Mr Vineet Nayar, HCL Technologies' CEO and Vice-Chairman, sees opportunity and is confident of gaining business, even in a volatile global economy, mainly through incubation and restructuring of existing clients. Business Line caught up with him to know the company’s strategy.
Some top IT companies have downgraded guidelines, how confident is HCL Tech given the poor macro economic situation?
HCL is confident of its growth trajectory and the reason for that are some strategic choices we have made – firstly, to focus on the restructuring market where significant amount of renewals are up for grabs. Second is to focus on vendor consolidation especially in financial services where customers were unhappy with existing vendors. Third, the whole philosophy of employee first, which would create a motivated work force that would work hard for the success of the company. The fourth strategy is to incubate new businesses such as infrastructure (which is now a billion dollar), Enterprise Application Services and Engineering and R & D Services through acquisitions, which is also close to a billion dollar now. Combination of these four strategies has worked well for us. If you remove one of the four, you will see HCL’s performance falling. HCL continues to be paranoid…about environment, competition, relevance, competitive advantage and continues to invest in it. As long as we continue executing our strategy well and retain the paranoid culture within our company, I think our profitable trajectory of growth will continue.
Year-on-year, your revenue from rest-of-the-world (ROW) has declined, and the US and Europe have grown, what is the reason?
Our mindset in HCL is that we are a small company and therefore it is important to pick and choose our bets. And, once you pick them, put everything behind that, not 99 per cent but 100 per cent. We saw a significant vendor churn in America and opportunity in Europe and therefore we focused all our retention in the US and Europe, not at the ROW. That is the reason US and Europe had grown dramatically for HCL. For everybody, the ROW had grown. Our view is that the ROW will grow this year because now that we have won lot of businesses in the US and Europe, at the moment it is behind us. We have brought leadership in ROW and that leadership has already demonstrated huge growth – 7 per cent sequentially in this quarter.
Are you confident about continuing to get clients from the US and the Europe, especially in the US with the Presidential Election coming up?
We as a company have announced globally, a socially responsible business. Under this, we have promised to create 10,000 jobs in the US and Europe (in next five years) and out of that we have already created 2,200 jobs this financial year in the US and Europe. Because of this, the customers and the administration are looking at HCL in a positive light because we are part of job creation industry. Therefore, I do not see a threat in whatever is happening, unless a new element comes in, which I am not aware of. I do not believe there would be a change in our ability to continue in both these markets.
Which are the other geographies where you are getting businesses from?
We see Nordics giving continued growth, South Africa – you will see it as a large market in the near future, Australia and New Zealand are also big markets. We see restructuring and renewals of contracts from there.
There are some bits and pieces in Latin America also as a trend going forward.