HCL Tech inks deal to take over Volvo's IT business

Global truck maker Volvo said on Tuesday it has signed a letter of intent with HCL Technologies to sell its external IT business in a deal seen boosting operating earnings by about 900 million Swedish crowns ($108.5 million) on closing.

The Swedish company said in a statement that about 2,600 Volvo staff would be affected by the transaction and offered employment at HCL.

The deal was expected to close during the second quarter of next year.

"Not only will our cooperation with HCL Technologies provide significant cost-savings. We will also make a capital gain when the contract is signed," Volvo's acting chief executive Jan Gurander said in a statement.

The sale of Volvo's external IT operations is part of sweeping efficiency measures aimed at cutting 10 billion crowns of structural costs at the truck maker.

In April, the Volvo Group said it was looking for an external partner to assume responsibility for its external IT business and IT infrastructure operations.

"HCL's engagement with Volvo is especially satisfying given that we have the opportunity to create additional value for such a forward looking organisation. I take this opportunity to welcome Volvo and its customers to the large network of value-creating relationships we already have in the Nordics," said Anant Gupta, president and chief executive, HCL Technologies.