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This article has been written by Brijesh Devi, pursuing the Diploma Programme in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from LawSikho.


There are several reasons as to why a company acquires another. However, the biggest reason for an acquisition is to increase its revenue. So, like any other acquisition, Hindustan Computers Limited (HCL’s) motive behind acquiring DWS was to increase revenue. But that isn’t the only reason for this acquisition as this acquisition is also a strategic one. DWS is an Australian based company that provides IT, business, and management consulting related services to its clients. 

They had around 700 employees and have their head office in Melbourne with branch offices across Australia. COVID-19 had heavily impacted a lot of business in India but this wasn’t the case in Australia as the number of cases that were found was comparatively very less and thanks to the Australian government’s quick decisions, the nation wasn’t brought to a standstill due to elongated lockdowns. 

The Corporate sector wasn’t impacted much by the government guidelines. DWS did pretty well in terms of revenue for 2020. On 5th January 2021, HCL’s acquisition of the DWS group was made official after all the verification from the respected authorities was done. So, what were the key considerations that played out in HCL’s decision of acquiring DWS? Before learning the consideration played in the acquisition, let’s have a look at the era known as the digital age.

What is the Digital Age?

The digital age is considered to have begun from the 21st Century due to the sudden changes brought into businesses from technological advancements. It is said to have picked up where the Industrial Revolution left and industries shifted from traditional approach to technological/digital approach. Digitalization is the process wherein the companies shifted in the digital age and acknowledged the use of technology as superior to old and traditional methods of running businesses. The digital age represents the era where the use of computers, laptops, and similar technology is encouraged so that the user can get data or information easily without any barriers. The improvements, easement, and opportunities in businesses brought in by the digital age are immense. Both HCL Technologies Ltd and DWS are organisations that offer services relating to technology and computer-related matters. Their union was a very well-formulated strategy that will provide them with huge returns in the near future. 

History of HCL

As the name suggests, Hindustan Computers Limited (HCL) is a multinational company based in India that provides services related to technology consultation. HCL enterprise was set up in 1976 and has its foot in a variety of industries. However, HCL Technologies Limited is the subsidiary that has generated the most revenue in recent times. 

Earlier, HCL Technologies was only a research & development division of HCL Enterprises but after 1991, it gained a separate focus when HCL entered into the software industry. As a result, HCL Overseas Ltd. was set up with the primary task of providing technology-related services. 

HCL Overseas earned the government’s assent to commence their business activities as of 10th February 1992. The Company went under a name change in the year 1994 where it came to be known as HCL Consulting Ltd. Finally, in October 1999, HCL Technologies Ltd came into existence as we know it today. HCL Technologies gradually grew to be one of the leading Indian MNCs that specializes in digitally developing enterprises. 

HCL Technologies expansion

HCL Technologies first released its first IPO (initial public offering) on 10th November 1999. From thereon, it has obtained huge success nationally as well as internationally. To expand its presence, HCL has obtained various companies throughout the globe. As with any other company, HCL acquired other companies to increase their man capacity, improve their intellectual property, gain knowledge about different market areas, and increase their profit-making ratio. In this technology-driven era where businesses use automation, cloud services, IoT, HCL Technologies help provide such services to these organisations.

HCL has built a rapport among Fortune 500 & 650 companies and Forbes Global 2000 companies. They are one of the most reputed companies which are engaged in giving Tech-related services. HCL Technologies have divided their services into three categories. The first is IT and Business Services (ITBS), the second is Engineering and R&D services (ERS) and the third division is Products and Platforms (P&P). 

Each unit helps an enterprise to modernize and digitally transform their workplace and business activities. This distinguished model by HCL is highly regarded by their clients, improving and ensuring the smooth running of the business. HCL Tech has received various prestigious awards on the national and international stage for its contribution to the tech industry and the development of society as a whole. 

Some of the major recognitions they are awarded include the 2016 Excellence in Practice Award by Association for Talent Development (ATD) for career development programs, National CSR Leadership Congress & Awards 2017 by World CSR Congress for their donations relating to CSR activities, and many others. Since its incorporation, HCL has made a name for itself and has been successful in getting acknowledged globally.

