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Wednesday, Nov 15, 2006

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HCL Tech inks pact with Canadian co Celestica

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To jointly design, make electronic products for global OEMs

Joining hands
HCL to set up centre in Chennai
The two companies have set up a joint marketing team for the venture
To offer fully integrated product lifecycle solutions to OEM customers

New Delhi , Nov. 14

HCL Technologies Ltd has entered into an agreement with Canada based electronics manufacturing services company Celestica Inc to jointly design and manufacture electronic products for global original equipment manufacturers (OEMs).

As per the agreement, while HCL will design medical, aeronautics and consumer electronics products, Celestica will manufacture the products for its global customers such as IBM and Cisco.

HCL is setting up a design centre in Chennai with an initial base of 200 employees. The two companies have set up a joint marketing team for the venture.

Eyes $100 m revenues

Mr Vineet Nayar, President, HCL Technologies, said that the new initiative is expected to bring revenues of $100 million over the next five years for HCL alone.

"Through this collaborative venture, the two companies are driving change in an increasingly competitive market by offering seamlessly integrated design, manufacturing and supply chain solutions. This is the first joint venture of this kind in the electronics industry," said Mr Nayar at conference call.

Traditionally, outsourcing has often involved multiple suppliers handling various aspects of the product lifecycle. This joint venture will provide a fully integrated product lifecycle solution to OEM customers — including product concept, design, engineering, manufacturing, fulfilment, sustaining engineering, reverse logistics and after-market services.

HCL's scalable design engineering capabilities combined with Celestica's existing strengths in hardware design for manufacturability and supply chain integration create an alternative for OEMs seeking total cost advantages.

Global Network

"A new market is being created through this joint venture. It removes a level of complexity, allowing OEM customers to focus on their core business and strategic initiatives," said Mr Nayar. The venture is aligned with HCL's blue ocean strategy to create uncontested market spaces and create additional value for its customers. This alignment will provide a unique proposition of a single point of contact for OEM customers — from concept to manufacturing — leveraging the strength of both industry leaders, said a press release.

While for HCL this will bring in additional revenues, for Celestica the venture will enable it to bring cost effective solutions to its global customer base. Celestica operates a global manufacturing network with operations in Asia, Europe and the Americas, providing a broad range of integrated services and solutions to leading OEMs.

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