and SASE into their operations and product offerings,” remarked Kyle Malady, CEO of Verizon Business.
Notably, this agreement will be categorized within the telecom and technology sectors, which experienced significant downsizing in the previous quarter. This deal stands out as a substantial and strategic move within these sectors, potentially serving as a noteworthy counterbalance to the prevailing trends of downsizing and reflecting the companies’ commitment to innovation and growth despite broader industry challenges.
In a conversation with Moneycontrol in the previous month, Vijayakumar had revealed that the company had initiated the development of a robust pipeline right from the outset of the first quarter. He also mentioned that HCL Technologies was presently witnessing an “all-time high” order book.
“We anticipate strong bookings for this quarter, which we believe will contribute to sustaining improved sequential growth moving forward. This momentum aligns with our objective of achieving the projected 6-8 percent year-on-year revenue growth (at constant currency) for the year,” he further elaborated.
Vijayakumar’s comments provide insights into HCL Technologies’ proactive approach in bolstering its business prospects. The company’s focus on cultivating a strong pipeline and attaining a record order book indicates its dedication to securing new business opportunities and capitalizing on them for sustained growth. This proactive strategy bodes well for HCLTech’s ability to meet its stated revenue growth targets and underscores the management’s confidence in the company’s performance trajectory for the rest of the fiscal year.