DWS Group

Before its acquisition by HCL Technologies, DWS was an independent Australian IT and business and management consulting services group. It has its headquarters in Melbourne with branch offices throughout Australia. Prior to HCL’s takeover, the company had around 700 employees. Ironically, the company was established in the same year when HCL Technologies was formed (formerly HCL Overseas Ltd), in 1991, DWS group had an elite clientele ranging from blue-chip corporations to government agencies as well. DWS’s work was acclaimed not just in Australia but internationally too. HCL was reportedly keeping tabs on the company’s position since early 2020. Their union is going to be beneficial for both sides.

HCL’s acquisition of DWS: a strategic masterplan

HCL Technologies commenced its business in Australia and New-Zealand more than twenty years ago. Before HCL acquired DWS, they were already a well-established company even in Australia. They had various clients and established many branch offices in the country. 

DWS, being an Australian company, knew a lot more about the Aussie market and had a comparatively easier run than HCL Technologies. However, DWS wasn’t as big of a company internationally when compared with HCL. HCL is a prominent multinational corporation (MNC), as of 2020, it had offices operating in more than fifty countries. 

As for DWS, they have five offices all in Australia. HCL Technologies has been keen on having a stronghold in Australia since the beginning. They haven’t had the opportunity in being the most sought company in regards to providing services relating to technology. Australia, just like India, is one of the leading countries that provide companies that are into IT and Consultancy services. 

A well-executed acquisition can bring many advantages to the acquirer apart from revenue multiplication. DWS, a leading company in Australia in terms of providing IT, business, and management consulting services. HCL Technologies Ltd. was also engaged in a similar line of work. These types of acquisitions are known as horizontal acquisitions, wherein, the acquirer and the target company both are engaged in the same line of business. HCL acquisition of DWS was an arrow that hit two targets at once. 

Firstly, it cut the competition for HCL Ltd and secondly, it provided them with clients from DWS as well. An acquisition that completely changes the acquirer’s position in a market is an art in itself. This acquisition will give HCL Technologies the advantage they needed in conquering the Australian tech industry.

Analysis of the move

The acquisition of DWS by HCL Technologies Ltd. cost 158.2 million Australian Dollars which roughly converts to 851 crore Rupees. HCL made the total equity pay-out of the said amount in September while the move was officially confirmed in December 2020. DWS employed over 700 people in its Melbourne, Sydney, Perth, Canberra, and Brisbane offices. HCL Technologies has 1600 employees in its worldwide spread offices. 

DWS generated a revenue of 167.9 million Australian Dollars and HCL Technologies generated 10 billion US dollars. Additionally, DWS had announced that their shareholders are to get a dividend payment of 0.03 Australian Dollars per share as a part of annual corporate earnings for FY20 (June end). 

The CEO and Managing Director of DWS Group, Danny Wallis had said, “This acquisition represents an outstanding outcome for all DWS stakeholders: shareholders, employees, clients, and other business partners”. While the Vice President and Country Manager of HCL Technologies Ltd, Michael Horton said, “We are excited for this expansion of HCL Technologies in Australia and New Zealand and are confident that our combined strengths will further accelerate the digital transformation journeys of our clients and innovations for their end customers.” 

The year 2020 has been very difficult for the tech industry. The COVID-19 lockdown has hampered the global economy. Big-tech companies have resorted to mass lay-offs to cut managing costs. However, some companies have made huge profits in this situation as well. HCL and DWS are among such companies. Both reported more than decent revenue for 2020 and are supposedly well-off any debt obligations. HCL Technologies’ rise to be globally recognized as a major IT services providing company is a fairy tale. They have acquired several businesses around the world, throughout the years to help develop their organization. As of 31st March 2020, they had one hundred and thirty-seven subsidiary companies and eleven associate companies. DWS groups acquisition too will prove to be fruitful for HCL Technologies. With this move, they have made their presence strong in Australia as well and are now one step closer to global domination.

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