How HCL’s bet on products business soured
Summary
Lastly, HCL’s approach of selling these legacy products of IBM has helped it get additional business and improve operating cash flow in the near term. But its approach of prioritizing revenue and cash in the short-term is in contrast with the strategy adopted by Infosys Ltd and Wipro Ltd, which are investing in cloud computing platforms and setting up design hubs as they look to make themselves future-ready. Simply put, a business HCL painstakingly built after spending $3.5 billion over the last five years now runs the risk of not reporting any growth in the current fiscal. Beginning July 2016 and until December 2018, HCL spent $1.25 billion in stitching such commercial agreements with global IT giants, Vijaykumar had told Mint in an earlier interview. For now, analysts and investors are content that HCL has decided to return to its shareholders 75% of its total new income over the next five years, as outlined in its new capital allocation policy announced last week.
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