HCL transcending US protectionism with clear alignment to client's global digital business needs & goals

HCL's 'Great Digital Leap Forward' will keep astute client partners ahead of US offshoring BPO political protectionism

I was in Boston last week for the HCL Technologies advisor and analyst event, which occurred on the day the world woke up to a new US political direction. President elect Trump's stated ambitions to restrict outsourcing gave many food for thought at the event, but HCL's modern approaches to digital business arguably render old outsourcing models to the history books anyway.

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I thought HCL presented a very well organized understanding of the enterprise scale challenges large business entities face, solutioning approaches and ways they partner with their clients. The healthy appetite they have for sharing risks and rewards in a rapidly accelerating and evolving business world spoke volumes about understanding changing business strategies and associated digital technology deployments.

Managed services steadily increasing, legacy fixed price IT execution work shrinking

22 year HCL veteran and previous COO C. Vijayakumar ('Vijay') is the new CEO after Anant Gupta stepped down last month to pursue some ambitious and futuristic external plans. 'Vijay' detailed significant new shifts in the ways HCL does business.

Representing a clear macro snapshot of the rapidly changing services world, HCL's managed services volume is now at 58%, having been inching up a couple of points every year for the last 5 years. Output and outcome based work takes precedent in these new risk/reward business models, meaning more negotiated shared revenue deals with client partners.

The percentage of fixed price delivery work, (aka the old 'core IT' services world) is shrinking. ERP implementation work is dwindling rapidly, as I also previously discussed more broadly in my last post, and while Software as Service (SaaS) work is growing, old IT era projects are facing 'financial headwinds'.

As the global cloud aspects of business grow, on premise is becoming irrelevant - HCL are closing four of their six Indian data centers and are now closely aligned with cloud provider partners. Going after infrastructure outsourcing (IO) deals with cloud partners Amazon, Microsoft and IBM is the bedrock, but the real action is around the consulting and micro services offerings that reside on these modern digital data platforms as clients modernize.

Digital and infrastructure deals are the fastest service line growth areas, with a clear focus on what the 21st century technology 'connected Enterprise' footprint looks like in the context of specific clients.

Autonomics driving business innovation

'Autonomics' is an HCL term for automation that leverages artificial intelligence and data analytics. This automation can be as simple as 'robotic process automation' which is the scripted automation of enterprise 'busywork' processes, typical across multiple enterprise systems. This area of automation will arguably replace a lot of the old physical 'business process optimization' work done by humans that was outsourced last decade by western companies.

Autonomics can be as complex as orchestrating the control mechanisms for smart industrial internet manufacturing design along with all the associated supply chain and product support data flows, and the goal of services firms like HCL is to partner closely with clients to envision new products and services that leverage this new competitive landscape. HCL call their framework for this orchestration and automation ' DRYiCE', a partnership between humans and machines. Essentially the goal is to automate tasks and not labor.

I had breakfast with CTO Kalyan Kumar ('KK') before the event and was struck by how fluid and forward thinking HCL are compared to my previous business interactions with the firm last decade. CEO Vijayakumar quoted 1970's 'Future Shock' futurist Alvin Toffler later in the day, 'the illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn', having first shown a video demonstrating the fragility and short lifespan of firms that are not evolving with the digital revolution. KK was clear that some degree of cannibalization of old IT work was necessary to continue to drive forward.

Global markets and globalization, two very different things

This is all a far cry from the on-premise in India 'Remote Infrastructure Services' (RIM) HCL approach last decade, with associated outsourcing of US and European jobs that caused controversy and anxiety.

The world we live in today requires global connected data flows, leveraging the sheer size of firms like HCL technologies. Being a 100,000 person company with annual revenues north of 6.1 billion USD last year makes HCL technologies one of the key scale global services providers with a massive portfolio of skill sets. Unlike some of their giant competitors, I think HCL are acutely aware how fragile the transition from IT era cultural rigidity to digital is, and their 'beyond digital' thinking maps well to the challenges firms of all sizes competing in global markets are strategizing around.

Precision Agriculture supplier - a good example of innovative digital evolution and partnership

It's a highly competitive buyers market right now on the client side, so having well honed philosophies, skill sets and partnerships are critical to continued relevance. A good, down to earth example of the type of work HCL are doing is with a precision agriculture firm partner/client. They started out in 2002 making soil tension meters, evolved to field instrumentation and automation and are partnered with HCL to drive agricultural advice services that enable precision agriculture, to get greater yields from land.

The evolution from the manufacture of offline smart devices to data flows and aggregation is a fascinating microcosm of what is going on in the 'Internet of Things' IoT space. The firm made a decision 18 months ago to start selling their services by the acre instead of selling devices and have transformed from cables buried under agricultural land to connect early devices to leveraging HCL's IoT works team to create an 'as a service' digital business model. The data they are creating is their new value model and invaluable to farmers, who consume pay-as-you-go services from a network of wireless stations connected to the cellular network.

Information gathered, analyzed and aggregated on soil tension, wind direction/speed, rainfall, soil/air temperature, relative humidity, barometric pressure, solar radiation, degree days, chilling temperature and other attributes is the information vital to increase land crop yield, planting and soil treatment intelligence. This also helps reduce water and energy usage, pests and diseases, reduces fertilizer loss and creates more predictable efficient results.

It's this type of co-innovation and business evolution partnership with all sizes and scales of business that is the new face of the global services industry and it's very hard to imagine parochial protectionism succeeding in the face of stiff global competition. The complex interdependencies within digital ecospheres such as precision agriculture make partnerships such as the one between HCL and their client essential for the survival of both.

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