HCL Tech bags $200m order from UK’s Equitable Life

HCL Technologies has bagged a USD 200 million order from Equitable Life. The contract will begin from March 2011 and is for a period of thirty years.

In an interview with CNBC-TV18, Senior Vice President of HCL Technologies, Stuart Drew gave the specifics of the deal and also his expectations on the business environment going forward. 

Here is a verbatim transcript of the exclusive interview with Stuart Drew on CNBC-TV18. Also watch the accompanying video. 

Q: Could you give us more specifics on deal value and the period etc? 

A: Yes it is USD 200 million, although the service start date is March 2011 when we take over the service. We will be generating revenues from now, contract signature to 2011 in preparation for taking over the service. 

So, a lot of IT work and development needs to go in to prepare taking over the service, which would transfer 340 rolls from Equitable Life to HCL on March 1, 2011. 

And the contract term is evergreen, which means as long as the policies exist. So the maximum length of time would be 30 odd years. I don’t know how many people are familiar with a closed book in the UK but it means that they are not open to new business. So the policies that are being serviced gradually decline. 

Q: How much of a revenue bump up on the balance sheet are you seeing for the first 12 months? 

A: Nearly eight million pounds. 

Q: Are you looking at more focus in the financial services markets specifically insurance in geographies like UK. Is this the start for such deals in HCL Tech? 

A: When you say the start, it is the first successful one since we acquired a business called Liberata Financial Services (LFS) a year ago and so this is the first deal that has been signed in competition from that stable which is now called HCL IBS, which is Insurance BPO services. 

So it is a very significant deal because it is a vindication of the acquisition in the first place and against stiff competition. LFS hadn’t won a new name deal in three years before we acquired them. So it’s great in the first 12 months to be able to get such a significant contract of the world’s oldest insurer. Equitable Life is the world’s oldest insurance company. 

Q: So are things looking up right now? There was no substantial deal flow between the April-June period. With are you expecting a better picture emerging for HCL Tech now? 

A: Yes we will, and already because behind the scenes here there are a number of other companies that had contracts with Liberata Financial Services who hadn’t gone to extended contracts which they have now done and there will be a separate press announcement about that in the next few days. 

Q: What is your sense on the pricing environment? 

A: Overall some people are using the recessionary environment to put the accelerator down on their offshoring plans and other people using it to actually tighten up saying they will wait and see. So there isn’t really a pattern, a trend. We are seeing different people behaving in different ways. 

But the pipeline is now growing for Q1 next year. So we always predicted that the first half of this year which for us is July to December would probably decline in terms of activity in the market, and then pick up and we are already seeing that pick up now for the second half.