HCL-ERS
Presented by -Anup Dutta
Agenda
• HCL-ERS Engineering to be HCL’s growth driver
• HCL-ERS with respect to Indian and Global ESPs
• HCL-ERS FY’17 strategic vision
• About HCL-ERS world
• HCL-ERS geo wise demand trend
2
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
Engineering R&D to be HCL Tech’s growth driver
3
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
Engineering R&D to be HCL Tech’s growth driver
36 years of Complex Engineering Experience
300+ Global Customers
100+ ODCs and 22+ Customer specific labs
1250+ Patents filed , 20+ EOOTB solutions
55 of Top 100 Global R&D companies as
customers
Market share of 36% among Top 4 IOPs. Lead by
Doubled the Revenues
in the past 3 years
$200m over the next competitor
Infrastructure
31.5%
Custom Apps
29.2%
EAS
17.7%
Towards a $1B run rate
OND’14 – $273M
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
BPO
4.3%
ERS
17.3%
Largest Engineering Services
Team Globally
20,000+ Engineers
Largest ESP from India
6th Largest Globally
(In terms of revenue)
ERS with respect to Indian and Global ESPs
5
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
HCL ERS has been the Largest Indian ESP for over three years now
Tier-I Indian ESPs Revenues in M$
for JAS-14 and OND-14 quarters
300.0
250.0
HCL Technologies has the highest
focus on ‘Engineering Services’ among
the
Top-4 Indian IT Companies
Engineering Services Revenues as a % of
corporate revenues in OND 14
273
245
0.0%
185
200.0
177
172
10.0%
HCL Tech.
176
JAS 14
150.0
OND 14
100.0
5.0%
75 75
20.0%
18.3%
Wipro
TCS
15.0%
9.80%
4.50%
50.0
Infosys
0.0
HCL ERS
TCS-EIS
3.40%
Wipro-R&D Infosys-PES
HCL ERS overtook Wipro R&D biz. in JAS-11
HCL ERS with 20,000+ engineering resources
quarter, since then has retained the Indian
is the Largest Engineering Service Provider
ESP Leadership
Globally
Tier-I Engineering Service Providers (ESPs) consist of following players & segments: HCL Tech (Engineering and R&D
Services); TCS (Engineering and Industrial Services); Wipro (R&D Business) and Infosys (Product Engineering Services)
Source: Public disclosures - investor relations
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
External
HCL ERS has consistently outperformed the Tier-I ESPs market
3 Year- Quarterly ESO Revenue Tracker
HCL ERS revenues reached
$273M in OND-14 from the
base of $184M in JAS-11
Tier-I combined revenues
reached $701M in OND-14
from the base of $550M
in JAS-11
Tier-I combined revenues consist of following players &
segments: HCL Tech (Engineering and R&D Services);
TCS (Engineering and Industrial Services); Wipro (R&D
Business) and Infosys (Product Engineering Services)
*Base of this analysis has been taken as the JAS 2012 quarter
HCL ERS has a market share of 38.9% in
OND-14, up 270 bps wrt AMJ-14 quarter
Public disclosures
- investor relations
Copyright © 2014Source:
HCL Technologies
Limited | www.hcltech.com
HCL ERS captures an incremental market
share
(between JAS-11 and OND-14) of over
59%
External
Top 10 Indian ESPs market grew by 10% in FY14, with HCL leading the list by
over 200M
Indian ESP Landscape: FY14 revenues, annual
growth
HCL ERS
881* + 7.3%
Wipro-PES
676
TCS-EIS
649
Global ESP, Only Engineering Service/outsourced
R&D Rev.
