HCL Technologies is a part of the HCL Enterprise, and is one of the two companies listed under it in India. HCL Enterprise is a 3 and a half decade old enterprise. HCL technologies focuses on the global market and provides IT services to its clients. Its First IPO was in the year 1999 and the organization has focused on outsourcing transformation thru innovation and value delivery. Its portfolio comprises of service in the filed of R'nD , IT solutions , Infrastructure management, and Business Process outsourcing. It leverages its global presence and offshore network to provide these services spread across industry verticals.
HCL philosophy of 'Employees First' helps it create and deliver value for its customers. HCL Technologies, and its subsidiaries revenues gross at US$ 2.9 billion (Rs. 13,145 crores), as on 30th September 2010 (on LTM basis).
HCL partners with a number of Global 1000 firms, which also contain top IT and technology firms
HCL Technologies
The HCL Enterprise has over 35 year history, HCL Technologies is comparatively young company incorporated, 12 years ago, in 1998. Over the year since its incorporation HCL has build exceptional capability in IT applications space which comprises of custom applications development and COTS deployment, ITIM and BPO, at the same time extending its headship in product engineering. HCL also harnessed capability and domain depth thru its micro - verticalization strategy for industry verticals such as Financial Services, Hi-tech and Manufacturing, Retail, Media and Entertainment, Life Sciences, and Telecom.
HCL's wide and well distributed portfolio of offerings and domain capabilities enables it to delivery value thru the customer's organization across geographies. It has a rich portfolio of service offerings as compare to its peer group in India, with critical mass .
Its five core LOB's are R&D and Engineering, Custom Applications, Enterprise Applications, IT Infrastructure Management, and BPO Services. HCL in recent times has also started an Enterprise Transformation Service which aims at offerings Business, Technology, Application and Data Transformation - inurn aims at the broad wishes for an organization. HCL's builds on its ability to integrate these delivery lines transversely thru the IT landscape helps it create new avenues of value creation. This is complimented with HCL's unique service leadership in these areas by best-of-breed inimitable offerings. Several industry analysts recognize HCL's leadership in these areas.
HCL visionary outlook lead it to start questioning the linear business model as early as 2005 and anticipate the upcoming inflection point. This is anticipated as the point where in the proportionality between volume and value will change and thereby bring forth the point of value focused delivery which in-turn will open more avenues. With this underlying theme HCL started its journey build upon the focus of value in its customer's relationships and on harnessing new market opportunities , keeping its employee experience on the forefront. This lead to HCL enter the next phase of its evolution that focused on value as the centre of its offering and an organization that focuses on using technology to deliver competitive advantage to its clients. This approach soon became a path for IT organizations to traverse and this is also being recognized by Harvard, Fortune, Forbes, Economist, Business Week and the likes.
About HCL Technologies
Company Name
HCL Technologies Ltd.
Company Type
Global IT Company.
Service Areas
Software, Infrastructure and BPO.
Date of Establishment
November 12, 1991.
Chairman and Chief Strategy Officer
Shiv Nadar.
CEO
Vineet Nayar.
Employee Strength
64,557 on 30th June 2010.
Offices
Offices in 20 countries.
Geographies
USA, Europe, Asia Pacific and Japan.
Consolidated Revenues
US$ 2.7 billion (Rs. 12,565 crores), as of 30th June 2010.
Board of Directors
Board of Directors
Pursuant to the Companies Act and the Articles of Association, the directors of the Company (the ―Directorsâ€-) may be appointed by the Board or by our shareholders in a general meeting. The Board may appoint any person as an additional Director, but such a Director shall hold office up to the date of the next annual general meeting, unless the director is re-appointed by the shareholders in accordance with the provisions of the Companies Act. A casual vacancy in the Board due to the death or resignation of a Director who is appointed by the shareholders can be filled by the Board at a meeting of the Board, and the person so appointed shall hold office only until the date which the Director in whose place he is appointed would have held office. The Directors may appoint an alternate director to act for a Director during his absence for a period of not less than three months from the date in which the meetings of the board are ordinarily held. As per our Articles of Association, our Company is required to have not less than 6 Directors and not more than 16 Directors. Currently, our Company has 10 Directors. The present composition of the Board of Directors and its proceedings are in accordance with the Companies Act and the norms of the code of corporate governance as applicable to listed companies in India.
