`Blue ocean' strategy helps HCL Tech bag DSG deal

`Blue ocean' strategy helps HCL Tech bag DSG deal

HCL Technologies, which bagged the Rs 1,500-crore contract from DSG International, had worked out a three-pronged strategy in July 2005 to procure big-ticket deals in the international market.

"We conceptualised what we call the `Blue ocean' strategy and created uncontested market spaces. HCL recognised the application outsourcing business was being increasingly commoditised and that it was coming under pricing pressure," Mr Vineet Nayar, President, said.
(`Blue Ocean Strategy: How to create uncontested market space and make competition irrelevant' is the title of a best selling book written by two INSEAD (France) professors, W. Chan Kim and Renee Mauborgne)

HCL then decided to chase large deals that would bring a significant transformation, to move up the value chain, and go for multi-service deals with application and infrastructure components.

"Based on this strategy, we went about transforming HCL internally, and that has resulted in deals like Autodesk and EXA," he said. For the DSG International deal, 10 participants, including frontline Indian IT vendors, put in the Request for Proposals (RFPs). Three vendors — HCL Tech and two global companies — were short-listed and at the end of nine months the contract came to HCL Tech.

According to Mr Kevin O'Byrne, Group Finance Director of DSG international, "We have selected HCL Tech on the basis of its breadth of experience, partnership approach and the transparency in its cost models."

"In the last six months alone, this is the fourth large co-sourcing deal being announced by HCL — with this being the largest so far this year. We are happy to have DSG international as one of our top four customer relationships," Mr Shiv Nadar, Chairman and CEO, HCL Technologies, said.

The contract for HCL Tech comes on the heels of some big deals bagged by Indian IT companies in recent years.

Dutch financial powerhouse ABN Amro had given out a 1.8 billion euros ($2.2-billion) contract spread over five years to IBM, as well as two Indian companies — TCS and Infosys.

"This deal is larger. In addition, the ABN-Amro deal was a select outsourcing contract that came to Indian offshore companies while the DSG deal involves total outsourcing. Another key differentiator is the fact that the ABN Amro and other such deals are based on Full Time Equivalent (FTEs) or people-based pricing, while this is a total package deal."