HCL Technologies is the second IT firm after Infosys to reinstate guidance amid pandemic. The company has given revenue guidance of 1.5-2.5 percent in constant currency for the next three quarters.
For the quarter ending June, the company registered $386 million in net profits, up 20.9 percent year-on-year (YoY). The revenue declined 0.3 percent YoY to $2356 million for the quarters.
In a conversation with Moneycontrol, C Vijayakumar, CEO - HCL Technologies, talks about recovery amid COVID-19, what will drive growth for the company and how COVID-19 has changed the IT outsourcing landscape.
Q: During the results announcements you said that the worst is over. Where does this confidence come from? Could you give us some insight on what will be the growth driver?
A: We had some good bookings, that is number one. We won 11 transformational deals and these are all net new wins. So we see a good pipeline ahead, which increased 40 percent over the last quarter. Many of these deals, mixture of large and smaller deals, are digital initiatives, which are very critical for our clients, and to be executed in the coming few quarters.
So that is what is driving our confidence and what we expect to happen. Unless of course, there is a very strong second wave that might have a serious impact our businesses. Otherwise this is what we expect.
Q: Digital seems to be the key. But how has COVID-19 changed the IT sourcing landscape and how will HCL Tech benefit from it?
A: Anyone recognizes that technology is the core to reinvent the business. But I think this pandemic has brought so much attention on tech to just to enable the survival of the business. Even for the basic, technology has become such a fundamental component. So the interest to know and understand the technology infrastructure at the executive level has gone up.
This obviously means that the propensity to spend, improve, enhance and create resilient technology infrastructure has gone up significantly. Everybody has seen that this is something that can make or break the business. So that is what has fundamentally changed.
Q: Banking and financial services (BFS) is an important vertical for HCL Tech. Reports suggest that BFS is yet to recover and it might see cut in spends. Is that a concern?
A: Maybe in BFS the entire impact of coronavirus has not played out fully. So that could be the reason why analysts believe there could be cut down in spending in the financial services side.
Having said that, the whole digital foundation aspect and the need to strengthen and invest in technologies such as cloud will continue since these are very important for structures from a long term perspective. I do think investments in those area will continue.
Some amount of discretionary projects could be cut down. But these (investments in digital) are really mission critical.
Q: Finally, when do you think you will see the recovery to pre-COVID-19 levels? One of your competitors said recovery could be expected from Q3. What is your stand?
A: If we grow 1.5-2.5 percent every quarter, then we would see the growth come back to the pre-COVID-19 levels in 2-3 quarters. Maybe the fourth quarter or first quarter of FY21.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