The table below sets forth Board of directors details as of the date of this Placement Document:
Name
Designation
SHIV NADAR
Chairman & Chief Strategy Officer - HCL Technologies
VINEET NAYAR
CEO, HCL Technologies
AJAI CHOWDHRY
Chairman & CEO - HCL Infosystems
T S R SUBRAMANIAN
Director
ROBIN ABRAMS
Director
SUBROTO BHATTACHARYA
Director
AMAL GANGULI
Director
PROBIR CHANDRA SEN
Director
Brief Profiles
SHIV NADAR : Founder - HCL, Chairman & Chief Strategy Officer - HCL Technologies
At a time when India had a total of 250 computers, Shiv Nadar led a young team which passionately believed in and bet on the growth of the IT industry. That vision in 1976, born out of a Delhi "barsaati", akin to a garage start-up, has resulted 3 decades later in a $5 billion global transformational technologyenterprise today. From designing India's first PC at the same time as global IT peers in 1978; to working on the Boeing Dreamliner's Flight Management Systems now, HCL has stayed a true Pioneer of Modern Computing. HCL's range of offerings spans Product Engineering, Custom & Package Applications, BPO, IT Infrastructure Services, IT Hardware, Systems Integration, and distribution of ICT products - across a wide range of focused industry verticals.
VINEETNAYAR : CEO, HCL Technologies
Vineet Nayar is the CEO of the $2.3 billion HCL Technologies Ltd, leading a team of 54,443 professionals in 26 countries to drive growth in IT Services industry. He also serves on the board of the company as a whole time Director. Vineet has instituted several radical programs that began a quiet transformation across the organization.
AJAI CHOWDHRY: Founder - HCL Chairman & CEO - HCL Infosystems
An engineer by training, Ajai Chowdhry is one of the six founder members of HCL, India's leading Technology and IT company. HCL, India's original IT garage start-up founded in 1976, is today a US$ 5 Billion Global Enterprise.
T S R SUBRAMANIAN: Director
Mr. Subramanian had a distinguished career in the Indian Administrative Service, where he held various positions including that of Cabinet Secretary, the highest post in the Indian administration and the post of Secretary in the Ministry of Textiles. He has also worked in the Ministry of Commerce, where he dealt with trade policy issues and matters relating to General Agreement on Trade and Tariffs (GATT) and with UNCTAD. His assignments in the state of Uttar Pradesh included the highest executive post, Chief Secretary of the State.
As Cabinet Secretary to the Government of India, Mr. Subramanian took a number of initiatives to modernize and develop the infrastructure sector in India, especially in the Power, Telecom and Surface Transport sectors.
ROBIN ABRAMS: Director
Robin Abrams was most recently interim CEO at ZiLOG. She had been the President of Palm Computing and Senior Vice President at 3Com Corporation. She was also formerly the President and CEO at VeriFone. She has 30+ years of computing and computing services expertise coupled with strategic planning and management experience.
Abrams has worked at Apple as a VP and GM for Americas , At Unisys in Sr positions and at Norwest banks (Now Wells Fargo). She has served on several U.S. public company boards including Openwave Systems, ZiLOG and BEA Systems (until it was acquired by Oracle). Abrams also serves on the Anita Borg Institute Board and several academic advisory committees.
SUBROTO BHATTACHARYA: Director
Mr.Subroto Bhattacharya, a Chartered Accountant by training, spent his early career with DCM Ltd. where he rose to the position of a Director on the board. In the late eighties, he joined the HCL Group and subsequently joined the Board of the flagship company HCL Ltd. He also serves on the Board of Directors of HCL Infosystems Ltd and NIIT Ltd.
AMAL GANGULI : Director
Mr. Amal Ganguli, a Chartered Accountant, was till recently the Senior Partner of Price WaterhouseCoopers India. In a distinguished career spanning nearly four decades, Mr. Ganguli was involved with the India practice of Price WaterhouseCoopers and is an authority on matters related to audit,taxation, mergers and acquisitions and corporate restructuring.
PROBIR CHANDRA SEN : Director
Mr. Probir Chandra Sen, a graduate of St. Stephens College, Delhi and a post graduate in M.A. (History) and Diploma in Social Anthropology from King's College, Cambridge U.K. and M.Sc (Economics) from University of Swansea, U.K., joined the Indian Administrative Service in Madhya Pradesh Cadre in 1967. He has held a variety of assignments both with the Government of Madhya Pradesh and the Government of India. He retired as Secretary General, National Human Rights Commission in April 2003. He took over as Director, India International Centre from May 2003 onwards.
