HCL Engineering R&D Services: First Flight into The Future

The president of the Engineering and Research and Development Services (ERS) division at HCL Technologies Ltd. (HCL) congratulated the Boeing Company (Boeing) on the maiden flight of its 787 Dreamliner jet airliner on December 15, 2009. Out of the many companies working on the 787 Dreamliner project, HCL was the only Indian information technology services firm to be selected for the project. As part of the project, HCL worked closely with Boeing, and some of Boeing’s tier-one suppliers, in developing various onboard mission-critical software systems, such as the electrical power generation and distribution system and the pilot controls. The multi-million dollar deal had important implications for HCL and its future in the US$644.3 billion aerospace and defence industry. HCL ERS had to make a crucial strategic choice: should the division continue to offer great value to its customers by helping them optimize costs and improve delivery time, or should it move up the value chain by investing more in research and development capabilities, thereby emerging as a leader rather than a follower in this highly complex and technology-driven industry?

This case is best suited for the second year of a two-year MBA program or the latter part of a one-year executive MBA program. It can be used in courses discussing strategy formulation and implementation, enterprise risk management, and general management. After using the case, students will be able to do the following:<ul><li>Assess and identify the risks and opportunities presented by the changing dynamics of the civil aviation industry for a tier-two supplier like HCL.</li><li>Understand the dynamics of the relationships among tier-one and tier-two suppliers and original equipment manufacturer in a multi-tier global supply chain in the aerospace industry.</li><li>Identify the capabilities and core competencies (or core rigidities) of engineering research and development service providers like HCL, and the impediments these service providers may face in moving up the value chain.</li><li>Formulate strategies for growth and survival in a risky and dynamic environment.</li></ul>

• Value Chain, Enterprise Risk Management,