IT demand environment robust, cos want to accelerate digital transformation: HCL Tech's Roshni Nadar

Mumbai: The demand environment for technology is "robust" despite the challenges seen over the last two years, and global clients have razor-sharp focus on accelerating their digital transformation with efficiency, HCL Technologies Chairperson Roshni Nadar Malhotra said on Thursday, affirming the company's double-digit growth outlook.

Nadar in July 2020 became the first woman to head a listed IT company in India, when she took over as the chairperson of HCL Technologies from her father and billionaire Shiv Nadar.

In a media briefing on Thursday, Roshni Nadar outlined her vision for the company that is eyeing double-digit growth, spoke about business strategy to tap opportunities in new age areas such as cloud and digital, and underlined the new frontier locations for the firm.

"My vision for HCL Tech is that we should just keep growing. And as Vijayakumar (CEO of the company) said we can keep growing at double digit...and so...we can keep growing in double digits," she said.

Nadar added: "Five years from now, at the growth that we're at, we will grow in many more geographies. We will probably get many more customers. Our business lines will grow fast as well," she pointed out.

Nadar -- who is also CEO of HCL Corporation, the holding company for all the group entities -- asserted that the Noida-headquartered IT services firm is firmly focused on organic growth, but will chase 'tuck in' and specialised acquisitions for domain expertise.

North Asia, Central America, Eastern Europe, and Africa are newer geographies for the company, she said, adding "this is where we plan to grow in the future as new frontier countries, in addition to our existing large geographies and markets." "The last two years have been unpredictable, challenging, and yet the demand environment continues to be robust," Nadar observed.

Citing her interactions with customers in large markets of Europe and the US, Nadar said their utmost priority has been accelerating digital transformation programs with efficiencies.

HCL Tech's diverse and deep portfolio of cloud, digital, engineering and product offerings have helped cement long-term relationships with customers, and even proved to be an entry barrier for competitors.

Nadar noted that majority of the company's "very steady healthy growth" has come organically and emphasised that it continues to be a focus for the IT services provider.

"...Tuck in acquisitions, specialised acquisitions which give us a certain domain expertise and a certain strength in different business lines is something that we will do, but the focus has been organic growth," Nadar said.

Post pandemic, a lot of global customers have warmed up to the concept of nearshore delivery centres.

HCL's choice of locations is keeping in mind customer concentration,  nearshore delivery centres, and cultural affinity, she explained.

HCL Tech CEO C Vijayakumar said over last decade the company has delivered the highest total shareholder return (TSR) among Tier-1 Indian IT service providers.

"We want to continue to deliver industry leading TSR for our shareholders. We've delivered it for the last 10 years in the medium term we want to be in the top quartile in total TSR returns," he said.

By FY25, about 51 per cent of the total tech spending is going to be on cloud, and HCL is well poised to tap into the market opportunities.

HCL's confidence of delivering "industry leading growth" is backed by broad range of digital capabilities, he said.

On whether HCL Tech will be able to sustain its double-digit digital revenue growth over next five years, Vijayakumar emphasised that the company has "an opportunity to grow double digit for a pretty long time." HCL Technologies had recently reported an over three-fold jump in consolidated net profit for fourth quarter ended March 2022 at Rs 3,593 crore, and had struck an optimistic note about "buoyant" market environment and "strong momentum across verticals and service lines" to guide for 12-14 per cent revenue growth for FY23.

Its revenue from operations for the just ended March quarter came in at Rs 22,597 crore, 15 per cent higher than a year ago. For the fiscal ended March 31, 2022, the net income stood at Rs 13,499 crore against Rs 11,145 crore in the previous fiscal.

Revenue from operations for the entire fiscal was Rs 85,651 crore, up from Rs 75,379 crore in FY21.

Asked about impact of inflationary pressures, Vijayakumar said the company has not seen it impact client budgets so far. None of HCL Tech's clients are talking about reducing any spend, he informed.

"Today most of the spend and most of the programs are around digital transformation. While it is helping to modernise business processes, technology landscape and launch new operating models, digital transformation is also the biggest lever to simplify your business processes and make them more efficient, which is the need of the hour in a very inflationary environment," he explained.

The top executive exuded optimism that digital spends would continue to be an important spend area for clients.

To a question on the current turmoil in Sri Lanka and its impact on the company's day-to-day operations, Vijayakumar said the firm has about 1500 employees there, and is in touch with the staff.

"We have certain client deliveries...they are going reasonably well. Wherever there are some gaps, we have a very large presence in India, so we are filling in for those gaps," he said.