Mr. Sen was conferred the `National Citizen's Award' presented by the Prime Minister of India, the 'Shiromani Award' presented by the Speaker of the Lok Sabha and the `Wings of History Award' for his tenure in Indian Airlines.
Leadership Team
VINEETNAYAR : CEO, HCL Technologies
Vineet Nayar is the CEO of the $2.3 billion HCL Technologies Ltd, leading a team of 54,443 professionals in 26 countries to drive growth in IT Services industry. He also serves on the board of the company as a whole time Director. Vineet has instituted several radical programs that began a quiet transformation across the organization. His mantra of "Employee First" and a strong belief in value-based leadership has been recognized globally. Fortune Magazine has articulated his leadership style as "The World's Most Modern Management" and the London Business School calls him "the leader of organizational Innovation". The Harvard Business School (HBS) has written a case study on the Transformation at HCL, based on his innovative and radical leadership.
ANIL CHANANA: Chief Financial Officer, HCL Technologies Ltd
Anil Chanana is a finance professional with over 25 years' rich experience in this domain. Anil's first stint at HCL was way back in 1985, when the company was still called Hindustan Computers Limited.
Anil is a qualified Chartered Accountant and has attended various programs including the Leadership Program conducted by Hewlett-Packard and an Executive Program in Finance from Stanford University.
ANANTGUPTA : President - Infrastructure Services Division, HCL Technologies Ltd
Anant Gupta is the President of HCL Technologies Infrastructure Services Division (HCL ISD) HCLT ISD (also popularly known as HCL Comnet) is a leading IT services company and a subsidiary of HCL Technologies Ltd. A focused player in the IT services arena, HCLT ISD seeks to provide simplified infrastructure solutions through delivering high-performance management services for complex, distributed infrastructure environments encompassing the Internet, Client and legacy based infrastructures.
RAHUL SINGH: President, BPO Business Services, HCL Technologies Ltd
Rahul Singh is President of HCL's BPO Business Services and is responsible for leading the global business and operations of this division. As head of BPO Business Services Rahul is responsible for the execution of the business growth strategy whilst ensuring operational excellence.
An accomplished leader and a pioneer in creating the BPO industry in India, Rahul Singh has 24 years of rich experience across industry segments such as Outsourcing, Banking, Financial Services, Call Centre Services.
Manpower details
Manpower Details
30-Sep-10
IT Services
54,302+
BPO Services
10,205+
Total Employee Count
64,557+
Summary of Business, Products < Not Applicable>, Market, Customers, SWOT- Rajeev
Summary of Businesses
HCL Technologies operates in 5 business areas
Custom Applications
Engineering and R'nD
Enterprise Applications
Infrastructure services
Enterprise Transformation Services
BPO
Custom Application Services : This division leverages domain-driven approach to design, and implements scalable, reliable, robust, secure, and easily maintainable applications that provide our customers with business differentiation through IT. Its services comprise of application development, support, re-engineering, technology upgrade, platform porting / migration, and test only services. Building on domain capability of over 10,000 domain and technology experts, this division supports 100 + clients across globe contributing to > 29% of HCL's revenues. This group's customers include at least 2 of the 5 key company in each of the Banking , insurance, manufacturing, retail, media & publishing, gaming and life sciences verticals.
Engineering and R&D Services [ERS] : HCL's unique combination of skills and capabilities makes it a Indian company that stands out with significant focus on contract engineering services. This group contributes > 19% of the HCL's revenues, this group also provides a strategic advantage to the services portfolio. This groups services catalog comprises of E2E engineering offerings all the way from hardware, embedded to mechanical and software product engineering for OEM's and vendors across Aerospace & Defense , Automotive, Consumer Electronics, Industrial Manufacturing, Medical Devices, Networking & Telecom, Office Automation, Semiconductor, Servers & Storage and Software Products.
Enterprise Application Services [EAS] : This group provides best-in-class services and solutions to customers in ERP, SCM, CRM, HCM, EPM, BI and Middleware. It has strong partnership with SAP, Oracle and Microsoft. This group accounts for > 22% of HCL's revenue and is poised for a big upside in coming years.
