HCL Technologies acquires Volvo's infotech arm to boost Europe business
The software services provider will acquire the external information technology business of Volvo for SEK1.13 billion ($136 million) in a move that will bolster its presence in the European markets.
As part of the deal, HCL Technologies, which is controlled by Billionaire Shiv Nadar, will acquire 40 new clients in Europe. As many as 2,500 employees working for Volvo will be transferred to HCL Technologies across 11 countries.
"We are excited to drive business transformation through IT for one of the world's leading companies," said Anant Gupta, president and chief executive of HCL Technologies. "This addition enables HCL to achieve an even stronger presence in the Nordics and the wider European region, and accelerates our journey in these markets."
HCL Technologies also said it has signed a multi-year outsourcing deal with Volvo as part of the acquisition.
"The external outsourcing deal is a fraction of the internal IT contract. It is the largest transaction that has happened in the industry in the last two years on the global space," Pankaj Tagra, Vice President and head of Nordic business, told CNBC-TV18 channel.
Through this acquisition HCL Technologies will be better placed to serve it automotive and manufacturing clients while building a larger presence in Europe, particularly the Nordic area and France.
As organic growth has been slowed in recent quarters for technology businesses, they are having to rely on acquisitions and expansion. Many are looking towards adding extra services such as automation.
For HCL Technologies, Europe accounted for 31% of revenue in 2015 with sales growing around 15% in the last year.