A very busy team with full suite of treasury responsibilities and more

HCL Technologies (HCL) has a centralised treasury organisation of 20 treasury professionals based in India that supports the corporation’s cash, liquidity and risk management requirements across the 49 countries in which it operates. HCL has over 175 entities globally, most of which are subsidiaries, with their own distinct compliance, liquidity and risk requirements which are managed by treasury. In many cases, these operate under regulatory, capital and currency constraints, adding further complexity. In addition to its traditional roles of cash management, corporate banking, borrowings, FX management and investment, treasury’s portfolio also extends to global corporate insurance (assets/liabilities), professional indemnity, employee benefits programme, credit ratings, leasing supply chain programmes and securitisation.

“In the last six months, we have taken on the additional responsibility of managing the investment for the provident fund (PF) trusts for over 100,000 employees in India. While maintaining liquidity and security, we manage our own and employee retiral funds,” explains Vineet Sood, Executive Vice President Finance and Treasury.

From a risk management perspective, treasury manages FX risk across more than 20 currencies, one of the few corporations managing a global FX hedging programme from India, managing an annual exposure of US$3.5bn against currency fluctuations. Through a very complex module built in-house, HCL is able to monitor forex exposure across 150 entities and 20+ currencies at the click of a button.

HCL and Citi are in the process of implementing cross-currency sweeps in tandem with the multi-currency notional pool set-up to better manage currency risk.

Treasury maintains its credit rating with S&P and additionally maintains commercial ratings across 40+ entities for the company’s customer and vendor support across geographies to support the business.

HCL treasury also runs a complex insurance programme covering 110+ insurance policies globally to protect asset, liability, contractual risks and employee benefits programme. In addition to the usual financial risks managed by treasury, the team also manages credit risk, commercial risk, sovereign risk and cyber risk insurance.

Over the past few months, HCL’s treasury team has embarked on several flagship initiatives to introduce digitisation and enhance its service offering to HCL Technologies. For example, treasury implemented QlikView®, an end-to-end data integration, user-driven business intelligence and analytics platform for real-time tracking of its US$1.5bn investment portfolio. The team has also leveraged its SAP platform to automate workflows for insurance claims and its employee benefits programme.

Citi has been instrumental in assisting HCL’s quest for innovation. Citi Connect, CitiDirect BE and Citi Liquidity Manager have been at the core of the company’s banking integration enabling it to seamlessly transact with the bank across 100+ accounts in 40+ countries. The bank’s liquidity manager and regional multi-currency pooling set-up provides liquidity across the group’s bank account structure.

A new strategy Mode 1-2-3

HCL is accelerating its evolution into a next-generation technology services firm through its strategy titled Mode 1-2-3, leveraging digitisation, analytics, cloud, internet of things (IoT) and automation to reinvent the business, but also to support its customers in their transformation initiatives. Treasury is a flagship example of this strategy. For example, one of the ways in which HCL’s treasury team is managing such a wide and complex range of responsibilities is the degree of digitisation and automation that has been achieved, based on SAP HANA, with host-to-host connectivity to the company’s partner bank.

The digital journey

HCL has been proactive in implementing digital solutions but focused these efforts on solutions and process automation that brings the greatest value to the organisation, rather than adopting digitisation for its own sake. For example, treasury is an early adopter of its bank’s payment outlier detection solution, which uses machine learning and artificial intelligence to monitor, identify and flag unusual transactions, a major defence against the risk of fraud and cyber-attack. In addition, HCL has prioritised digitisation of traditionally labour-intensive activities, such as import and export documentation, and issuance of letters of credit and bank guarantees now enabled via the CitiDirect BE platform. Multi-product digitisation with the bank has been a key enabler for HCL to work seamlessly in the times of the COVID-19 pandemic.

The need to comply

A key area in which HCL has introduced digitisation is compliance, which is not typically an area on which treasurers focus their technology efforts. As treasury is conscious of the reputational as well as financial risk of non-compliance with regulations, it has invested heavily in this area, including the automation of quarterly board reporting. Considering that HCL’s comprehensive FX programme to hedge the 20+ currencies, the compliance related to both the front office (dealer) and risk management office (middle office) is manged through comprehensive, robust, highly-customisable, IT-enabled support solution for tracking, managing and reporting on regulatory and internal compliances.

Developing the treasury team

While digitisation is a factor that has helped drive treasury’s success, the quality, expertise and commitment of the treasury team is the most significant contributor. HCL rotates its treasury team across verticals to give exposure to different experiences, knowledge areas and geographies, ensuring their roles remain interesting and challenging, and support their career development. This rotation is also important for team synergy as people can share experiences, and understand the issues associated with each vertical, allowing better, more integrated decision-making. Employees also benefit from a comprehensive induction programme and regular training.

A diverse team is key

HCL is at the forefront of promoting greater diversity across its workforce, led from the top with the appointment of Roshni Nadar Malhotra as Chair of the Board in July 2020. Treasury epitomises the culture of diversity; around 35% of treasury personnel are female, including senior roles.

“This has been valuable in increasing the breadth, depth, and quality of decision-making, and creating an environment in which women joining the business in the future can thrive. As an organisation, we value partners that share these same principles and our bank’s focus on diversity is a strong foundation for our partnership,” says Sood.

Treasury’s efforts reflected in company’s financial results

Just as HCL is reinventing itself as a next-generation technology provider, the company’s treasury team is redefining the boundaries, role, operations and relationships of a next-generation treasury function. With a team of only 20 professionals, covering over 175 entities and 49 countries, treasury has a far wider brief than most corporations of a comparable scale and complexity. The team has risen to this challenge by developing multi-disciplinary skills through rotation across treasury verticals, creating more integrated decision-making and a strong team ethic. It has also pioneered digitisation and automation of key activities to optimise liquidity and risk management, including financial and compliance risk.

“The value of this approach has been emphasised during the crisis, with treasury rapidly adapting and providing agile support to each entity globally to support their changing liquidity and risk dynamics, through working capital optimisation, stable funding, and credit risk management. Our success in stabilising the company’s financials has been exemplified through strong Q1, 2020-21 (June 2020) financial results and year-on-year growth in our earnings per share,” concludes Sood.

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