HCL Technologies’ move to shift business model from traditional outsourcing to non-linear has helped the company post 73 per cent growth in net profit during the third quarter ended March 31, 2013.
Anant Gupta, President and CEO, HCL Technologies, said, “Amidst a challenging and uncertain business environment, HCL continues on its growth trajectory fuelled by its alternative outsourcing approach”
Unlike many other IT companies in the country, which are looking at new business areas such as mobility, cloud, analytics and social media to drive up revenues, HCL Tech’s alternative outsourcing approach evolves from the traditional business model. Simply put instead of charging clients on a per hour per man basis, HCL Tech is chasing fixed price projects.
Currently, 53 per cent of its revenues come from fixed price projects, which has enabled the company to reduce manpower requirement.
HCL Tech’s employee base has come down by 791 people during the third quarter after it cut 141 staff in the previous quarter sequentially. HCL Tech’s revenue per employee has increased to $56,000 during the third quarter compared with $39,000 in 2007.
“If you look at the growth numbers against the backdrop of declining IT spends globally then the story is far more compelling,” said Krishnan Chatterjee, Head of Strategic Marketing, HCL Tech. “Our move from traditional outsourcing to non-linear business models is clearly helping us maintain revenue momentum,” he added.
The company’s two largest geographies also did well with Americas growing 3.6 per cent and Europe by 6.3 per cent.
Strong order book
Daljeet S Kohli, Head Research, India Nivesh Securities, said that though strong order book and managements focus to grow infrastructure services contribution to overall revenue could lead to higher revenue growth in future, higher dependence on the single service (Infrastructure) remains a key revenue risk going ahead.
HCL Tech won deals worth over $1 billion in the third quarter, maintaining its sustained momentum of signing large-size deals every quarter.
The company had five $100 million plus deals in the quarter and 10 deals that were over $50 million.
“Strong set of results from HCL Tech shrug off any concerns regarding health of Indian IT industry which were raised because of weak performance by Infosys,” said Ankita Somani, Research Analyst - IT & Telecom, Angel Broking.