IT service provider HCL acquires sector expertise as part of European strategy

Indian IT services provider HCL Technologies is continuing its strategy of acquiring expertise in the automotive sector in Europe with the takeover of a German company which provides IT to German car giant Volkswagen.

The €30m acquisition of H&D International Group will give it significant business with Volkswagen, which is the company’s biggest customer by far.

This is not the first example of HCL acquiring companies focused on the automotive sector in Europe to increase its expertise and regional delivery capabilities.

In 2016, HCL completed the integration of the external IT services arm of its customer, Swedish truck maker Volvo, after a $200m acquisition the year before, which gave it expertise in the automotive sector including mainframe skills and a global workforce. At the same time, it enabled it to increase its footprint in Sweden, with a delivery centre, as part of its Nordic business expansion.

The takeover of H&D International in Germany will have similar benefits. It will add 1,400 people with expertise in the sector to HCL’s global workforce and help it win business in Germany’s huge automotive sector. It will also open a delivery centre in Germany at the existing H&D operation in Gifhorn.

H&D International specialises in IT infrastructure, application services, front-office IT and Industry 4.0, and has expertise in SAP, Citrix, Microsoft and VMware.

“Germany is a critical market for HCL as we continue to expand our business in Europe,” said Ashish Gupta, corporate vice-president at HCL Technologies. “We feel the German market is at an inflection point and it is the right time for HCL to expand and make significant investments here. H&D has a longstanding track record of high-quality service delivery and we are confident this will play a significant role in our continued growth in Germany.”

Klaus Holzhauser, managing director at research and consulting firm Pierre Audoin Consultants in Germany, said HCL already has a strong presence in Germany and the automotive sector through purchases like that of Volvo IT and Geometric Software.

“Its investment in H&D strengthens its capabilities and positioning even further in two crucial regions,” he said. “H&D has established a strong footprint in the German and Central European automotive markets and is the IT services provider to one of Germany’s biggest car manufacturers, making it a great investment for HCL.”

Peter Schumacher, CEO at the Value Leadership Group, said HCL has had success acquiring in Europe since 2003, when it took over Deutsche Software from Deutsche Bank. “Some 15 years later, HCL is not only Deutsche Bank’s largest supplier for application development maintenance and IT consulting, but it continues to grow its share of business. 

“With the acquisition of H&D, HCL will become a significant supplier for the Volkswagen group globally. If HCL manages this relationship as well as they have done with Deutsche Bank, they are likely to significantly expand their business far beyond H&D’s current footprint – in particular in engineering services.”

HCL started its operations in Europe in 1999 and is present in 18 European countries, with offices in countries including the UK, Finland, Sweden, Germany, Netherlands and Poland.