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Full services co-sourcing enabled one of the Europe’s largest retail chains to reduce the IT costs by upto 50%

Full services co-sourcing enabled one of the Europe’s largest retail chains to reduce the IT costs by upto 50%

Electrifying Europe

One of the largest specialty electronics retail chain in Europe, with over 100 million customers a year, is looking for outsourcing end-to-end IT services. This is challenging in itself as the sheer physical and infrastructural spread of operations is massive. In addition, the focus on goods changes across stores in certain instances, varying from brown goods to white goods. It covers the entire spectrum of electrical goods focusing on out-of-town locations as well as high street locations. Besides some of its stores focusing on brown goods, it also focuses on more specialized items, such as PCs, accessories and mobile telephony equipment. This has given our client a balance between insulation from product lifecycle vagaries and exposure to fast growing sub-sectors.

Sparking wires

In 2005, when the client engaged HCL, it was facing challenging trading conditions and difficulties in peak trading periods. Given the electronic trading conditions and industry dynamics, the client realized that it needed to cut down on peripheral work and concentrate on its core business of retail.

To add to the problem, the active acquisitions and mergers history of the company had generated a complete lack of integration, and created an IT environment that was scattered between the in-house department and external vendors.

Several facets of the IT department were in desperate need of a ramp-up. The company wanted to hive off its entire IT department and outsource everything from development, maintenance and support of key processes to infrastructure support, customer support and service deliveries. The challenge was in deciding on an outsourcing model.

Although traditional IT outsourcing meant high P&L benefits, it entailed low/ no control and risk factors.

Building the new circuit – the largest ever by an Indian IT company

The client chose HCL to consolidate and outsource its IT services. And HCL recommended a Full IT Services Co-sourcing Model. The unique feature about this deal was that the entire IT department of the client was outsourced, and since the asset control remained with the client, costs were rationalized and the strategy remained in the control of the client. The multi-year contract was the largest one to be awarded to any Indian IT firm to date.

A collaborative governance body was set up with members from both the companies to monitor the engagement at all levels viz. strategy, planning and design, implementation and optimization at periodic intervals. Effectively, the client’s entire IT department was managed by HCL, to the extent of rebadging several of their IT employees as HCL team within an extremely short period. The first year of engagement saw Data Center Movement of over thirty projects and service delivery to SLAs during the transition in that year.

We flipped the switch... and there was light!

Let us look at the bottom line. The partnership was designed to have an extended IT department. IT rather than being relegated to a transactional service has proved to be a transformational tool for the client. More than 100 employees from the client’s IT department were seamlessly rebadged into HCL within the first year itself, through a well-defined rebadging process that was handled by a dedicated HR team at HCL. This helped retain knowledge and experience for the company while reducing their manpower overheads.

In dollar terms, direct cost savings to the tune of cumulative 44 percent have been projected in this multi-year engagement with the client. In addition, about 15 percent cost reduction in service delivery cost was achieved post-transition.

HCL has also successfully delivered and maintained more than 300 applications for the client and is managing all third-party IT vendors for them. Responsibility of over 30 in-flight projects was also taken over successfully.

In the long term, the company has been able to focus on its core competency: its business strategy and customers, while retaining strategic control with the CIO. The Full Services Co-sourcing model allows for flexibility, enhanced responsiveness to business needs and best-in-class infrastructure capabilities allowing for operational excellence and giving the client a competitive edge.

Improvement in the service multi-fold was also achieved with respect to service desk SLAs, Incident Volume, Resolution Times, Project Delivery within budget and time.

The path is lit

Since the entire IT department of the client is managed by HCL, via provision of end-toend services for the multi-year engagement, we are already handling every possible facet of their IT requirements. As the company grows, HCL is poised to ramp-up its services in the shortest possible notice period. In addition, both the companies are also working on a move toward an organization-wide enterprise platform to bring each department of the client under the same umbrella.


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