HCL Technologies moving some workload to other geographies to tackle COVID challenges

By: |
April 25, 2021 5:35 PM

In constant currency terms, the company's revenue rose 1.1 per cent in FY21. For FY22, the company is confident of double-digit revenue growth in constant currency on the back of a strong deal pipeline.

HCL TechnologiesWe raise FY22E EPS by 6% and maintain our Hold rating as we see the stock as fully valued in the absence of a further rally in the crude price.

IT services major HCL Technologies is engaging closely with clients to prioritise work, and shifting some workload from India to other geographies to ensure business continuity as the country grappling with record-high COVID cases.

The company, which expects its FY22 revenues to clock double-digit growth in constant currency, is also ramping its efforts to ensure employees and their families get access to necessary health services amid the second wave of the pandemic.

Speaking to PTI, HCL Technologies President and CEO C Vijayakumar said the company is working with clients to prioritise important work.

“We have a global organisation. We already have almost 30 per cent of our workforces present outside India. Some geographies have stabilised and their vaccination levels are very high, so they are taking a little more load. Everybody’s very understanding of the situation, clients and our employees in other geographies,” he added.

The company is hopeful of the situation starting to moderate over the next couple of weeks.

“Clients are very understanding and supportive. And we are working with them to see how, if there is a shortfall of people in certain operations, what can we do to offset that, how can we prioritise some work over the other…very active conversations happen on a continuous basis,” Vijayakumar said.

India is registering a record number of COVID cases daily. The number of new COVID infections touched 3,49,691 cases and 2,767 fatalities, according to the Union Health Ministry data updated on Sunday at 8 am.

Last year, the company had set up a COVID helpline for employees with a team of 15 doctors and 20 nurses. The company has now enhanced the team to 25 doctors and will scale it further by adding another 30 doctors.

“Employee wellbeing is the biggest aspect that we are focused on…a lot of the first-line help is provided to HCL employees and their families through the helpline that we’ve set up…We have an active vaccination campaign, including on our campus. We have set up facilities in some of the locations. We’re slowly getting to all the locations where we can make it easier for people to get vaccinated,” the top executive said.

The company is working with a hospital to set up a facility at two of its campuses to ensure employees get access to healthcare services.

Its total headcount stood at 1,68,977 people at the end of the March quarter with attrition at 9.9 per cent.

HCL Technologies intends to hire about 20,000 freshers in FY22, and its lateral hiring – which is dependent on the demand environment – is also expected to be higher than the previous fiscal.

On Friday, HCL Technologies had announced its March quarter performance. The Noida-headquartered company saw its quarterly revenue grow 5.7 per cent to Rs 19,642 crore in the March 2021 quarter from the year-ago period, while the topline grew 6.7 per cent to Rs 75,379 crore for fiscal 2021.

In constant currency terms, the company’s revenue rose 1.1 per cent in FY21. For FY22, the company is confident of double-digit revenue growth in constant currency on the back of a strong deal pipeline.

HCL Technologies signed USD 3.1 billion worth of net new deals in the fourth quarter (up 49 per cent year-on-year) and USD 7.3 billion worth of net new deals in FY21 (higher by 18 per cent over FY20).

The company is also looking at continuing to expand its offerings into new markets like Germany, France, Canada, Australia and Japan as well as growing its footprint in geographies like Mexico, Brazil, and Spain.

“The markets that we are currently very strong and prominently present in are the US, UK and Nordics. These markets are very strong and we have a large presence there. We also have a presence in France, Germany, Canada, Italy and Australia…we want to scale our presence in these markets in line with the IT spend in these markets,” Vijayakumar said.

He noted that markets like France, Germany and Canada account for at least five per cent of the total global IT spend, and given that the company’s revenues from these markets are still small, there is an opportunity to grow that.

While the company does not disclose country-specific revenue numbers, HCL Technologies saw 62.8 per cent of its FY22 revenues coming from the Americas, 28.8 per cent from Europe and 8.4 per cent from RoW (Rest of the World).

Vijayakumar added that the company is also building additional capabilities in the digital engineering space in areas like Industry 4.0, softwarisation, AR/VR and 5G.

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