HCL Technologies

HCL Technologies, India's third-largest IT services company, reported revenue of approximately $10.2 billion in FY2021 with an operating margin of approximately 19%. The company had historically competed as a services-led IT outsourcer, relying on a direct enterprise sales force for customer acquisition. In December 2018, HCL announced the acquisition of select IBM software products for $1.8 billion — a bet that owning enterprise software products could create a lower-cost customer acquisition channel for its services business. The acquired portfolio included AppScan, BigFix, Commerce, Connections, Digital Experience (Portal and Content Manager), Notes Domino, and Unica — products with large installed bases but requiring implementation and managed services. The acquisition closed in July 2019, and HCL formally launched the HCLSoftware division to operate this business.

HCL structured its business around a Mode 1-2-3 strategy that used each business segment as a distinct customer acquisition channel:

• Mode 1 — IT and Business Services (ITBS): Traditional IT services sold through the direct enterprise sales force — application development, infrastructure management, and digital transformation. HCL optimized this channel through improved deal qualification and focused pursuit of strategic accounts.
• Mode 2 — Engineering and R&D Services (ERS): Leveraged HCL's engineering heritage (founded as a hardware company) to offer product development, embedded systems, and digital manufacturing services. Engineering clients typically arrived through technical community reputation and referral networks rather than traditional marketing.
• Mode 3 — HCLSoftware (Products and Platforms): Used the acquired IBM software portfolio as a built-in lead generation engine. Each software license created a natural services opportunity — implementation, customization, integration, and managed services — that could be pursued at low incremental marketing cost. HCL invested in building the software division's own go-to-market, with HCLSoftware Annual Recurring Revenue crossing $1 billion in FY2023 (up 5.2% in constant currency) and reaching $1.02 billion in FY2024.
• Software ecosystem development: HCL built a partner ecosystem around HCLSoftware products, with channel partners distributing software and generating services leads. The company also invested in developer communities around products like Domino and Volt MX to create organic demand for HCL services expertise.