Tackling The Product-Services Conundrum

HCL Technologies’ $1.8-billion acquisition of certain IBM software assets is expected to be a stormy affair if the lessons from the past are any indication. For instance, in 2016, TCS was asked to pay $940 million by a US court for the alleged theft of code by its executives from a customer. While the fine was later halved, the case was a stark reminder for the Indian IT industry about the importance of putting a wall between the product and the services teams.

“These are dead assets and it makes no sense to invest money in these assets,” said Sanchit Gogia, CEO at Greyhound Research, talking about the IBM assets being bought by HCL Technologies. “For this amount, they could’ve bought a mid-mized ERP company with decent revenues. This is a short-term gain for a long-term loss. This is not an IP asset built for future,” Gogia said. 

“There will be a lot of investments that’ll go into building these products further and putting some of them on the cloud,” Gogia said. “These products have never been sold independently by IBM, and if HCL wants to do that, it’ll be a tough one to crack.”

[Hindu Business Line]

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Analyst:

Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, an award-winning global research & advisory firm. To read more about him, click here.

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