Our focus is on big acquisitions

Written by Diksha Dutta | Diksha Dutta | Kirtika Suneja | Updated: Jul 26 2012, 08:33am hrs
Amidst an uncertain economic environment in the $70-billion Indian IT industry, the countrys fourth-largest software exporter, HCL Technologies, has delivered optimistic growth this quarter. CEO and vice-chairman Vineet Nayar and newly appointed COO and president Anant Gupta feel the new leadership decisions will definitely give a competitive advantage to the company. In an interaction with FEs Diksha Dutta and Kirtika Suneja, Nayar and Gupta discuss the reasons for recent deal wins, upcoming business strategy and the macroeconomic condition in the industry. Edited excerpts:

Do you see the pecking order changing in the IT industry as HCL Technologies has delivered positive results as compared with its peers like Infosys and Wipro

What is happening in the IT industry is that some companies are losing relevance to customers and employees and others are gaining importance and we are in the second category. The employee first, customer second strategy drives our brand, revenue, growth and momentum. My comparison is not with peers, but my focus is that how in an uncertain macroeconomic condition, I can drive more growth. Better results than others dont make me happy. Sustainable growth is more important. We want to be relevant for 2015.

How will this growth reflect in the next three years

Our growth will be driven by six factors, which include incubation of new service lines, increasing the change-the-business (CTB) deals and creating technology for business differentiation.

Will the future hold a combined strategy for run-the-business (RTB) and CTB deals

Our existing customers are in RTB, but CTB is growing in the industry. This positioning will help us expand in CTB.

This is the reason you are seeing margin expansion. We saw a five-fold increase in our $100 million clients. Our top-20 customers are growing faster than the company average rate.

Since the results are positive, what are the wage hikes that the employees can expect

We will give 8% hike to offshore employees and 2% hike to onshore employees over the next two quarters and this will have an impact of 200 bps on the margins, which we will recover. Our wage hikes are not linked to profitability. Effective from July 1, 70% of our employees will get the wage hike. This basically comprises front line employees who are in disbeliever and sales. The rest 30% employees will get the hike effective from October 1.

How will acquisitions fuel growth in such a scenario

We are not looking at small acquisitions right now. Our focus is on big acquisitions and that, too, will be a five-year play. In the longer term, acquisitions will definitely be a strategic part of our growth.

Are you promoting a new league of leaders, with Anant Gupta taking over as a COO and president

I think we do have a competitive advantage as our leadership team has the most balanced portfolio. We are working towards an aggregated strategy in our leadership team.