 "Anant Gupta")
This is one of the better performing quarters for HCL. Can you sustain this going forward?
There is a lot of confusion around the IT sector. From our perspective, we see big demand in the market. Of course, things have changed and different markets will have different challenges but that does not mean that IT sector in not robust. From our perspective and places we participate in, we feel that we are well poised.
We have always looked at how we have to participate in a yearly basis and while we had a great quarter, it's not like everything has happened because of this quarter -- its progression of systematic foundation, some engagements moving in quicker, some engagements having moved, completion of one time projects, I think they culminated into a good performance.
This is the first time that the company has provided a guidance after an interval of 12 years. Do you think 12-14 per cent is much more bullish than industry standards?
If you look at our order book, we are reasonably strong, our client relationships continue to do well, so the confidence of all these things, and given that there is little confusion, pessimism in the market around the sector, we thought it was prudent to provide a picture which is little bit longer term.
Secondly, we have made our investments and taken decisions which are not short-term in nature, we have invested more robustly, we believe that presence in different markets, though will have a negative impact in short-term, but on a longer-term basis it will be positive. We have made the right investments, so when you look at our near shore centres, look at our headcount in a country, you can see they have been steadily increasing and we have the right balance.
Infrastructure services continues to grow whereas the other segments still lag. Do you expect this to continue?
It's a market scenario. There is momentum in infrastructure business. Worldwide, if you look at the penetration of players like us has been limited. In the last 4-5 years, it has started to increase but still the headroom is large. Number of players available to do large scale global execution are very few and HCL is definitely amongst the top. Our investments in global execution model are higher, so I think couple of reasons why infrastructure is growing faster.
If you look at applications services, the bundle is large because it's all clubbed into one line. But when you start breaking it down and say how much is application management, how much is some of the newer technologies like modern applications, digital, analytics, these are all growing very strong. There has been shift in the environment which has depleted certain markets like, ERP (enterprise resource planning) over the last 2-3 years has seen a shift towards adoption of software-as-a-services (Saas). From a one-time sale of a licence to a Saas model, we have seen a fundamental shift in the packaged application work and that is the reason that globally it is slightly challenged.
Having said that companies like SAP, Oracle, Microsoft who are in the packaged application business are making their story also on software as a service, so we should see some of that come back next year but that's the one big reason why a very large portion of the application market is actually depleting.
Will upcoming US Presidential elections make an impact?
You see such positions or posturing taken by different political (people) parties during elections. I think at the end of day, its question of how does one build its execution model, how does the operating model support and sustain on a longer term and shorter term. Our presence in local markets have been large and we continue to be among the few companies who have less than 50 per cent dependency on H1-B visas. We hire locally, we prefer to take the right talent from the market.
What is the impact of Brexit on HCL?
In every disruption, there is an opportunity and I think as long as your model has resilience and lesser dependence on operating architecture we are fine.We are not dependent on UK as a delivery hub for continent Europe, so to that extent we are more resilient. It's too early to say what is going to happen, I definitely see with every change, there will an opportunity and we will be ready for that. We have been in that market for long, we will continue to be in that market and have to fine tune and shape our propositions as needed.
In terms of geography, Americas and Europe have grown but rest of the world has not. What is the reason for that?
The positive is Americas and Europe, both have posted double digit growth. If you add the worldwide IT spend from these two regions, it constitutes about 75 per cent of the worldwide spend and because we have a great track record of execution, a fantastic track record on client relationships, we obviously see enough market in those regions. At the same time, it's not that we are not investing in other markets. In the rest of the world, we are participating in very selective countries like Australia, New Zealand, South Africa, countries in ASEAN and India also.