Enterprise Transformation Services (ETS) : This group works jointly with clients in building BT roadmap by aligning business with IT strategy. This group offers an integrated solution to enable BT's following "Advise to Execute" approach. The offerings comprise of Process Transformation Services, Data Management Services, Integration Services, Architecture Services, Disruptive Technology Services (Including Cloud related services) and IT Strategy and Change Management services.
Infrastructure Service Division (ISD): This group is the growing line of business in the organization and its inception was to venture into an untapped pace of RIM ("Remote Infrastructure Management") at the time of initiation. This is also what comprises of the 3rd wave . HCL ISD group dominates this space and is also respected by global experts for foresight and maturity in delivery.
Business Process Outsourcing (BPO) : This group accounts for > 6% of HCL's revenue and is now headed for the next maturity level which is Transformational BPO. This outsourcing approach comprises of Full Process and Multiple Process outsourced to a HCL. This group also build on strengths of delivering thru multiple geographies , Channel and languages across domains such as Telecom, Retail, Media Publishing Entertainment (MPE), Energy Utility & Public Services, Banking & Financial Services, Insurance, and Healthcare.
Summary of Industry Sectors
Aerospace and Defense
Automotive
Consumer Electronics
Energy and Utilities
Financial Services
Government
Healthcare
Independent Software Vendors
Industrial Manufacturing
Life Sciences
Media & Entertainment
Retail & Consumer
Semiconductors
Servers and Storage
Telecom
Transportation & Logistics
Travel & Hospitality
SWOT
HCL Technologies is one of India's largest information technology (IT) services exporter providing IT services as well as IT-enabled services. Its range of offerings comprises software-led IT solutions, remote infrastructure management, engineering and research and development (R&D)
services and BPO. The company's diversified portfolio of services decreases its business risk and
also shields it from decline in any particular service line. However, intense competition in the
IT-services industry will adversely affect the company's operating performance and market share in
coming years.
Strengths
Diversified portfolio of services
HCL has diversified portfolio of services. The company provides a range of services, including
software, infrastructure management, and business process outsourcing (BPO) services. HCL with
global offshore infrastructure and network of offices in 26 countries offers these services to key
industry verticals, including financial services, manufacturing, aerospace and defense, telecom,
retail, life sciences and healthcare, media and entertainment, travel, transportation and logistics,
automotive, government, and energy and utilities.
The software services provided by the company include custom application services, engineering
and R&D services, enterprise application services and enterprise transformation services. The
custom application services comprise custom application development, application re-engineering
and integration, legacy migration and modernization, to application portfolio optimization, maintenance
and production support.The engineering and R&D services provide full lifecycle product engineering
services, spanning from requirements definition to prototype architecture, development, testing, and
manufacturing technical help desk to field support, maintenance and upgrades. HCL's enterprise
application services' line of business is focused on providing services and solutions to its customers
in areas like ERP, SCM, CRM, HCM, and EPM. Through enterprise transformation services, the
company renders offerings in key areas, including middleware and SOA, data warehousing and
business intelligence services, enterprise content management and portals, independent verification
and validation, and mainframe and midrange services, and governance, risk and compliance
consulting.
The infrastructure services segment offers data center design, migration and rollout planning, process
design, service delivery structure design, implementation and rollouts as well as day to day operations
across the range of infrastructure elements such as servers, storage, end user devices, network
equipment, security devices, among others. The BPO segment offers a combination of voice and
non voice based processes that relate to: business generation, operations management, management
support, and platform based services.
Furthermore, the company has a diversified revenue base. In FY2009, HCL's five primary service
offerings, including custom application services, engineering and R&D services, enterprise applications
services, infrastructure services, and BPO services contributed approximately 31.5%, 23.1%, 18.3%,
16.3%, and 10.9% of its total revenues, respectively.
The company's diversified portfolio of services decreases its business risk and also shields it from
decline in any particular service line.
Strategic partnerships and alliances
The company has strategic partnerships and alliances with several leading Fortune 1000 firms,
including leading IT and technology firms and ISVs. HCL has been involved with Microsoft for the
last 15 years. Both companies share a relationship wherein HCL is a global system integrator, OEM
partner and an engineering partner. HCL has more than 10 years of a multi-faceted relationship with
SAP as a customer, a development partner, and a go-to-market partner. HCL and SAP together
focus on providing business solutions to customers in areas including consulting services, systems
integration services and support for evaluation, and implementation and continuous improvement.
