It is rare to see Roshni Nadar, chairperson of HCL Technologies, talking about the group's IT services business. She did that on Thursday at a media conference in Mumbai, saying she wants the company to keep growing in double digits.
Asked what her five-year vision for the company, she said: “Five years from now we will grow in more geographies and business lines. North Asia, Central America, Eastern Europe and Africa are newer geographies for the company. This is where we plan to grow in the future as new frontier countries, in addition to our existing large geographies and markets.”
Nadar, who took over as HCL chairperson from her father Shiv Nadar in 2020, said that demand for technology continues to be robust despite challenges over the last two years. “Global clients have a razor-sharp focus on accelerating digital transformation with efficiency,” she said.
Nadar, the only woman heading a top Indian IT services company, said HCL's "very steady healthy growth" has come organically, and that continues to be a focus for the IT services provider.
"...Tuck-in acquisitions, specialised acquisitions, which give us certain domain expertise and a certain strength in different business lines is something that we will do, but the focus has been organic growth.
Nadar said HCL Healthcare can emerge as a significant player. “It's a corporate healthcare solutions provider. Today, I think it's one of the largest, in terms of numbers, corporate healthcare providers in the country. HCL Tech is obviously a large customer, we've got other customers as well. So, I see that evolving and growing within India as healthcare is becoming a priority for organisations all over the world.” HCL Technologies is the largest contributor for all the philanthropic activities that the promoters have.
C Vijayakumar, CEO and MD of HCL Technologies, chalked out five strategic objectives that will drive value creation for customers and shareholders. “We have over the years conceptualized and pioneered innovation. Going ahead too we want to be a differentiated leader in the market through innovation, cloud capabilities, integrated solutions and accelerators. Two, we want to be an employer of choice in our chosen markets,” said Vijayakumar.
The third objective is to be preferred digital partner for the fortune 2000 companies, and fourth objective is to weave all the ESG practices into the business strategy. “We want to weave every aspect of ESG into every geography that we operate in and we want all the ESG metrics into our business strategy and lastly we want to continue delivering industry leading TSR for our shareholders. We've delivered it for the last 10 years in the medium term, we want to be the top quartile in the total TSR returns,” added Vijayakumar.
HCL Technologies reported dollar revenue growth of 11 per cent year-on-year at $2.99 billion for FY22. The company has given a revenue growth guidance of 12-14 per cent in constant currency for FY23.
Unlike several of its top IT services peers, HCL Technologies also has a significant presence in the products and platform (P&P) segment. Rather this segment is a $1.4 billion revenue unit and has one of the largest segments of engineers who work on products for global clients. But because of the cyclical nature of the business, P&P drags the company's overall growth. For instance, for Q4FY22 IT businesses grew 5.2 per cent but the P&P business declined 24 per cent on a sequential basis.
For Vijayakumar the P&P business is the crown jewel of the company. “You have to think of the P&P business from HCL Tech’s early days, we started as a product company. We were among the first people to launch computers indigenously manufactured, of course, services overtime became a big theme and a large business. But our product engineering business is a $1.4 billion business. We have the largest number of engineers developing core technologies for our customers. Over the years we have created value worth $150 billion for our clients,” he added.
The biggest driver of growth however is going to be cloud for the company. To which both Nadar and Vijayakumar pointed to. Rather the management believes that the current global uncertainties—geopolitical upheaval as well as inflation, will not impact cloud spends. “Our confidence in growth comes from the fact that HCL Tech today has the broadest range of digital capabilities today. It starts from Digital Foundation, to digital applications and the overall digital business and digital engineering. The biggest spend is going to be on cloud and digital. By FY25, about 51 per cent of the total tech spend is going to be on the cloud,” he said.