HCLTech signs $2.1-billion deal with Verizon; stock rises

HCL Technologies has signed a $2.1-billion deal with Verizon Business to provide managed network services to its global enterprise customers.

"We expect this deal to have a positive revenue impact over the next six years beginning in November 2023 with an estimated new total contract value of US$ 2.1 billion over the term," the IT company says in a stock exchange filing.

Reacting to the deal announcement, shares of HCLTech rose as much as 4% in opening trade to ₹1,186.70 apiece on the BSE. The IT company's market capitalisation stood at ₹3.19 lakh crore.

Verizon's strategic global partnership makes HCLTech a primary managed network services collaborator in all networking deployments for global enterprise customers.

Verizon Business will continue to lead all customer acquisition, sales, solutioning, and overall planning and development with its customers, the IT firm says in a statement. HCLTech will lead post-sale implementation and ongoing support, it adds.

To execute the tightly coordinated balance of responsibilities at enterprise scale, a select group of Verizon Business Global Customer Operations staff will transition to HCLTech, the statement says.

The partnership will offer customers an MNS portfolio, a highly digitised experience with data-driven service models, enhanced efficiency and lifecycle management with frictionless interface, a broad end-to-end partner ecosystem, and joint innovation on an integrated platform, it says.

“Our data-driven service delivery, advanced network capabilities and frictionless customer interfaces combined with the unique strengths and resiliency of the Verizon network will enable enterprises to drive better business outcomes and time to market. I am excited to welcome the incoming employees from Verizon Business Global Customer Operations and look forward to a successful and fulfilling journey together,” says C Vijayakumar, CEO and managing director, HCLTech.

With HCLTech’s IT service expertise and ongoing support for enterprise networking deployments, Verizon Business can modernise its service delivery and simultaneously heighten its focus on helping customers incorporate next-generation technology like 5G, SD-WAN and SASE into their operations and their own customer offerings, says Kyle Malady, CEO, Verizon Business.

Information technology convergence is the future of data-centric business operations, and with the fast-accelerating pace of digitalisation, customers need a well-coordinated delivery framework to realise that future, Malady says.

In July, HCL Tech signed an agreement to acquire 100% equity stake in ASAP Group, a German automotive engineering services provider, at an enterprise valuation of $279 million. The acquisition is expected to boost HCL Tech's engineering services by strengthening its technology capabilities in the fast-growing automotive engineering services segment in Europe and other key global markets.

HCL Tech’s consolidated net profit rose 8% year-on-year to ₹3,534 crore during Q1 FY24. The company's Q1 FY24 revenue grew 12.1% to ₹26,296 crore. HCL Tech retained FY24 revenue guidance at 6-8% in constant currency.