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HCL Tech’s growth streak to continue as it looks at multi-year technology upcycle, says CFO Prateek… – Moneycontrol.com

(Image: HCL)

Noida-based IT services firm HCL Technologies, which broke into the $10 billion revenue club for the year ending December 2020, expects the growth momentum to continue as it is looking at multi-year technology upcycle, said Prateek Aggarwal, Chief Financial Officer (CFO).

For the year ending December, its larger rival Tata Consultancy Services’ (TCS) revenue stands at $21.6 billion and Infosys’ at $13 billion. Wipro’s revenue for the calendar year 2020 was close to $8 billion.

In an interaction with Moneycontrol, Aggarwal said this growth came at the back of digital transformation of businesses, and cost optimisation projects like vendor consolidation as clients are looking to cut down cost at the back of the COVID-19 pandemic.

“So, I definitely see it as a multi-year cycle,” he said.

Aggarwal said that at the back of the pandemic, enterprises across the board are accelerating their technology adoption and this process will take years to be completely digital.

According to Aggarwal, given the size of IT landscape that most of its customers have, be it Fortune500 companies in the US, it will take years to change to digital technologies like cloud migration or to be nimbler to serve their customers better.

“I see it at least a 3-5 year kind of technology upcycle. As far as HCL is concerned we have invested quite in advance,” he added. This includes investment in its Mode 2 and Mode 3, which are digital technologies and products and platforms, over the last few years.

“They are starting to bear fruit. It propelled us to become a $10 billion company now,” he added.

This is already reflecting in the deals the company has signed. The company has signed 13 digital transformation deals in the quarter. C Vijayakumar, Chief Executive Officer (CEO), said the overall deal pipeline is 20 percent more than what it was in the December 2019 quarter.

The company has also increased its revenue guidance for FY21 to 2-3 percent from 1.5-2.5 percent earlier. The company registered a growth of $2,617 million, up 2.9 percent for the quarter ending December 2020. Its profits increased 26.5 percent YoY to $540 million in the same quarter.

This was in part due to the company’s Mode 2 and Mode 3 business, which were one of the fastest growing segments for the company and are a key growth driver. Mode 2 grew 25 percent YoY and Mode 3, which includes its products and platforms, saw 3.5 percent growth. This is likely to continue as well.

The company is also ramping up its hiring. The company added 4,022 freshers in the quarter and in total HCL Tech has on-boarded 6,480 employees so far. The company will add 5,000 more for the quarter ending March 2021. For the quarter, the net addition of employees stood at 6,597.

Through its training and reskilling programme, the company has been able to fulfill the demand internally. The company’s internal fulfilment rate has increased by 10 percent in the quarter to 60 percent. “This is also one of the reasons that has our growth,” VV Apparao, Chief Human Resources Officer, told media persons during the earnings call.