hcl tech share price: we’ll have a decent increase in bookings for the full year: C Vijayakumar
How did Q2 go for you?
C Vijayakumar: Our services business grew 5.2% sequentially and 13.1% year-on-year. Yes, our product activity has gone down and product activity has gone down and a specific number of transactions slipped over the next quarter, which we think will be a very strong quarter. What’s even more important are our bookings – $ 2.3 billion, 14 big deals, a 36% year-over-year increase and our net addition was 11,135. highest net addition we have ever had and it’s the highest on record.
Thus, the number of reservations and the highest net recruitments ever recorded very clearly reflect the good growth dynamic that we have in our services activity. The product business is a long term gamble. It’s going to take us a while to understand the full dynamics and that’s how I would sum up the quarter. I think it was a good quarter. The dynamics of services are very strong.
A quick word on the deal pipeline. What will they look like in the future? Will it be mostly smaller contracts or could we also have contracts like Xerox, Ericsson?
C Vijayakumar: I announced at the end of the June quarter that the deal pipeline was at an all-time high. Since we’ve converted some of the trades, it’s a little lower than it was at the end of last quarter. But we have a very good mix of small and medium business and big business. Big deals usually have multiple service offerings that go to a particular client and they are mostly driven by consolidation and cost removal to fund digital transformation and then digital transformation which is the chain of big deals that we see and there There is quite a good mix of all the cross sections of transactions.
It is also very important to see that many existing customers continue to grow as they all invest in new digital initiatives and that creates a good tailwind. Almost all categories of customers have increased. For example, our $ 50 million customers went from 29 to 41, a year-over-year growth of 12. We’re seeing a similar trend across all customer categories, which is really reflected in all of the extra spend we get from our existing customers.
All technology companies face attrition. You have also had to deal with attrition. What will this mean? What type of wage inflation are you likely to see?
Prateek Aggarwal: It’s one of the things that is happening the most in the industry right now. In fact, over the past two or three quarters, attrition has increased for all of us. We manage it in different ways. The good thing is that HCL’s attrition continues to be significantly lower than most of our other peers. We try to take care of it as much as possible and despite that it is increasing by giving good variable pay, good skill allocations, good raises and doing all the good things that started at the start of the pandemic.
If you go back 18 months, the care the company has given to each employee and their families has helped to raise awareness of the company to its employees and their families. I’m sure this is helping us already and will continue to help us in the future as well.
C Vijayakumar: I also want to point out that we have been ranked number one in Forbes’ list of the best employers in the world. We are number one in the world on all fronts in professional services. It is a great recognition for us and we are really proud of it.
In the future, what will that mean because now you’re not just competing with Tier I tech companies, you’re also competing with startups, billion-backed unicorns, and billions of dollars. You’ve heard of BMW superbikes. We also heard about the Mercedes plan from the HCL group. How is it going to play out?
C Vijayakumar: Our value proposition for employees is to help them build long-term careers. The person who joins us from college, joins with a lot of hope and aspirations and we really shape them and make them great technical professionals, great leaders and we have amazing examples. Our value proposition is to facilitate a much longer term association with the company and the long term association also translates into a very beneficial association for our employees. It’s strong and our attrition, even in this situation, is pretty much under control.
The second half of the year saw a sharp acceleration in the growth of approximately $ 4 billion in transactions. Can you give us an idea for the next six months.
C Vijayakumar: Yes, our pipeline continues to be good and we expect the entire year to see a decent year-over-year increase. In the first two quarters, we did very well year over year in number of bookings. Even for the entire year we will have a decent increase in bookings which is the right metric to look for momentum and some of that will convert as we hire people.