Strong deal pipeline will translate into revenues: HCL Tech CEO C Vijaykumar

economictimes.indiatimes.com:

C Vijayakumar, CEO and managing director of HCLTech, said after the $12.6-billion company missed profit and revenue estimates for the first quarter of 2023-24 due to weakness in ER&D and telecom spends. Yet, India’s third largest software company has maintained its revenue growth guidance of 6-8% and 18-19% operation margin for the fiscal year. The company is confident about converting its existing deals pipeline into strong revenue growth over the next few quarters and sees an increasing number of cost optimisation opportunities balancing out the lack of discretionary projects in the market, Vijayakumar told ET’s Romita Majumdar, Sai Ishwarbharath andSurabhi Agarwal in an interview.

Edited excerpts:How do you read the macro environment and demand? Do clients still fear a recession? Some segments of the market are growing well. Three of our largest verticals – financial services, manufacturing and life sciences – which contribute to 60% of our services, have grown in mid-teens on YoY CC (year on year at constant currencies) perspective, which is strong. However, tech and telecom is where we saw steep decline and that is where the maximum pressure is.

We expect that to moderate and recover. Some verticals have been positive while others will take a bit of time. I think the fear of recession is not gone.

Everybody is preparing for potential downsides.How many deal ramp-downs or cancellations are you witnessing? This is mainly in tech and telecom sectors only. It shows up in the numbers as well. It is not broad-based.Is HCLTech confident about achieving the guidance numbers given there are delayed deal conversions? In the next couple of quarters, we should see some of the conversations translate into revenues.