HCL Technologies reported new deal wins worth a total contract value (TCV) of $2.05 billion in the first quarter of FY23 ended June 30, 2022, growing 23.4 percent YoY as compared to the same quarter last year.
The deal wins were driven by services and product and platform verticals. TCV from services stood at $ 1.95 billion after bagging seven net new large deals. The product and platform business, which had declined by 24 percent QoQ last quarter, has started recovering, helping HCL bag nine net new large product deal wins and $104 million in revenue.
However, the overall deal wins is slightly lower on a QoQ basis as compared to the TCV of $2.26 billion reported in Q4FY22.
HCL Tech had a strong booking this quarter with 16 deals across life sciences, healthcare, manufacturing, financial services and technology segments. It’s a mix of large and mid-sized deals.
C Vijayakumar, CEO & MD, HCL Technologies said, “FY23 started on a strong note. Revenue grew 2.7 percent sequentially and 15.6 percent YoY in constant currency. Our services business grew 19 percent YoY. Our growth momentum was led by ER&D services and digital applications services with cloud transformation being a central feat across all verticals and solutions.”
He added, “We also saw strong recovery in product and platform business which grew 5.1 percent sequentially and 1.4 percent YoY in constant currency. We posted an EBIT performance of 17 percent this quarter. Margins in services business are under pressure mainly due to an increase in talent costs and transition costs. We have undertaken appropriate actions to improve our profitability profile, the results of which will start reflecting in coming quarters.”
Margin improvement initiatives for the company include both revenue and cost levers led by innovative pricing, rate increases and optimisation of the operating costs, both people and non-people.
Segment-wise growth came from engineering and R&D (ER&D) services which led with a 3.7 percent QoQ growth, followed by ITBS with a 2 percent growth QoQ.
HCL Tech is also getting more large-sized end-to-end engineering services deals, signing two large ones in Q1, one with a European ISP (internet service provider) and one with a global ISP.
Starting this quarter, HCL will be reporting services and product businesses separately.
Geographically, growth was led by Europe (22.5 percent), Americas (17.5 percent) and ROW (18.2 percent).
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