In its largest acquisition, HCL Technologies has agreed to buy certain software products of IBM for $1.8 billion, in a move that reflects the Noida-headquartered firm’s growing interest in the software products business. IBM, on its part, has been trying to concentrate more on analytics and cloud computing.
HCL is acquiring seven software products, whose focus ranges from marketing automation to ecommerce, and in scope represent a total addressable market of more than $50 billion, the company said in a statement on Friday. These software products include Notes & Domino, for email and low-code rapid application; Connections, for workstream collaboration development; and BigFix, for secure device management, among others. HCL and IBM have an ongoing IP partnership for five of these products.
“We continue to see great opportunities in the market to enhance our Mode-3 (Products and Platforms) offerings. The products that we are acquiring are in large growing market areas like security, marketing and commerce which are strategic segments for HCL. Many of these products are well regarded by clients and positioned in the top quadrant by industry analysts,” said C. Vijayakumar, president and chief executive, HCL Technologies. “The large-scale deployments of these products provide us with a great opportunity to reach and serve thousands of global enterprises across a wide range of industries and markets.”
Armonk, New York-headquartered IBM has identified four key growth drivers – cloud, analytics, social and mobile. “Over the last four years, we have been prioritising our investments to develop integrated capabilities in areas such as AI for business, hybrid cloud, cybersecurity, analytics, supply chain and blockchain as well as industry-specific platforms and solutions including healthcare, industrial IOT, and financial services. These are among the emerging, high-value segments of the IT industry. As a result, IBM is a leader in these segments today,” said John Kelly, IBM senior vice president, Cognitive Solutions and Research.
“We believe the time is right to divest these select collaboration, marketing and commerce software assets, which are increasingly delivered as stand-alone products. At the same time, we believe these products are a strong strategic fit for HCL, and that HCL is well positioned to drive innovation and growth for their customers.”
HCL’s shares were down 4.10% to Rs 971 in morning trade on the NSE on Friday.