No impact of Covid second wave on demand so far, says HCL Tech CEO

No impact of Covid second wave on demand so far, says HCL Tech CEO [ad_1]

C Vijayakumar, President & CEO, and Prateek Aggarwal, CFO, , in dialog with ET Now.

Have you seen any impact of the Covid second wave on demand?

C Vijayakumar: So far, we have now not seen any impact within the demand setting. The demand environment stays very sturdy as a result of rather a lot of shoppers in most verticals are accelerating two sorts of initiatives. One is price optimisation or variablising the price buildings. The second set of initiatives are round enterprise transformation or digital transformation, investing within the new applied sciences to ship differentiated enterprise outcomes.

We see each ends of the funding thesis being performed out. There are some robust verticals like life sciences, expertise providers, monetary providers the place we see digital transformation in addition to price optimisation. There are different verticals like power, utilities and telecom. Some of them are additionally making an attempt to cut back vital price, particularly the telecom suppliers so that they will reinvest in 5G deployment efforts. I see a really constructive demand setting.

So far, I’ve not seen any impact of the Covid second wave on the demand setting. Of course, India goes by way of probably the most intense part of the pandemic and that is very unlucky. We even have some staff who are usually not capable of totally contribute and that may have somewhat impact however we’re sincerely hoping it’s a very quick time period scenario and issues shall be higher quickly.

In this quarter, there was rather a lot of forex volatility as nicely. As the CFO, how have you ever navigated by way of that and what form of plans do you’ve in place to hedge going ahead?

Prateek Aggarwal: Currency fluctuations is one thing that any enterprise has to get used to. HCL follows a really disciplined hedging technique, name it a layered hedging technique the place month after month, quarter after quarter we preserve on taking small bites. This follows the way in which buyers put away a small quantity each quarter, each month in systematic funding plans or SIPs. That is the way in which we construct the layered hedge guide which on the finish of the day works to our favour.

What form of demand are you seeing? The deal pipeline is at a lifetime excessive however what markets need to know is what the transformational deal pipeline is wanting like?

C Vijayakumar: A big half of our pipeline is pushed by transformational offers and there are three or 4 main themes which might be taking part in out from a metamorphosis perspective. One is there are rather a lot of initiatives, buyer expertise transformation and provide chain modernisation. These are two massive themes that are taking part in out and that’s extra on a horizontal perspective and there are a pair of themes from expertise perspective which is utility modernisation and cloud migration.

These are the 4 broad themes I can assume of and the depth of how they play out is totally different. Some of the segments that are extra retail dealing with — be it retail banking, shopper items or stores — are extra focussed on buyer expertise and omnichannel and issues like that. Loads of manufacturing, logistics, journey and transportation are focussed on provide chain transformation programmes. Across the board, cloud adoption has accelerated. Some of our clients are lifting and shifting however rather a lot of them are modernising their IT panorama so that they will get the true profit of the cloud working mannequin relatively than simply internet hosting the purposes within the cloud.

You have talked about how India is probably the most intense however throughout the geographies that you’re in, how are they doing? Are you seeing the US recuperate a lot sooner whereas Europe is taking extra time?

C Vijayakumar: Yes, the US restoration provides us rather a lot of confidence as a result of the vaccination has gone off fairly nicely. The outlook can also be very encouraging and to that extent we see the restoration somewhat bit sooner as nicely. Europe has been somewhat bit of see-saw. I count on it to stabilise in direction of the center of this 12 months.

Where are the levers for the margin steerage that you’ve offered for?

Prateek Aggarwal: The levers are loads and everywhere. The largest one which we have now already began in FY21 itself is hiring at varied ranges and varied coaching programmes. That is the largest lever of all of them and it’s set to be much more accelerated within the subsequent couple of years. Apart from that, demand itself is the largest lever as a result of it additionally provides us working leverage. Apart from this, there are the same old automation and digitisation and ARC discount levers.

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