HCLTech drives away with $1.14 billion Mercedes deal
Bengaluru, July 4 -- HCL Technologies Ltd has won a $1.14 billion contract from Mercedes-Benz that was previously held by rival Infosys Ltd, three people aware of the matter said, in the first mega-deal for India's third-largest information technology (IT) services company in three years.
The company did not name the German carmaker in its press statement, calling it a significant strategic partnership with a "Europe-headquartered, Fortune Global 50 firm". Under the five-year contract, HCLTech will establish an AI-driven operating model to transform and manage the company's global digital workplace and enterprise networks, the statement said.
The contract requires HCLTech to manage IT procurement, including supplying Mercedes-Benz employees with hardware and software across its laptops and servers, the people cited above said. Its last mega-deal-valued at over $1 billion-came in August 2023, when it inked a $2.1 billion managed services contract with US telecom firm Verizon for six years. HCLTech is now assured $228 million in annual revenue, translating to about 1.6% growth in FY27. The incremental revenue is the same as the amount that Infosys lost from Mercedes-Benz not too long ago. However, according to the people cited above, the Mercedes-Benz contract comes with an operating margin lower than HCLTech's 17.2%.
Investors cheered the mega-deal, with HCLTech closing 5.8% higher on the BSE on Friday.
Infosys signed an eight-year deal valued at $3.2 billion with Daimler in 2020, a year before the German entity split into Mercedes-Benz Group and Daimler Trucks, making it one of its three largest clients. Infosys was to provide services across six business divisions - network services, cybersecurity, SAP software, data centres, after-sales call services and workplace solutions or IT procurement, the biggest of the six arms. After the split, both Mercedes-Benz Group and Daimler Trucks retained Infosys as their IT services vendor. However, Infosys risked losing over a third of its $400 million annual revenue from Daimler as the German group sought new IT vendors, Mint reported first on January 12.
Cognizant Technology Solutions Corp. snapped up a portion of the deal in March, when it bagged a multi-year contract with Daimler Trucks valued at more than $300 million.
Late last month, Infosys lost the workplace solutions and network services portions of the deal from Mercedes-Benz, according to one of the three people cited above. HCLTech snapped up these portions, the people said.
"We kindly ask for your understanding that Mercedes-Benz does not comment on deal specifics," Mercedes-Benz said in an emailed response to Mint's queries on Friday.
Emails sent to Infosys and HCLTech went unanswered....
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