Altran-R&D
+ 1%
Alten-ETC
+16%
Akka
1,584
1,208
1,146
+9%
+8%
-1%
Tata Technologies
392
+5.3%
Bertrandt
Infotech
381
+ 10%
AF
+12.5%
HCL-ERS
+ 30%
IAV
773
+10%
EDAG
745
+56%
Infosys-PES
308
L&T TS*
279
Persistent -PE
229
+ 13%
Tata Elxsi - SD&S
124
+ 21%
KPIT Cummins - ES
115
+ 13%
HCL ERS among Tier-I (TCS, Wipro, Infosys)
FY14: 35.5%
*Data based
disclosures,
may differ from
Copyright
© 2014 on
HCLpublic
Technologies
Limited | www.hcltech.com
internal ERS
1,091
940
881
+10%
+24%
+7.3%
Wipro
676
+1%
Assystem
658
+2%
Major Acquisitions in FY 14:
• AF AB acquiring Epsilon (Sweden)
• EDAG and Rucker merged
• Around 6 minor acquisition by Alten
HCL-ERS FY’17 strategic vision
9
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
HCL-ERS FY’17 Strategic Vision
$ 2B in Revenues
Retain India ESP Leadership
To be among Top 3 Globally
ERS Organic FY 17 Plan
Focused Account Growth
Top Tier Accounts
494
 4 Mega (100M+) Accounts
 8 Large (50M+) Accounts
 16 HiPot (20M+) Accounts
859
Mega 4 Accounts
Large 8
Accounts
494
1,220
Strategic Focus Areas
176
2.0/ Helicopter Landing
 Japan
 Europe
1,429
Others
361
200
Geo Expansion
1,396
HiPot 16 Accts
365
1,090
New Service Lines
1,429
1,205
North America - Organic
 PTS
 Mechanical
 IoT/M2M
JP
1,090
115
EU
225
Japan
636
Micro-verticals
Europe
939
Embedded
 Energy, Oil & Gas, TSPs
 Auto, Industrial
1,129
SEG
636
1,329
Mech.
303
190
75
M&A
M2M
 FY 17 Target : $ 545M
 Into EU + Auto + Mechanical
0
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
$200M
300
1,429
CSO
XRX
Mechanical
Product Testing Services
$400M
$600M
$800M
$1B
$1,2B
$1.4B
About HCL-ERS World!
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11
HCL-ERS world
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
HCL – ERS Global delivery Centers
Qingdao
China (89)
Beijing
China (98)
Legend: ERS specific GDCs
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13
Great Engineered Products are about Phenomenal Experiences
Experiences build great brands and great organizations
9 million phones sold in 3
days
200+ million iOS7
activations i
$150 B revenue for
Apple, which is more
than the total revenue
added for the past 12 yr
Launched in 2001,
65% of the hybrid cars
in the US today are
Prius
Just in the US, it has
saved $10B in gas
By recreating the face to
face experience, Cisco’s
Tele-presence created
tremendous value by
saving on travel
For the first time, so
many great
technologies, ideas
and processes had
been assembled in
one device, iterated
until they squeak, and
made accessible to
normal human beings
While most
automakers are still
catching up to
develop their own
gasoline-electric
hybrid technologies,
Toyota is about to
release its third
generation of the
Prius.
Organizations the world
over are experiencing the
transformational impact of
faster decision making,
stronger working
relationships, cost control
and improved productivity
delivered by Cisco
TelePresence
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
The Boeing 787
Dreamliner has an
order backlog of
$180B, equivalent to 6
years of commercial
aviation revenue of
Boeing
The key to the
exceptional
performance of the
787 Dreamliner is its
suite of new
technologies and its
revolutionary design.
What do we do to engineer great products ?
As a complementary engineering services partner to R&D divisions of Global Technology companies, we
focus on :
…Accelerated Product Development
…delivered at an incredible
Value
…enabled by the latest Technologies
HCL ERS is the largest global engineering services team with over 18,500 engineers working for 300 +
customers across 31 countries.
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
The New disruptive technologies are impacting customers, across industries
Internet of Things,
Convergence
M2M Technologies
Automotive| Industrial | Energy/Utility| Health | Retail
• Raymond James research:
The number of Internetdevices surpassed humans
in 2011, & by 2020, Internetdevices are expected to
number between 26-50B
• Cisco estimates that
business already are
generating $613B of
profits due to
connections of devices to
internet, which is only half
the true potential
Functionality| Features| Hardware| Software| Platform
• Priming of underlying digital
features such as voice,
texts, video, pictures,
broadcasts, presentation,
streaming media, global
connectivity and
personalized services
Engineering
Analytics
Analytics platforms| Cloud Adoption| Distributed
Computing
• NASSCOM estimates total
Engineering Analytics
industry spending:
2014: $ 12.6 B
2017: $ 26B
CAGR: 16%
• Personation in consumer
industries; predictive
component failure in
Aero; improving
efficiency & safety in
Industrial are few EA
applications
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
• Morgan Stanley estimates
the Global 2013 shipment
of Smartphones + Tablets
(growing annually at 30%)
at 4X the shipments of
Desktop + Laptop PC
(declining at 15%)
Digital / SMAC
e/m Commerce | Mobility | Data Analytics | Cloud |
Social
• IDC predicts that over
85% Incremental
IT/technology spend of
corporates between 2014
& 2020 to be influenced
by the SMAC
technologies
IDC prediction, 2017 spend
• SMAC: $944 B (CAGR: 15%)
• Cloud: $ 195B (CAGR: 25%)
• Analytics: $ 30 B (CAGR: 30%)
• Traditional IT: $ 1.54T
(CAGR: 2%)
Large and innovative deals – 1/2
Looking for customer’s stress point, and opportunities for Large deals (Carve outs)
R&D Transformation for
Legacy Products
•
ALU technology migration to 4G, 5G, LTE. 2G/3G is legacy
• End-to-end sustenance & support by HCL
• Rebadging of ~2,100 ALU employees. Multi location
•
Biz model - Carve out, Helicopter Landing
Looking for investment led opportunities in Innovation, NPD & Time-to-Market
Brilliance Product line
Key Highlights
End to end product development: First
•
complete NPD managed by Xerox (w/o Fuji) and
HCL
•
Accelerated NPI. Time to market was 18
months, 50% faster than conventional duration
•
R&D cost Optimized: Multi layered
innovation driven project, R&D cost reduced by
30%.
