HCL Technologies has entered into an agreement with the American Global Corporation Xerox. They have agreed to share services agreement which contains the provision of global administrative and support functions. Xerox Corporation is set to outsource these functions including certain information technology and finance functions. The company stated these are few of the many functions to be outsourced in regulatory filings, on 18th March, 2019. Shares of the Indian multinational info tech company, after suffering a one day blip gained momentum right after and has been rising upwards since then. The stock has traded 14 times the estimated earnings per share in 2019 so far.
HCL Technologies was founded in 1976 and is known for the provision of IT services and IT consulting and advisory. The company is headquartered in Noida, Uttar Pradesh and is a subsidiary of the HCL Enterprise. Moreover, their clients include 250 of the Fortune 500 companies whereas 650 of the Global 2000 companies. The company has operations in diversified sectors which include healthcare, life sciences, media and entertainment, consumer goods, banking, aerospace and defense, insurance, automotive etc. As per the Q3FY19 results, the company has a consolidated revenue of Rs 15,699 crores.
Xerox Corporation is headquartered in Norwalk, Connecticut. The company is placed in the list of the Fortune 500 companies. Its major business includes selling prints and digital documents services and products in more than 160 countries. Elements of computing were developed by the researchers at Xerox which were later used by Apple and then Microsoft who dominated the personal computing area. Further, Xerox Corporation is listed on the New York Stock Exchange(NYSE) and S&P 500 Index.
About the agreement:
The total valuation of the transaction is an estimated amount of Rs 9000 crore over the course of seven years. HCL will potentially make specific up-front and ongoing investments in certain tools, software and other technology. Furthermore, these investments are made with a view to provide improved service levels and minimizing the cost margin to xerox by optimizing and automating transferred functions. HCL Technologies, last week announced the acquisition of digital transformation consulting company Strong-Bridge Envision (SBE) which will merge with HCL’s Digital and Analytics business segment. This segment will majorly focus on integrating cloud native services, digital and analytics, cyber security and GRC services. The deal is subject to compliance with European works council consultation and employment regulatory requirements.
The promoters holding in the company stood at 60.00%, while Institutions and Non-Institutions held 36.50% and 3.50% respectively.
HCL Technologies is currently trading at Rs 1036.20 as on 19th March, 2019 up by 2.39% from its previous closing of Rs 1012 on the NSE.