'3-pronged strategy is working for HCL'

In the second quarter of the 2015 fiscal year, HCL tech has outperformed all its peers such as TCS, Infosys and Wipro in terms of revenue growth of 4 per cent when compared to the previous quarter. CEO Ananth Gupta spoke to Businesses Line on the the factors that led to this growth.

In this quarter, all business segments have grown. Will this trend continue?

Our strategy revolves around three things- IT outsourcing is continuing to gather strong momentum. Our rebid story continues and we continue to win a large share in that market.

Our second play is engineering services. Historically it used to be either automotive or aersoapce sectors but now even the medical sector is getting into hi-tech engineering (in terms of using Internet of Things and other technologies). Any company which builds products that needs engineering services is an area of opportunity for us. It is a trillion dollar opportunity as companies are looking to spend in newer kinds of engineering. The outsourced services is only $40 billion. We are amongst the top 6 players in the world.

The third area is digitalisation. We believe that digitising the front office is not the way of the future. It is about the front-to-back and end to end alignment of their whole business process. These are mid to large size deals and require a lot of change management. Ultimately when you start digitising every part of the value chain you need to integrate it with legacy environment. That is an area we are betting heavily.

Q: In the past, growth was always largely driven by infrastructure management services. This quarter seems to indicate that other service lines seem to be growing...

A: Our continued focus is always in developing next generation propositions around the above mentioned areas. This quarter we have exhibited this and am confident of doing that as we go along.

Q: How has it translated in terms of growth?

A: Our growth rate has been consistent in the last two quarters. It was 13 per cent on a sequential basis and 20 per cent when compared to the same period last year. We see ourselves well positioned for $120 billion worth of contracts up for renewals over the next four years in areas such as infrastructure management as well as integrated IT outsourcing deals.

Q: Can you sustain the momentum considering that the economy in developed markets are not of the woods?

A: Pipeline wise we are bullish. The opportunity is large but we have to keep investments in some business areas such as digital. It is no longer about going to a client and telling him that outsource this part of the business for a cheaper cost.

Q: Some of your peers tell us that there are not many large outsourcing deals out there. What's your take?

A: It depends on what do you mean by a large deal. We have always maintained that in the rebid space there are significant deals- both from revenue as well as from a transformation perspective. Take our Astra Zeneca deal as an example which we took off from IBM, was very large. It had two parts- transforming 13 or 14 data centres, migrating and building a completely new hybrid data centre and finally running it. All that are reflected in the numbers.

If you look at financial services and manufacturing are two large momentum plays. The weight of these two are large. Public services such as energy and utilities, retail has all grown and all have outperformed.

Q: Do you see growth coming back in some of the verticals like telecom in the near future?

A: In the next four to six quarters we could see a revival in telecom and media which has started to invest in digital platforms.

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