•
Emerging Market focus: Ground up design
targeting the new emerging markets for
customers
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
Large and innovative deals – 2/2
Looking for customer’s stress point, and opportunities for Large deals (Carve outs)
End to end product engineering services for legacy product
lines
• HCL took over Clients products and rebadged 370+ resources of R&D team across US, UK, China and India
• Complete product engineering & support ownership for product worth $300 million in annual revenues.
• B2B product suite consisting of 12 varied Products with functional coverage across ERP, Financial Products, CRM &
HCM
• Responsible for Research, Engineering, QA, Localization, Tech Pubs , Consumer & Enterprise Tech Support with
shared Product Management.
Carve out of Ericsson’s Milan development center
• 136 engineers with deep experience in microwave and mobile backhaul
• Milan will be a key delivery center for the Ericsson business going forward and expertise we can leverage for other
telecom and non-telecom customers
• The addition of this talent in Italy & India and moving Ericsson to a large strategic account level, further underscores
HCL’s industry leading Telecom OEM services offering as we now have all SP focused OEMs as our key customers
globally
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
HCL-ERS geo wise demand trend
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19
Demand Trend India – 1/2
Verticals
Top Hiring Skills
Java/J2EE (Standard Skill)
Java, UI (Standard Skill)
Manual / Automation testing (Standard Skill)
Software
Microsoft Technologies (ASP.Net, VB.Net, c#.net)
Engineering / (Standard Skill)
PLM
ATG (Niche skill)
Windchill Implementation (Niche Skill)
Team Center (Niche Skill)
Ematrix or Enovia / Infor PLM (Niche Skill)
Aero & Auto
HW / VLSI
Telecom &
Networking
RAMS DO (Niche Skill)
C, Embedded development (Standard Skill)
PCB Design (Standard Skill)
Analog / Mixed Signal / High Speed Board design
(Niche skill)
SOC Verification (Niche Skill)
Lab View (Standard Skill)
L2/L3 Testing and Development (Niche Skill)
Java NMS/EMS Dev & Test (Niche Skill)
LTE/WCDMA, CDMA Dev & Test (Niche Skill)
Linux, Windows device driver development & Kernal
development (Niche Skill)
C, C++, Linux, TCP/IP (Standard Skill)
Network Security development & Testing (Niche
Skill)
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Demand Trend (Open
Positions)
Supply Challenges / Focus
Areas
TP Hiring considered
Niche Skill - 150-200
Standard Skill - 850PLM - No active vendor support.
950
Quality and supply of profiles is
ATG, Java, dot net
a challenge.
ATG Hiring - less profile inflow
Niche Skill - 60-80
RAMS DO - Quality and supply of
Standard Skill - 150C, Embedded
profiles is a challenge
200
SOC Verification - Very minimal
profile inflow for Noida
Standard Skill - 40-60
requirements.
Niche Skill - 100-150
PCB Design
Board Design - Profile quality is a
major issue.
Standard Skill - 200 Profile flow is very minimal for
250
niche skills. Profile quality also
Niche Skill - 1000 has been an issue.
1100
C, Linux, TCP/IP
Demand Trend India – 2/2
Verticals
Top Hiring Skills
Demand Trend (Open
Positions)
Supply Challenges / Focus
Areas
Servers & Storage
Storage Development & Testing (Niche Skill)
Storage Kernel Development (Niche Skill)
VM Ware development & Testing (Niche
Skill)
Firmware Development (Niche Skill)
Niche Skill - 200 - 300
Less inflow of profiles for
Chennai location
Standard Skill - 200-250
Niche Skill - 150 - 200
Less inflow of profiles for
Windows Device Driver
development profiles.
C/C++ Unix, CEmbedded
Standard Skill - 200-250
Niche Skill - 150 - 200
Poor turn out on weekend
drives across location has
been a challenge for VC++,
MFC and C# Winform skills.
