Noida-based HCL Technologies on Friday reported yet another growth quarter in both revenue and net profit. This is the ninth consecutive quarter where the company has performed well. Geographies such as the US and Europe continued to maintain the growth momentum. In an interview with BusinessLine , Anant Gupta, President and Chief Executive, shares more. Edited excerpts:

There have been mixed reactions from analysts, especially on the sequential versus year-ago growth. What is your take?

I think 3.2 per cent growth quarter-on-quarter (QoQ) is good – largely in line with what we had planned. A little surprising on margins in terms of positivity, but still we are 10 bps (basis points) below on year-on-year (YoY) basis on margins (23.9 to 23.8). But net margin expansion is 36 per cent annually, so I think it’s good.

To summarise the quarter, we are more balanced because different service lines kicked and different verticals kicked in – not kind of one specific area. The engineering services contributed about 8 per cent growth in this quarter, largely on the back of large scale engagements. Similarly, enterprise system integration that delivered little over 5 per cent (QoQ) and global infrastructure management services grew by 5.2 per cent.

How do you see the way forward given the geographical uncertainties?

There will be uncertainties and they will drive different behaviours for different services in different segments. And, that’s why as a system, one has to design to mitigate the volatility or have a portfolio which will be relevant in different points in time.

For example, if there is an increased pressure to cut costs like in Europe, then in my view, that will accelerate companies (like in Germany) outsourcing strategy. Hence, it would push one of the businesses—IT outsourcing (ITO). But on the same side, they may or may not necessarily pull the lever on digitisation, or they may ask us to assure the ITO market to save on other costs. So, there would be different behaviours. But I think there is always some opportunity somewhere.

What areas do you see as low hanging fruit in terms of geographies and verticals?

Financial services in Europe will continue. If I take manufacturing, it will be global phenomena – in developed markets like the US, Europe and others. In retail and consumer packaged goods (CPG), we will see some of that because they in fact are driving the digitisation strategy more, especially the CPG companies.

Telecom will also drive some of the digitisation and engineering strategies. In life sciences, pharma will continue to drive a lot of vendor consolidation quite like financial services.

There is a merger of cloud and managed services in terms of businesses. What kind of deals are you getting from them?

The ITO deals have always moved to transformational in nature. Cloud as a stack has always been designed like that. Hence, we don’t say ‘cloud as a different strategy’… It’s part of a larger portfolio.

For example, moving from ‘on premise’ cloud to ‘hybrid’ model. We have been rated as leaders also by Gartner in data centres and end-user services. Trends like cloud on platform as a service and infrastructure as a service would continue, but they are not sourced separately. They will be always part of bundled ITO because the interface to the end user and company has to be one. That’s why terms like SIAM (service integration and management) layer – a terminology we will be seeing increasingly used – and we actually helped our customers build on that platform through our ‘MyCloud’. That is the reason we win so many deals.

Anything under the Prime Minister’s ‘Digital India’ campaign and for that, would you merge with HCL Infosystems for projects?

We have been executing through HCL Comnet in selective projects in India and we will continue to do that. Likewise, whatever comes in the digital framework (digital India), we will do that. I don’t think we need to merge anything or buy something. Comnet is a strong brand and we run our networks, security and systems infrastructures for years. We will just leverage that to do it. The core is, it’s (India) a selective market for us and we will not go after each and everything because of its nuances.

But would it remain a selective market, especially after the Government announcing so many projects and foreign companies also ready to come in?

We will wait and watch. We are as bullish (as the foreign companies).

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