Volvo to divest, outsource $100m IT infrastructure

Volvo Group divests its IT business, outsourcing it to HCL Technologies to reduce overhead costs

HCL Technologies, based in Nodia, Uttar Pradesh, is one of the top 20 largest publicly traded companies in India.
HCL Technologies, based in Nodia, Uttar Pradesh, is one of the top 20 largest publicly traded companies in India.

The Volvo Group intends to divest its external IT business and to outsource IT operations to HCL Technologies in a transaction to be closed during Q2 2016 to provide cost savings and a capital gain.

In conjunction with the closing, the Volvo Group’s operating income and net financial debt are expected to be positively impacted by approximately $106m.

“I am convinced that this will benefit personnel, suppliers and customers,” said Jan Gurander, Volvo’s CFO, and for the last months its acting president and CEO.

Approximately 2,600 Volvo personnel will be affected by the transaction. They will be given the offer to move over to HCL Technologies and to continue to work closely with their colleagues in Volvo’s IT services division.

“This means that employees within the IT business who join HCL Technologies will have a new affiliation in an environment in which information technology is the core business. I am convinced that this will benefit personnel, supplier and customers,” continued Gurander.

Volvo Group announced its intention to find an external partner to assume responsibility for its external IT business and its IT infrastructure operations in April. The transaction is part of the efficiency programme that aims to reduce the Group’s structural costs by $1.18bn.

“An equally important aspect is that we will have a partner who can ensure that the operation of our IT infrastructure is developed in a manner that will enable us being at the forefront of our industry,” added Gurander.

HCL Technologies Limited is a global IT services company, headquartered in Noida, Uttar Pradesh, India. It is among the top 20 largest publicly traded companies in India, with a market capitalisation of $22.1bn, as of May 2015, and consolidated revenues of $6.0bn, as of August 2015.

Anant Gupta, president & CEO of HCL Technologies, commented: “It is pleasing that skilled personnel will be joining HCL and helping our culture to flourish. I take this opportunity to welcome Volvo and its customers to the large network of value-creating relationships we already have in the Nordics.”

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