Volvo outsources IT to HCL Technologies in five-year deal

News
16 Feb, 2016

Carmaker also transfers 2,500 IT staff to HCL to deliver external IT services

Volvo has outsourced its IT operations to HCL Technologies, along with 2,500 staff from 11 countries that comprised part of its IT team.

The five-year outsourcing agreement marks a dramatic shift for Volvo, from providing and provisioning its IT largely in-house to relying on the Indian outsourcer to deliver its technology roadmap.

That roadmap requires HCL to prepare Volvo’s infrastructure for cloud, automation and Big Data, and will see it look after 3,500 applications, 20 datacentres, 12PB of storage, 20,000 MIPS (millions of instructions per second) of mainframe capacity and more than 15,000 network devices.

HCL will also shift 65,000 Volvo employees onto Microsoft Office 365, as well as other productivity tools.

Olle Högblom, CIO of the Volvo Group and president of Volvo IT, said: “Combining the strengths of HCL with those of the transferred parts of Volvo IT will result in an organisation with formidable capabilities and an intimate understanding of Volvo Group needs and opportunities.

“This, and the cultural fit between our two organisations, is the foundation for a partnership that will provide long term and strategic benefits for the Volvo Group.”

Clive Longbottom, founder and service director of analyst firm Quocirca, told IT Pro that Volvo will keep its staff responsible for developing in-vehicle technology, and that outsourcing its infrastructure appears to make sense.

He said: “Going to HCL for IT support/management/operation should be OK - it is the basic systems that are being looked at here, not in-car IT." 

Volvo IT

As well as transforming Volvo’s infrastructure, HCL will also take over Volvo IT, the carmaker’s division responsible for selling IT to external customers – both Volvo partners and completely separate bodies, such as the City of Stockholm.

The Economic Times cited sources suggesting the business would be worth $1.8 billion to HCL over the length of the five-year deal.

The 2,500 Volvo IT staff – who provided both internal and external support - will help HCL to continue to deliver services to 40 existing Nordic and French customers of Volvo IT, but also take Volvo’s IT to its own clients.

Anant Gupta, CEO of HCL, said: “The Volvo Group employees and consultants will add great value for our customers with the skills and expertise that they bring. We are delighted to welcome them to our team. The deal perfectly embodies HCL’s ongoing mission to develop its business with an innovation-led mind set.

“I am convinced that HCL will prove to be an outstanding partner also for the other customers of Volvo IT and that our former employees of Volvo now joining HCL will find themselves becoming an important part of a leading global IT services provider, with a very exciting and modern business philosophy.”

One of HCL’s priorities will be to build on the capabilities of Volvo IT’s mainframe using IBM’s midrange iSeries line of servers, delivering services from it to its existing set of customers.

Quocirca’s Longbottom told IT Pro that HCL may not take all of Volvo IT’s capabilities, which could yet be spun off into its own organisation.

“We will have to see what happens to Volvo IT - whether this goes wholesale to HCL, whether HCL cherry picks, or if the division does become its own company - with a lot of its capabilities being based in India, it could still carve itself a reasonable market in the region,” he said.