HCL Tech remains an IT outlier. But CEO remains cautious of macro pressures

However, portion its Noida-headquartered IT company’s wide show satisfied marketplace expectations, a paltry gross maturation projection of 3-5% for FY25 due to the fact that of decreasing spending connected IT successful cardinal planetary markets has raised concerns. 

Similar macroeconomic pressures could proceed connected India’s $254-billion IT services industry, said C. Vijayakumar, managing manager and main enforcement of HCL Technologies, successful a post-earnings interrogation with Mint.

Nonetheless, HCL Tech volition enactment towards maintaining its profitability successful airy of the constricted scope for the sector’s betterment successful FY25, helium said. Edited excerpts:

Your operating borderline dropped 2.2 percent points successful the past 4th of FY24, and determination was nary borderline enlargement done the past fiscal year. Is maturation for HCL Technologies coming astatine the outgo of profitability?

Not really. We’ve managed to support our borderline year-on-year, truthful we grew astatine akin profitability (as FY23). (As) for the March quarter, a precise beardown December 4th for our bundle concern each twelvemonth increases our borderline astatine the time—this is seasonal, and explains that driblet successful the March quarter. 

Plus, successful our services business, we’d fixed wage increments for mid and elder absorption successful the March quarter. Those are the high-level reasons.

But overall, we’ve guided for operating borderline to stay the aforesaid arsenic FY23 and FY24. So we’re looking to turn astatine the aforesaid profitability, and not look a deed that galore manufacture peers person (seen) implicit the past 2 years.

Also read: The 1 agleam prima successful a bleak twelvemonth for IT

Do you expect immoderate further pressures to support this profitability going forward?

We’ve offered broad-level guidance for the year, and astatine this point, I’d privation to instrumentality to conscionable that alternatively of giving further directional indications.

Is determination accent successful presumption of billing projects and executing them, fixed the cautious commentary for FY25?

Client caution depends connected the benignant of programmes (that we’re executing). Efficiency-led programmes person higher competitory intensity, but for immoderate task progressive successful transformation, customers worth capability. 

Our pricing and execution of projects are babelike connected the level of domain cognition and capableness that we bring to the table. It’s hard to person a azygous reply for each projects.

Can you power clients successful spending connected larger discretionary tech projects?

Fewer discretionary deals are what we person assumed successful our readying and guidance.

At the extremity of the day, it’ll beryllium connected however clients volition prioritize tech programmes… this volition beryllium business-driven prioritization. As work providers, I’m not definite if we tin power that.

Also read: Can electrical cars electrify muted IT firms successful a dull year?

Despite immoderate optimism, your gross maturation guidance for FY25 is the lowest successful 3 years. Could FY25 beryllium adjacent trickier than the erstwhile 2 fiscal years?

We’re assuming that a akin macroeconomic situation volition continue, and didn't privation to instrumentality a telephone connected erstwhile the situation volition rebound. Our guidance for gross maturation is inactive among the highest successful the industry, contempt taking each factors in.

You’re the lone 1 among the apical 4 IT services companies to person added nett headcount done FY24. And you’ve spoken of hiring 10,000 freshers successful FY25. Are determination immoderate circumstantial hiring areas?

Yes. There are tons of caller programmes we person connected information analytics, SAP tools and cyber security—we’ll proceed to prosecute experienced endowment successful these domains. Outside of this, we’ll mostly prosecute caller talent, who volition substance our interior grooming programmes and enactment connected cardinal maturation areas.

Speaking of training, there’s been overmuch speech astir grooming and upskilling employees for generative AI. Is this an costly procedure?

Not really. Most of america (IT services firms) person established grooming processes, interior capabilities and tools astatine manus for it. 

We’ve kept up grooming expenses, since the exertion manufacture perpetually needs their endowment basal to beryllium upskilled. Training employees connected generative AI skills is simply a portion of this itself, and there’s nary summation to the outgo of grooming due to the fact that of generative AI.

On generative AI, you’ve inactive refrained from disclosing immoderate gross fig from this subset, contempt conversations successful this tract being ongoing since aboriginal 2023. Are clients being blimpish astir adopting this technology?

There is simply a precise wide adoption of generative AI ongoing close now. However, companies are inactive figuring retired however to standard adoption of generative AI, and gauging returns connected investments successful this field. All of this is yet to beryllium evaluated by clients.

Take unreality migration, for example—many customers moved connected it aggressively, and past realized that their adoption strategy should person been different. They should person modernized their operations and data, and past migrated to unreality platforms arsenic required. 

There’s a learning (for generative AI) successful the unreality migration story, which volition assistance successful the generative AI modulation arsenic well. The attack is present steadier.

Have you truthful acold received immoderate $1 million-plus generative AI deals yet?

Yes, several.