DEMAND ROBUST DESPITE 2ND COVID WAVE: HCL TECH CEO
HCL Technologies had reported a 64.9% YOY decline in Q4 net profit, as the impact of higher taxes and one-time bonus payment was visible in the fourth quarter numbers. However, the firm says it expects doubledigit growth in the current financial year. Chief executive officer (CEO) C VIJAYAKUMAR spoke to Neha Alawadhi about the firm’s plans for the year and the impact of the pandemic. Edited excerpts:
What was the reason for the quarterly profit being down 65 per cent?
That was because of a taxation issue in India. There are certain technicalities, because of which, in the Indian accounting standards, we had to provide for higher tax.
How much of your double-digit growth for this FY is organic and how much inorganic?
It is largely organic.
What is the demand scenario now when the second wave of the pandemic is being seen in many geographies?
Demand environment is quite robust and we have not seen any lay down in the demand, while different geographies are going through their own phases of the pandemic. Most client geographies seem to be very focused on continuing their journey, whether it is digital transformation or optimising their cost structures or implementing new solutions. They believe technology has been the lifeline in the pandemic to try to survive and thrive. So, that is deeply embedded in the plans to continue spending on these areas.
Given that some areas have been affected more due to the pandemic, are you re-analysing or looking at redistributing your focus in areas such as health care?
Obviously, the demand is much better in the tech vertical, life sciences and financial services. But there is demand in other segments as well. So, at this point, we’ve not really redistributed any management bandwidth. We have a set of segments where we’ve focused on and think there is enough opportunity in those areas. So, we’ve not made any changes.
How is the onshore-offshore model changing, given the current scenario?
At least during the first wave of the pandemic, the demand to do more offshore was quite high. In this situation, maybe it will moderate a little bit for some time. But I think the mid-to-long-term demand will be more in offshore and other low-cost locations.
What would be your priority this year?
Our Mode-2 focus will continue to increase because that is where the biggest part of the demand is. So, besides IT and engineering services, we are going to focus on building more capabilities around data engineering, Industry 4.0, softwarisation, 5G, and things like that. The second aspect would be we’re trying to increase the geographic footprint. We are increasing our focus in Germany, France, Canada, Australia and Japan. We’re also setting up operations in Mexico, Spain and Brazil. We already had a presence from a delivery perspective to support some of the language requirements, but now there will be local sales organisations as well in these geographies.