In addition, HCL, which has been associated with Oracle for more than six years, is a Certified
Advantage Partner, globally, the highest partnership status at Oracle. HCL is also the value added
reseller of Oracle products in the APAC region. Other partners of the company include TIBCO, IBM,
HP, CA, and EMC.
Furthermore, the company also signed many strategic alliances in recent times. In March 2010, HCL
formed a strategic partnership with software company Wellogic to provide interoperability and health
records management solutions to the global healthcare market. The company entered into an
agreement with software company nMetric to provide intelligent shop floor solutions to automotive
manufacturers in February 2010. HCL formed strategic partnership with Savvion, a business process
management (BPM) company, to extend its service focus into the BPM area in November 2009.
Association with major global brands helps it to create and deliver the best suited IT-enabled business
solutions for customers.
Strong market recognition
HCL has strong market recognition. In April 2010, the company was named to the WorldBlu List of
Democratic Workplaces, sponsored by WorldBlu, a non-profit company specializing in organizational
democracy. In November 20009, the company was selected to the FinTech 25 ranking of the top
global technology providers to the financial services industry. The company also received 'Golden
Peacock Innovation' award for its MTaaS, a business service management centric service delivery
platform, offering in the IT sector category in October 2009. Strong market recognition enhances
the brand image of the company in the IT-services industry, thereby bringing more business to the
company.
Consistent revenue growth
The company reported strong financial performance in the period 2007-09. HCL's total revenue
increased from INR60,687.4 million ($1,270.2 million) in FY2007 to INR102,294.1 million ($2,141
million) in FY2009, representing a compounded annual growth rate (CAGR) of 30% for the same
period. All the three segments of the company, including software services, infrastructure services
and BPO reported strong growth with percentage increases of 34.8%, 46.1%, and 24%, respectively
in FY2009 over FY2008. The company's revenues increased due its ability to win new business.
In addition, HCL reported revenues of $685.2 million for the third quarter of FY2010, compared to
$564.4 million for the corresponding quarter of FY2009, representing an increase of 21.4%. Consistent
revenue growth improves the investors' confidence and also enables the company to firmly pursue
its future plans.
Weaknesses
High dependence on mature markets
HCL is dependent upon the mature US and European markets. In FY2009, the company reported
54.4% of total revenues from the US and 29.2% from Europe. The US and Europe collectively
accounted for 83.6% of total revenues in FY2009. HCL derived only 5.4% from the growing economies
like India in FY2009. Although, the company's revenues from other than the US and European
operations increased from 15.4% in FY2007 to 16.4% in FY2009, it is still less compared to the US
and European regions.
High dependence upon mature markets may not drive revenues as much as a large presence in the
fast-growing countries in Asia Pacific.
Lack of scale
HCL lacks the scale to compete with software developers and vendors like Infosys and Tata
Consultancy Services. HCL generated total revenues of $2,141 million in FY2009. Infosys, a
competitor of the company, has recorded revenues of $4,663 million in FY2009. Tata Consultancy
Services, another software developer, recorded revenues of $6,068.8 million in FY2009.
In addition, the company lacks the scale to compete with its competitors in terms of employee strength
and geographical presence. The company reported 54,216 employees for FY2009. By contrast, its
major competitors, including Infosys and TCS, employed about 104,900 people and 143,000 people,
respectively.
Lack of scale limits the company's capability to expand its operations and earn incremental revenues.
Opportunities
Launch of global development center in Brazil
The company opened a new global IT development center in Sao Leopoldo, Brazil in November
2009. This center compliments HCL's operations in Sao Paulo and will offer a range of services
including enterprise application services, custom applications development and maintenance, and
remote infrastructure management to clients primarily in Latin America, North America and Europe.
The company also plans to hire over 300 engineers to work at the center by 2012.
In addition, according to the industry sources, spending in IT services activities in Latin America
exceeded $20 billion in 2009 and is expected to reach $25 billion in 2012, representing a CAGR of
8% for the period 2009-12. Also, Brazil is the leading country in IT services spending in Latin America,
accounting for more than 40% of the overall IT spending in the region. Launch of global development
center in Brazil enables the company to tap the growing demand for IT services in Latin America.
