Indian Outsourcer HCL Acquires Data Center in the US

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Indian outsourcer HCL Technologies has acquired its first data center in the U.S. from one of its customers, the company said on Monday.

HCL also took over the data center's staff and other operations, said R. Srikrishna, senior vice president for sales for the North America business of HCL's Infrastructure Services Division. HCL actually acquired the data center in October but delayed announcing it until this month, pending the upgrade of the facility.

The data center, located in New Jersey, fits into HCL's strategy to offer some services from locations close to its customers, Srikrishna said. The data center will in part be used to serve the unnamed customer HCL purchased it from, as well as offer services to other HCL clients.

HCL has already invested US$15 million to upgrade the 35,000-square-foot center to support eco-friendly technologies, virtualization, cloud computing, business continuity and mainframe management services.

HCL already has co-location arrangements with SunGard Data Systems for six other locations in the U.S., and will continue this arrangement, according to Srikrishna.

Customers want data center services delivered from locations close to them, he said. A customer in California, for example, would prefer to have services delivered from a data center in the state rather than from New Jersey, he added.

Although customers can save money by outsourcing IT services to India, this may not be the case with data centers, according to Srikrishna.

Setting up and running a data center in the U.S. is far cheaper because of India's high electricity costs, Srikrishna said. Real estate -- the other major cost for a data center -- is on par and in some cases cheaper in the U.S. than in India, he added.

Indian outsourcers are increasingly looking to put data and software development centers closer to customers, including opening ones in the U.S. Some outsourcers also believe that hiring local staff reduces criticism in the U.S. that Indian outsourcers are causing job losses in the U.S.

HCL already has close to 5,000 staff in the U.S., and this is likely to grow, Srikrishna said. About 1,500 of the staff became part of the company after its acquisition last year of Axon Group, a SAP consulting company firm in the U.K. A large number of outsourcing contracts, particularly infrastructure services contracts, have required HCL to absorb some of the clients' IT staff.

HCL is increasingly focused on delivering newer services that its customers do in-house, Srikrishna said. HCL will continue to use its centers in India to perform work that is cheaper to produce there, he added.

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