CEO of HCLTech is Optimistic About Long-term Growth

By Consultants Review Team Monday, 29 April 2024

Despite the fact that macroeconomic statistics have not altered, HCLTech CEO C Vijayakumar expressed optimism about the medium- to long-term development prospects of the IT sector.

In contrast to some competitors, HCL's banking and financial services division emerged as its best-performing vertical in 2023–2024, expanding 2.8% in a row and 12.1% annually in constant currency. Despite a subdued macroeconomic climate, this rise happened because clients continued to exercise caution and did not increase their discretionary expenditure. During the same period, its core market, the Americas, rose 6.8% year over year and 4.2% sequentially.

"We've made a few strategic moves at BFSI. As a capability, we have been investing in the wealth and asset management market, and we have solid relationships to propel positive momentum in that market. Financial industry adoption of hybrid cloud was the subject of the second major wager. several of these revenues were supported by excellent execution and several really outstanding victories. Insurance comes in third. Financial services are growing as a result of these three sectors. In a post-earnings conversation with TOI on Saturday, he said, "And we are positioned as a challenger in a lot of large accounts, where we started small and are scaling up quite nicely.HCL now has 22 clients overall after adding 3 new ones to its $100 million portfolio. In the fiscal year 2023–24, it had $9.7 billion in yearly bookings, an increase of 10.2% over the same time the previous year.

In light of the muted macroeconomic indicators and demand pressure, HCLTech forecasts that its revenue growth for the 2024–25 fiscal year would be between 3% and 5% in constant currency.For the current fiscal year, the business has given a margin projection of 18% to 19%, which is consistent with the numbers from the prior year."We have ended our joint venture with State Street. Thus, part of those may potentially affect the results for FY25.Thus, in my opinion, the advice maintains the macroeconomic circumstances at the same level as they were in FY24," Vijayakumar stated.

State Street, a NYSE-listed financial services company, has streamlined its operations in India and paid $170 million to acquire a 49% share in State Street HCL Services, a joint venture between the company and HCL UK. HCLTech and State Street have been working together for over ten years. The software industry expanded 2.3% in constant currency over the previous year. From 78.8% in the 2022–2023 fiscal year to 83.8% in the 2023–2024 fiscal year, that is the increase in subscription and support income. "We made the decision to discontinue some small parts of our telecom product portfolio, which is why you will see a slowdown in ARR (annual recurring revenue) growth year over year," Vijayakumar stated.

A generative AI and automation platform called Tech AI Force was introduced by HCL with the goal of improving productivity and expediting release dates.Although there is a lot of curiosity, there aren't many completed projects in generative AI.The most potential, he continued, will be in data and in both cloud migration and private AI stacks; I believe this to be more true than in the projects themselves. In the March quarter, the firm hired 2,725 new workers, increasing its total staff to 2.2 lakh. HCLTech has brought on 12,000 new hires, bringing it closer to its goal of about 15,000. The corporation intends to hire 12,000 freshmen for the 2024–25 fiscal year, with 10% of the hiring taking place off campus. With a voluntary attrition rate for IT services of 12.4%, it has one of the lowest in the business.

HCLTech has combined the sales of IT and business services with that of engineering and research and development (ERD) services. In an effort to strengthen its ERD sales skills, it has announced position adjustments for three leaders. As the chief product officer for the HCL Software company, Kalyan Kumar, who was formerly the CTO, head of ecosystems, and chief product officer for the software division, will now concentrate on that role. Leading its worldwide ecosystems and serving as chief technology officer will be Vijay Guntur, president of its engineering and R&D services. In this new and extended position, Hari Sadarahalli will now oversee the engineering services business and delivery group.


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