Growth of IT-BPO in India
India's IT-BPO market (including exports) is expected to grow in the coming years. According to the
industry sources, the IT-BPO industry in India has achieved impressive growth rates over the past
decade and reached $71.6 billion in 2009. It is also forecast that IT-BPO market (including exports)
will grow at a CAGR of 15% and reach $285 billion by 2020. In addition, according to 'NASSCOM
Perspective 2020: Transform Business, Transform India' report, India's IT/BPO Exports could range
from $65 billion to $75 billion in 2012. Also, the Indian global sourcing industry is expected to reach
$ 175 billion in revenues by 2020.
HCL BPO is one of the leading players in India's IT-BPO market. It offers a combination of voice
and non voice based processes that relate to business generation, operations management,
management support, and platform based services. The company operates 22 delivery centers
across India, the UK and the US and offers 24X7 multi-channel, multi-lingual support in eight European
and eight Asia-Pacific (APAC) languages. HCL BPO's focus verticals include telecom, retail, banking
and financial services, insurance, hi-tech and manufacturing and media, publishing and entertainment.
Further, in FY2009, the HCL BPO generated 10.9% of the company's revenue.
Prominent position in IT-BPO market will enable the company to benefit from the growing market
and enhance its revenues in the coming years.
New deals
The company has signed many new deals in recent times. In April 2010, Melbourne IT signed a deal
with HCL to support its integrated web services (IWS) business transformation project.The company
signed an IT infrastructure management engagement with Electrolux, a global leader in home
appliances and appliances for professional use, in February 2010. Meggitt, an international group
specializing in aerospace equipment, high performance sensors, defense training and combat
systems, signed $50 million global engineering transformation services agreement with HCL in
January 2010.
HCL IBS, a part of HCL, was selected as a preferred partner to deliver cost reduction and cost
certainty to Equitable Life Assurance Society in November 2009. HCL entered into a five year
transformational IT infrastructure management engagement with the Energy Future Holdings (EFH),
a Texas-based, privately-held energy company with a portfolio of competitive and regulated energy
subsidiaries, in September 2009. New deals will generate incremental revenues for the company.
Threats
Intense competition
HCL operates in a highly competitive and rapidly evolving IT services industry.The company competes
with established as well as evolving IT companies in the regional and global markets. Some of the
major competitors of the company include Cognizant Technology Solutions, Genpact,
Hewlett-Packard, Infosys, International Business Machines, Patni Computer Systems, Tata
Consultancy Services, Tech Mahindra, Wipro, and WNS Global Services. Most of these competitors
have greater financial capability than HCL.
Intense competition will adversely affect the company's operating performance and market share in
coming years.
Employee attrition
The company is subject to the threat of employee attrition like other companies operating in Indian
IT services industry. According to the industry sources, the average attrition rate for the IT service
providers was 25% till 2008 and the IT- BPO sector in India has witnessed churning rates of over
50%. Due to global economic recovery and improving job markets, the employee attrition rate is
expected to reach pre-recession levels of 20-25% in the next few quarters.
The company's success and ability to grow are dependent, in part, on its ability to hire and retain
talented people. HCL continues to make investment in employee development initiatives through
up-gradation of skills, re-skilling and leadership development. The company's 'Employee First'
initiative which focuses on employees as key resources has led to introduction of several employee
friendly policies that has helped HCL in containing its attrition rates from 20.4% in 2005 to 13% in
2009.
Although the company maintains a reasonable attrition rate, it may become difficult for it to protect
its best employees from being hired by its peers. In light of the improving economic scenario, retaining
best employees may turn out to be a challenge and may also increase the costs incurred by the
company.
Anti-outsourcing legislation
The issue of companies outsourcing services to organizations operating in other countries is a topic
of political discussion in many countries, including the US, which is the largest market for HCL. The
introduction of anti-outsourcing legislation may broaden restrictions on outsourcing by federal and
state government agencies and on government contracts with firms that outsource services directly
or indirectly. The legislation may also impact the private industry with measures such as tax
disincentives or intellectual property transfer restrictions. It also restricts the use of certain visas.
Anti-outsourcing legislation, if adopted, will adversely affect the business, financial condition and
results of operations and impair the company's ability to service its customers.
