 "Anant Gupta")
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On a day when HCL Technologies disappointed the market with lower-than-expected numbers, president and chief executive Anant Gupta tells Karan Choudhury its order book continues to be quite strong and as the deals get converted to execution, it would help the company deliver strong numbers for the full year. Edited excerpts:
Your performance in the July-September period has been below the Street’s expectations. In most of the parameters, HCL seems to be lagging the peers. How is your outlook for the full year?
We are quite bullish. I think, in the past three financial years, we out-performed the top-three companies in the industry, and will continue to do so this financial year as well. We have laid the right foundation in the first quarter. Our order book is 10 per cent higher than what we had previously seen.
Given, we have long-term contracts in information technology outsourcing and infrastructure management, the conversion of those contracts into this financial year would be much better. There were certain engagements that did not convert as they were large and complex. But from a full-year perspective, we are confident of delivering a good growth.
Your overall headcount has come down from 106,107 at the end of the June quarter to 105,571 now, which is a kind of rarity in the sector. Was it because of some retrenchment exercise?
Our voluntary attrition was 16.4 per cent, which is largely in the same region for the past many quarters. The reason for the net reduction (in headcount) is because of some onsite rebadging we did last year. As we make it into a steady operation under the global delivery model, there would be some movement. Given that we are growing, our ideal preference is to re-align them (employees) into other engagements. But there are situations where individuals don’t want to move or the proximity to the new location is different. That is also a factor.
There are reports that you have increased variable components in employees’ salaries at all levels. Is it reflective of the demand environment?
There is no fundamental shift. I think there would be components aligned from one bucket to another. For a large part of the workforce, the variability percentage varies based on the number of years of experience and job profiles. As you go higher, the variability increases; at junior levels it is lower. Fundamentally, there has been no change at the lower levels. There would be re-bucketing of what the key performance indicator should be; what the focus should be and there could be definition change in some pockets. But I do not see any other fundamental shift.
Can you throw some light on the $18.2-million provision you have made with respect to a particular client?
It is a client in the public services space. The $18.2-million provision that we have made is really because we saw a change in the programme objectives. It was a long-term programme for building a new technology platform. But subsequently, the client has a change in thought as to what the objectives should be. Given the confusion and sensitivity around that, we decided it is in our best interest to make sure that a provision is there, and it does not hit us as a surprise. In the quarter, the project used to give us a run rate of anywhere between $4 million and $6 million.
As you are already in the December quarter, how does the deal pipeline look like?
The deal pipeline is strong. We have booked deals to the tune of a billion dollar. We are seeing some strong movements, largely driven by infrastructure management and engineering services. But we need to scale the bookings profile even further.
How is the pricing environment?
Pricing has never been an issue as it depends on the business model. But business case for the end customer has always been the prime. Business case would be driven by maturity, automation and scale. If someone is purely working on a dollar-per-hour basis, they could be challenged. Customers increasingly do not worry about how many people you need, at what levels and where. Customers have now realised that dictating the input cost which is people is no longer relevant.
How is your digital business growing?
Nothing has changed other than the fact that we have now taken the full end-to-end value chain-based proposition to the market. We have created a separate business unit called BEYONGDigital that would stitch our end-to-end value chain-based proposition to go to the market. Hiring has been done and we will push it heavily.