C# Winforms,
C, Embedded
Standard Skill - 200-250
Niche Skill - 600-700
Medical domain and Mech
product design profile inflow
has been a challenge
CAD Tools
C, Embedded development (Standard Skill)
Mobile Technology (Niche Skill)
Consumer Electronics &
C, C++ Programming (Standard Skill)
Office Automation
Linux / Windows device driver development
(Niche Skill)
Manufacturing /
Semiconductor
Microsoft Technologies (VC++, MFC, C#
Winforms development) (Niche Skill)
C Embedded development (Standard Skill)
Product Engineering tools (Niche Skill)
Mechanical Engineering Medical Domain SME's (Niche Skill)
CAD Design (Standard Skill)
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
TP Hiring considered
Demand Trend US
Frequently hired skills:
•
Telecom, Networking, Mobility , Aero and mechanical are the key focus area
•
Volume Hiring demand in Java, .Net, Android, Open stack, C++, Embedded, Mobility,
CQ5 and Frontend
•
Niche skill demand in Open Stack, ATG, CQ5, Aero Domain, mechanical
Hiring trends:
•
Average hiring lead time is 15 days from the date of customer share us the requirement
•
FY’15 year demand trend is as follows :
•
•
JAS’14 is 400-450 positions;
•
OND’14 is 400-450 positions and
•
JFM’15 is 550-600
60% of demand is from West coast region
Challenges:
•
In time hiring for Niche skill is a big challenge
•
Absence of vendors local presence in US
•
Turn around time for resume submission
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
Key asks:
•Building capability in sourcing Niche and
super niche skills
•There is a definite need to do Industry and
Skill Mapping for ERS Skills
•Turn Around time for resume submission is
very slow. We should ensure all shared
requirements are addressed within 24 - 48
hours
•Building Pool competency for repetitive skills
in ERS
Demand Trend Japan
Frequently hired skills:
•
Embedded/Firmware development (Camera/Printer/Mobile devices)
•
Automotive (AUTOSAR, Car navigation infotainment)
•
Mechanical (Catia, CAD/CAM)
Hiring trends:
•
Most of the ERS hiring happens for customers outside Tokyo such as Osaka, Nagoya, etc
•
All onsite hiring for ERS requires Japanese bilingual resources
•
Average hiring lead time is 45 days from the date of customer sharing us the requirement
•
Over 55% of our hiring are generally done through specialized vendors
Key asks:
•Quicker TAT of CVs in response to our
requirements
•Ability to attract talent primarily from some
of the remote places within Japan, where
most of the Manufacturing companies have
set up their factories
•Prioritization of HCL’s needs as against other
companies
Challenges:
•
Availability of bilingual resources – Japanese native or foreign bilingual
•
Reluctance of people to relocate within Japan, as most resources prefer to work in Tokyo
•
Availability of technical resources is scarce, as generally the local talent pool in Japan is small and they do not actively look for jobs
•
Due to the ageing population and declining birth rates, most potential talent fall in the age group of 45+ (in some cases 55+), irrespective of the level of
resources we look for
•
Mindset of younger Japanese workforce to either work for global MNCs (Fortune listed) or domestic conglomerates, and reluctance to join IOPs like HCL, etc
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
Demand Trend China
Frequently hired skills:
•
Embedded/Firmware development (Embedded Device/Mobile devices)
•
Automotive (AUTOSAR, Car navigation infotainment)
•
Mechanical (Catia, CAD/CAM)
•
Mobility Architect and Design (Mobile Application / UI/UX)
Key Asks:
•Quicker TAT of CVs in response to our
requirements
•HCL local project management and other
relevant skills project opportunity in future
Hiring trends:
•
All onsite hiring for ERS requires Chinese bilingual resources
•
Average hiring lead time is 45 days from the date of customer sharing us the requirement
•
Over 55% of our hiring are generally done through specialized vendors
Challenges:
•
Availability of bilingual resources – Chinese native and English is good in read and write.
•
Short-term project duration is not workable. Candidate prefers initial contract at least starting with 3 years.
•
Candidate relocation concern.
•
Availability of technical resources is scarce, as generally the local talent pool in every city has different focus skillset.
•
Candidates by & large, are not receptive to work onsite at client locations, and prefer to work in Inhouse roles.
•
Localized ERS overall management is missing, Many project renege rate is high, because there is no localized support from HCL and client not
treating onsite employee well
Copyright © 2014 HCL Technologies Limited | www.hcltech.com
Copyright © 2014 HCL Technologies Limited | www.hcltech.com