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BriefingNotes

HCLBEYONDigitalEmphasizesEnd-to-EndSkillsandServices1854PGIJune22,2016JanErikAase

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Briefing Notes – HCL BEYONDigital EmphasizesEnd-to-End Skills and ServicesSummary

HCL recently briefed the ISG research team on their Digital service line. Krishnan Chatterjee, Chief Customer

Officer at HCL’s digital services unit, BEYONDigital, presented HCL’s broad capabilities for helping

organizations improve business processes, employ emerging technologies, and develop digital properties to

provide a rich end user experience.

Key takeaways: HCL has a robust and long-term focused approach on developing digital transformation

capabilities by relying primarily on internal skill development. The company has been developing capabilities in-

house rather than by acquisitions and aims to become a one-stop shop for digital in a fragmented market. It is

also dwelling on fundamentals as it bolsters talent development specifically to create quality resources that are

critical in delivering digital projects. The challenge ahead for HCL is to keep pace with competitors who rely on

inorganic growth to ramp up their digital offerings.

Briefing Notes

In 2015, BEYONDigital, the enterprise digitalization unit of HCL technologies, conceptualized the 21st-century

enterprise and identified specific traits that personify these enterprises. The company believes that the digital

age enterprise strives to offer a unified experience, focuses on customer satisfaction, adapts to an agile and lean

approach, has a broad ecosystem for collaboration and delivers outcomes across value chains. Accordingly, HCL

has developed its digital offerings to resonate with these characteristics. The BEYONDigital suite of services

encompasses evaluation of user experiences, integration of DevOps and agile across functions for enriched

human experience, deployment of content across the user value chain and the establishment of co-innovation

labs at client sites.

HCL sees the outsourcing provider landscape for digital services as an agency play – i.e., a fragmented market

with several niche providers and a few large traditional outsourcing vendors that are warming up to this

opportunity. Each niche player brings a specialized but limited set of capabilities. HCL views the discrete nature

of these capabilities as an archipelago – i.e., a group of many related capabilities. It is dwelling on this market

gap to try to create a unified entity that delivers end-to-end capabilities that constitute the archipelago. The

company has developed capabilities in-house that span across design, consulting, technology, system integration

and software/product/platform.

We see this as an important step in the creation of a full-fledged digital unit. In the prevalent agency play

scenario, several firms cater to different requirements across the spectrum of digital capabilities, which

encompass technology, engineering, user experience design, social, mobility analytics and digital strategy.

However, the challenge ahead is to differentiate HCL’s homegrown capability against service providers who

have relied on acquisitions. The public relations teams at the other service providers have used these

acquisitions to effectively position their growing portfolio of digital services.

For its go-to-market strategy, HCL believes that the technology stack is of secondary importance in Digital.

According to Mr. Chatterjee: “What buyers want instead is a business discussion focused on the end user”. This is in

contrast to traditional IT, wherein discussions have been structured around the pyramid framework with Designat the top followed by Technology and Operations. For Digital, while the order remains unchanged, HCL’s

discussions with clients take the form of an inverted pyramid with Design having the greatest leverage followed

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by Technology and then Operations.

In our experience, we have seen that adopting the perspective of the end user as a priority drives significant

benefits to the users, enterprise clients as well as to the service providers.

We believe that sourcing digital services is an entirely different ball game compared to sourcing traditional IT

services. HCL sees things similarly, shifting its focus away from a technology-and operations-led discussion to

one that is business-led and based on outcomes. By conceptualizing the 21st century enterprise, HCL has created

a generalized persona of the digital enterprise client and developed capabilities to address the pain points of the

digital enterprise. HCL has also placed a strong emphasis on talent development, especially in data science and

UX/UI skills. This emphasis on talent development is a value proposition that has low tangible visibility upfront

but can make or break the success of digital endeavors. As an example, the quality of UX and UI designers goes a

long way in determining how customer-facing applications create user stickiness. This in turn translates into

revenues and hence enterprises should place high value on this capability when making provider selection

decisions.

Since digital is an emerging concept, use cases may not be as extensive as traditional IT. It becomes imperative

that providers of digital services have strong customer endorsements to help buyers make the appropriate

sourcing decision. Being chosen as a digital partner for one of the world’s most popular football clubs,

Manchester United equips HCL with this endorsement. While this is not a typical engagement nor a common

industry for IT services, the sheer number of users (fans) and their global spread is an indication of the scale that

HCL can support through their digital capabilities.

Net Impact

For enterprises wanting to make the move to digital, the agency play can be confusing. A myriad of technologies

and practices may leave buyers overwhelmed. Coordination is another issue, and it becomes all the more critical

in a fast-paced environment characterized by frequent releases. Given these challenges, it makes sense to have

a provider who has a broad portfolio of capabilities/offerings. HCL has a multi-disciplinary team comprised of

UX and UI designers, industry experts, researchers, business analysts and technologists. Enterprises should

provide due consideration to this bundled package and compare this value proposition to other alternatives at

hand. In addition, HCL’s new-age digital approach and its legacy system integrator role should help the company

appreciate a market demand shift wherein the focus is not on cost but on talent and transformational

capabilities. Progress and success for HCL will depend on how effectively it drives this message to clients who

currently employ HCL in an SI role.

Additionally, enterprises will also realize that building a truly complete and integrated end-to-end portfolio is

no easy task. This is because most digital transformations are heavily dependent on the use of emerging

technologies and specialized tools. While service providers may broaden their portfolio, converting the of

capabilities/offerings into a unified solution is challenging. With more and more digital implementations

becoming common practice in the near future, organizations will be keenly watching this. Each digital deal is

unique and enterprises may probe for applicable capabilities that are not available in-house with the service

provider. Success will depend on how HCL will leverage its ecosystem to bridge the gap while minimizing

coordination issues. The appropriate course of action, for outsourcing digital services, should be to start with

small projects, experiment extensively, monitor results and then take the full plunge.

Summary Facts

HCL Technologies is headquartered in Noida, India

Company size: Number of employees: 103,696. Annual Revenue: $6.1 B

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Core portfolio: Infrastructure Services, Engineering Services, Application Development and

Maintenance, BPO

Core markets and customer types targeted and served: Global ITO and BPO customers

Key competitors: TCS, Wipro, Infosys, Tech Mahindra, Cognizant, IBM, Accenture and CSC

Saugatuck Technology, an ISG Business

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