HCL will buy Swedish vehicles company Volvo Group’s external IT business for $138 million in an all-cash deal.
The Noida, Delhi NCR-based company signed a Letter of Intent with the Volvo Group on an outsourcing engagement for its IT infrastructure and operations services. The total IT contract is for five years, said HCL Technologies, India’s fourth-largest software exporter.
The IT transaction, which will be closed during the second quarter of 2016, will provide cost savings and capital gain to Volvo Group.
The decision to find an external IT partner for its external IT business and IT infrastructure operations is part of the efficiency program to reduce the Group’s structural costs with 10 billion SEK.
“The cooperation with HCL Technologies will provide significant cost-savings and we will also make a capital gain when the contract is signed,” said Jan Gurander, Volvo’s CFO and acting pPresident and CEO.
Approximately 2,600 Volvo personnel globally will be getting an offer to move to HCL Technologies and will work with their colleagues in Volvo’s IT services division.
Volvo Group’s operating income and net financial debt are expected to be positively impacted by approximately SEK 900 million.
“HCL’s engagement with Volvo is satisfying given that we have the opportunity to create additional value for such a forward looking organization,” said Anant Gupta, president & CEO, HCL Technologies.