HCL Tech Says IBM Software Deal Will Help Add Clients

HCL Technologies Ltd. said its $1.8-billion software asset deal with International Business Machines Corp. will help the information technology company add clients.

Intellectual property partnership helped the company build good revenue streams through royalties from partners, C Vijayakumar, chief executive officer at HCL Tech, said in a phone interview with BloombergQuint. The IBM deal will push the company to the “next logical step” which involves direct client access, customer contracts with HCL, and building strong sales and marketing organisation in many geographies, he said.

HCL Tech, founded by billionaire Shiv Nadar’s family, is buying softwares that help stream from social networks, authorise documents, report expenses and review mails in the biggest purchase by an Indian IT company. Investors were concerned with the price tag as the shares dropped 5 percent after the acquisition.

Vijayakumar said the deal will not impede the company’s organic growth. Engineering services business was faring well. “We will be at about 10.5 percent and half of that is organic. The bookings and big deals we have signed this year gives us even more confidence of an acceleration in the organic growth in financial year 2020.”