News

Published: August 11, 2023
Updated: August 11, 2023

HCLTech Clinches $2.1 Billion Deal with Verizon, Reinvigorating Growth Prospects

In a significant boost to HCL Technologies (HCLTech), the company has secured a substantial $2.1-billion deal with Verizon Business, focused on delivering managed network services to global enterprise clients. The agreement marks a pivotal moment for HCLTech, coinciding with its strategic plans for growth following a relatively subdued Q1 performance. This milestone has ignited investor enthusiasm, reflected in a 3.7% surge in HCLTech's share prices to Rs 1176 during early trade on Friday.

Deal Details and Context:

HCLTech's collaboration with Verizon Business involves provisioning managed network services to Verizon's global enterprise customers. This venture harnesses Verizon's formidable networking capabilities and combines them with HCLTech's prowess in managed services. This partnership is poised to deliver large-scale wireline service delivery for enterprise clients, fortifying HCLTech's position in the IT services landscape.

Rejuvenating Revenue Prospects:

With an anticipated positive revenue impact over the next six years, commencing from November 2023, the $2.1-billion deal is poised to significantly enhance HCLTech's financial trajectory. This is a timely boon following a decline in deal wins to $1.56 billion during Q1FY24, compared to an average order book exceeding $2 billion over the preceding seven quarters.

Collaborative Approach:

In this collaboration, Verizon Business will spearhead customer acquisition, sales, solutioning, and overall planning and development. On the other hand, HCLTech will play a pivotal role in post-sale implementation and ongoing support. This synergistic approach leverages the strengths of both companies to create a seamless and comprehensive service experience for customers.

Strategic Workforce Transition:

Notably, a select group of Verizon Business Global Customer Operations staff will transition to HCLTech to execute this collaboration effectively. This transition aims to ensure smooth coordination and balanced responsibilities at an enterprise scale, facilitating successful project execution.

Growth Amidst Industry Dynamics:

The significance of this deal is underscored by its placement within the telecom and technology segments, which experienced notable declines in the previous quarter. Despite these challenges, HCLTech's proactive approach and its partnership with Verizon signal a strong commitment to capitalizing on growth opportunities.

Leaders' Perspectives:

HCLTech's CEO and MD, C Vijayakumar, expressed confidence in the company's data- driven service delivery and advanced network capabilities. These, combined with Verizon's network strengths, are expected to drive better business outcomes and enhance time-to- market capabilities for enterprises. Kyle Malady, CEO of Verizon Business, lauded HCLTech's expertise in Managed Network Services and highlighted their collaboration's potential to usher in next-generation technologies like 5G, SD-WAN, and SASE.

Promising Outlook :

HCLTech's secured deal with Verizon comes at a crucial juncture, aligning with its efforts to expand its order book and drive sequential growth. This strategic move underscores the company's commitment to its 6-8% CC revenue growth guidance for the year. As HCLTech embarks on this transformative collaboration, the industry watches closely to witness the tangible impacts of this significant partnership on both entities' growth trajectories.