HCL tech pricing

HCL Tech moving towards value-based pricing
Our Bureau
Chennai , July 28
HCL Technologies is gradually moving towards value-based pricing. Explaining this at his first press conference after he took over as president at the company, Mr Vineet Nayar, said, "For long, the Indian IT software industry has priced its offerings based on the effort and time it took. Now, revenues based on a customer's success or business benefit will increase in proportion to overall revenues."
Of its $750 million of revenues, about $100 million comes from contracts with such pricing. Giving an example, he said, "If we work with an insurance client for example, instead of pricing just manpower used and time taken, we would get a certain fee per policy. So, we go up or down with the business volume of clients. There is a certain risk involved. But because of efficiencies we would bring in through automation, we would get higher revenues. So, that risk is mitigated."
Asked what kind of due diligence the company did with clients before it got into such contracts, Mr Nayar said, "It is true that a client's commitment is necessary to make this plausible. We focus on Fortune 100 companies who are already our large clients."
Commenting on the impact of the merger between Oracle and PeopleSoft (HCL Technologies does work on products from both), he said, "We have practices that focus on both. We also work with SAP. Clients wanting to move on from PeopleSoft to Oracle or to SAP would present a business opportunity for us."
He added that HCL Technologies is building a new campus in Noida where it has acquired 50 acres of land. "It is being built. This is for our expansion purposes and would house several thousands of employees," he said.