Mid-tier IT firm Hexaware Technologies expects a two quarter delay in demand recovery. Due to the novel coronavirus, or COVID-19, pandemic, the company is witnessing a pause in new deal signings and an impact on travel and transportation, education and retail verticals.
Speaking to investors via a conference call on March 31, R Srikrishna, CEO, Hexaware, said, “We started the year well, but demand came down due to the COVID-19 outbreak. We expect this to continue till the Q2.” The company follows a calendar year as its financial year.
Srikrishna expects demand to revive from late Q2 or early Q3, provided the coronavirus outbreak comes under control.
However, the management did not comment on whether the delay would impact its 2020 revenue guidance of 15-17 percent that it announced last year.
Currently, close to eight lakh people are affected by coronavirus globally, with the death toll standing at 38,000. In India, there are about 1,200 active COVID-19 positive cases and 47 deaths.
Starting late February and March, most IT firms suspended overseas and domestic business travel.
Enterprises, including Hexaware, have asked employees to work from home. "Currently over 90 percent of our employees are working from home. A small portion of them are unable due to client-related issues," Srikrishna added.
As the number of coronavirus cases increased, it began to impact new deal wins. The impact, Srikrishna said, can be felt in travel and transportation, healthcare, high-end retail and education verticals.
Travel and transportation accounts for about 10 percent of overall revenue, with the company having airlines as its clients. In healthcare and insurance, which accounts for about 19.5 percent of overall revenue, the impact is being felt in the fitness sector. But Srikrishna was quick to add that the impact will be only felt in the short term and fitness as a segment is small for the company.
Education has been impacted as well, as on-boarding of new students and examinations has been postponed around the world. High-end retail has had an impact as consumption has come down. However, both verticals are marginal as exposure to these verticals is less, the CEO added.
The company is also likely to see pricing pressure as enterprises world over are under pressure. In a bid to be supportive to its customers, Hexaware will offer discounts to clients in affected verticals. However, it will be based on the strength of the customer and if they could be associated with Hexaware for the long term.
