Global CIO: 5 Ways India's HCL Will Make Money From Cloud - InformationWeek
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Chris Murphy
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Global CIO: 5 Ways India's HCL Will Make Money From Cloud

Companies aren't spending much on cloud computing, but it's 'on the cusp,' HCL president says. Here is how one Indian outsourcer expects to cash in.

4. Migrating to private clouds: HCL has started to see glimmers of this business--assessments of private clouds--but the next wave, if it comes, would be migrations and ongoing software development to support companies' private clouds. Private clouds try to mimic the flexibility and resource pooling of private clouds, within a company's own data center.

5. Building custom products: HCL is providing one client with a SaaS-based platform to manage and interact with its network of independent dealers. HCL sees opportunity in providing more of that kind of cloud-based service--such as an automaker managing all its affiliated dealers, for example.

Metrics That Point To Growth

Will cloud computing make the turn, from hot concept to a real presence in IT budgets? Part of that depends on how much companies are spending on new IT projects of any stripe. We made the case a month ago that many IT teams are on a "return to growth" path this year, slowly shifting out of the cost-cutting and maintenance mode that dominated 2009.

Khorana points to two growth metrics in HCL Technologies' latest quarterly earnings that bode well for growth: deals for the outsourcer to work on new product development, and enterprise app deployments.

Both are up in the most recent quarter, ending in June-- 13% quarter-over-quarter for enterprise apps work, and 11% for engineering and R&D services. The engineering and R&D, where companies hire HCL to write software for new products, include an order from an aerospace company in Europe, and a number of vendors in software and networking.

"So it does appear … at least from the results we've seen here, that discretionary spend is also on the rise, besides these run-the-business kind of projects," says Khorana. "In that sense, the prognosis looks pretty optimistic."

It's not all sunshine for HCL. Its gross margin slipped to 33%, compared with 38% a year ago. It used to have two $100 million-plus customers, now it's down to one such whale.

So cloud computing isn't driving a lot of revenue yet. But Khorana says he has seen the shift in outlook the last year, among HCL's customer advisory board. In August 2009, the attitude was "some interest, not sure." By February this year, "it was 'we have a lot of interest, and our CEO is very interested,'" Khorana says.

When it comes to any hot technology, "my CEO is interested" is a growth indicator no good CIO will ignore.

Global CIO small globe Chris Murphy is editor of InformationWeek.

To find out more about Chris Murphy, please visit his page.

For more Global CIO perspectives, check out Global CIO.

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