Volvo Group is divesting its external IT business and outsourcing its IT infrastructure operations to global IT services provider, HCL Technologies. The deal is expected to close in the second quarter of next year. Volvo Group said the move would provide cost savings and capital gain, with operating income and net financial debt estimated to improve by approximately SEK 900m ($60m). The Swedish company is currently pursuing a programme to reduce structural costs by SEK 10 billion ($1.2 billion).
“I am convinced that this will benefit personnel, suppliers and customers,” said Jan Gurander, Volvo’s CFO, acting president and CEO. “Not only will our cooperation with HCL Technologies provide significant cost-savings, we will also make a capital gain when the contract is signed.”
HCL will meet the demand from customers currently being served by Volvo’s external IT business. Volvo IT delivers mainly infrastructure and operational services to customers outside the Volvo Group. Customers include The City of Stockholm and SJ, the Swedish railroad operator, according to a spokesperson for the company.
The divestiture of the IT business will affect 2,600 staff members who will be given the opportunity to move to HCL Technologies.
HCL, which is based in India, is an IT outsourcing and software specialist, providing infrastructure and application management services, engineering and R&D services. HCL Technologies will deliver services to all existing customers of Volvo IT external business.
“HCL’s engagement with Volvo is especially satisfying given that we have the opportunity to create additional value for such a forward looking organisation,” said Anant Gupta, president and CEO of HCL Technologies. “It is also pleasing to note that skilled personnel will be joining HCL and our culture will further flourish globally.”