‘Relationship Beyond the Contract’
HCL’s supply chain helps the company deliver scalable solutions to customers, while remaining innovative and competitive.
Putting the focus on customers is key for many businesses, but for HCL Technologies, that means developing a “relationship beyond the contract” so the contract does not define how it works with customers. For its supply chain, this involves HCL understanding what customers really need and not dictating what they get through its own definitions. With this focus, HCL achieved strong growth at 20.5 percent year over year in constant currency, , led by double-digit growth across its business segments.
“These are major initiatives that we take on – they are very complex and dynamic, and customers are entrusting us with them,” Chief Procurement Officer Eric Cohan explains. “We look at what the customer really needs, what they need today and how to deliver that. The contract is not a bottleneck to create value for them.”
HCL is a next-generation global technology company that helps enterprises reimagine their businesses for the digital age and does this across a number of business lines, including: IT and business services (ITBS); engineering and R&D services (ERS); and products and platforms. As a result, HCL is a leading global technology company that helps customers transform their businesses through apps, infrastructure, digital process operations, digital transformation solutions and engineering services in all aspects of product development and platform engineering. With its co-innovation labs, global delivery capabilities and broad global network, HCL serves industries such as financial services, manufacturing, technology and services, telecom and media, retail, life sciences, and healthcare and public services.
And while innovation is key in helping HCL find solutions for customers’ issues, HCL also succeeds by innovating in terms of how it enters certain sectors of business, and the supply chain’s role is key in this. For example, Cohan says, one of HCL’s newest offerings is end-user devices as a service. This allows its customers to focus on their core business without being too involved in back-office technology, and HCL is extending that model to customers’ employees’ desktop and laptop computers, which are machines owned by HCL. Computer OEMs are used to selling machines to customers or to value-added resellers, and the resellers can take a couple points of margin. HCL can’t do that – it has to provide the machines on a just-in-time basis and do it at a rate that supports HCL’s target EBIT.
“Traditionally, when companies do big desktop deals, they do a big purchase or only purchase two or three times a year,” Cohan says. “But with desktop-as-a-service, because we own the machines, when they have a new employee start or something is broken, we have to deliver just in time and still provide economies of scale. Then you layer on the complexities of multi-country when you have to deal with every country a customer has employees in. We have to figure out how to give customers a seamless experience when the supply chain is very different depending on the country with import/export issues, taxes and the currency exchange. It’s figuring out how to do that so that desktop-as-a-service is a cheaper option for the customer and we can still make money. That’s the supply chain challenge.”
HCL is based in India, but nearly 60 percent of its total revenue is from the United States. As a result, the supply chain team needs a strong team of people in India doing a lot of heavy lifting, balanced with people in the United States and Europe working with the project teams and suppliers. Additionally, to execute on its many offerings, HCL has to build supply chains for many of its projects. Cohan notes none of its supply chain partners are dominant in every region of the world, so HCL has taken a multivendor approach for every customer.
When providing clients with software, for example, sometimes HCL can quote as the end-user price, but sometimes the customer is the end user and HCL is the licensee. That model can be difficult for some software vendors to appreciate, but HCL needs software vendors that are flexible to deploy within its customer base. This requires creating strong relationships with software providers and using nuance and negotiation to manage the relationship.
“We are very flexible with our contracts, which allows for a changing business climate for our customers,” Cohan says. “A customer may not need our services in the same way as they did when they signed the deal three years ago.Because we are helping the customer, we need flexibility in our agreements so we aren’t locked in. Some vendors aren’t interested in doing business that way, but we have to do business with companies that can align with our mantra of ‘relationship beyond the contract.’ Those partners understand how we are selling and see our growth.”
‘Responsiveness and Speed’
In everything HCL delivers to customers, the company’s supply base has to ensure the solutions are scalable and cost competitive. This could involve buying solutions to support growth for its customers, and how it works with real estate brokers to find affordable facilities when it needs to support a customers in a new location, or ensuring its medical plans are beneficial for employees while also being within budget. Cohan notes the scope of HCL’s work is large and there are high expectations and high pressure, but the supply chain team understand this and embraces it.
“With a lot of the work HCL has, we only win it if it’s a cost-competitive offering,” he says. “This requires us as a procurement team to be involved upfront in the deals that we might not win, and that involves a level of responsiveness and speed that the organization expects from us.”
Today, HCL’s customers want to do innovative, transformational things for their business, and they need HCL to help orchestrate these plans. As a result, HCL’s supply chain has to find partners who are aligned with its own way of thought, and it had to upgrade its technology infrastructure to become more efficient. Cohan explains HCL has a lot of interesting problems to solve, and that is supported by his intellectual and creative team.
“We are asked to come in and help win business, and revenue for HCL doesn’t happen unless the supply chain team is there to provide support and stitch together relationships that put a competitive deal on the table,” Cohan says. “That is exciting to be that involved as a procurement official, and it shows that this is a critical function for the company.”