On the day HCL Technologies reported its second quarter results, CEO C Vijayakumar spoke to Moneycontrol's Neha Alawadhi about the opportunities for the IT major going ahead, and how it looks at the issue of protectionism and Brexit. Edited excerpts:
How do you look at the healthcare opportunity in the US, with the uncertainty around Obamacare and the new healthcare Bill?
If you look at our presence, we have a vertical called Lifesciences and Healthcare, but our revenues are a little bit tilted more towards life sciences. Our presence in healthcare is there but it’s still not a big vertical for us.
Even though the (IT) industry is under significant disruption, I would say healthcare as an industry in the US is a huge opportunity for providers like us.
In addition to the question of how to reduce costs, healthcare providers are also looking at how to simplify processes, how to bring in a lot more automation. All of this are good IT opportunities. We continue to participate. I continue to think that there will be a huge uptake in what we can deliver to the US healthcare companies.
So, either way it’s a good opportunity?
Totally. But the timing is a little uncertain, because a lot of them are not very sure what platforms to choose, whether they need to modernise or they need to bring the new platform. So some of that is little bit grey.
Also on the telecom side, where do you see significant opportunity?
There are two spaces - one is telecom equipment providers, like an Ericsson and second one is telecom service provider like an A&T, Verizon, where I think there is huge IT spend. We have good presence- such companies are among our top ten or 20 clients, but the headroom for growth is much more in the telecom as the landscape is going through significant transformation, and that’s again a big opportunity.
What about Brexit? There seems to be divergent commentary, and some people do see it as an opportunity…
At least I have not seen any negative impact from a business perspective due to Brexit, such as some decisions getting delayed or somebody insourcing. But I think the way we are looking at it is we have a lot of delivery footprint in Europe, which is not just limited to UK, we have fairly a large presence in Sweden, Norway, Finland, some presence in Germany as well. We are fairly distributed in Europe and that’s also one reason we believe we may not have any impact from a business perspective.
But, of course, there has been some change in currency, so there are just the currency translation impacts.
What has been your strategy in local markets abroad?
About eight years ago, HCL recognised that local talent is going to be very very important for the long term viability of this business. So we’ve created delivery centres in the US and we have over 12,500 people in the US and more than 50 percent of them are locals.
How has the onsite-offshore mix changed?
So maybe the onsite mix has slightly increased. But it is more important to look at what percentage of people in a geography are locals and how many are people who have moved from India on visas. For us, greater than 50 percent are locals.
Would you look to increase that number?
Yes, we are consciously trying to increase. Maybe it's going to be gradual; it could maybe increase to maybe 60 percent.
What about the growing protectionist sentiment across different geographies?
There are similar challenges or regulations which are not very friendly from an immigration perspective which have been put in place in other geographies as well. So whatever model we adopted in the US, we are trying to replicate it in Singapore and Australia and it will work for us.
How will it impact margins then?
I think it will not have any significant impact on margins because actually the cost is not very different if you send somebody from here to US versus when you hire someone locally. The cost will only be marginally different.
If you’re focused on sending people from India for only specialised skills, it will work, and it may not be right from a commodity skills perspective. But our interest and intention is also not to move people for commodity skills, it’s only for specialised skills which are difficult to find in the local market, that’s where we use people from India.