We are not looking to increase investments in R&D in FY23; they will remain at the same levels, says C Vijayakumar

After reporting a stellar Q4 wherein HCL Technologies’ consolidated net profit grew 226 per cent YoY to ₹3,593 crore for the fourth quarter ended March, from ₹1,102 crore in the same quarter last year, the company is all set for FY23. In an interview with BusinessLine, CEO and MD C Vijayakumar takes us through the roadmap for HCL’s product and platform business and his ‘talent model transformation’ as the company plans to add 35,000-40,000 freshers in FY23. Excerpts:

Product and platform business was down by nearly 24 per cent in Q4 after seeing an uptick in Q3. What factors led to this? What is the outlook for upcoming quarters?

The P&P business is in early stages, though it’s still a big business — $1.5 billion — delivering EBITDA of 45 per cent and 25 per cent EBIT. It’s a fairly complex business. There are a number of products, and each product is in a different life cycle of its journey. Some of them are being migrated to the cloud; consumption and charging models are changing. So we are not providing a view on what will happen next year. It is more long term.

What’s the gameplan for ramping up P&P business, as the company continues to invest around $200 million every year in R&D. What new innovations are under works for this vertical? Will the company increase this spend in FY23?

We have a cloud data warehouse product called Avalanche. This is 10X faster than the comparable products on the market, and it is priced at one-fifth of their price. That’s a strong offering, and we are in the early phases. It has great potential in the future.

Similarly, in automation, we have a number of products which automate a lot of IT operations. We are launching Unica and Commerce on the cloud, that will be a big strategy. There are a number of products deployed with a lot of clients, but we think a better strategy will be to migrate them to the cloud, and we have a cloud native solution available for a number of products.

We are not looking to increase investments in R&D in FY23; they will remain at the same levels.

TCV grew by 6% QoQ, but most of the client additions happened in the $1-20 million revenue bucket. What is the outlook for deal wins in FY23? Which categories of your business are to contribute to this?

$20 million is the annual revenue we get in those client categories. The new TCV is a little more towards smaller deal sizes and a little less on the larger deal sizes. These are going to come from across the board: digital foundation, digital R&D services, engineering and cloud services. To grow at 12-14 per cent you need all the engines to fire.

The attrition rate for HCL crossed over 21 per cent in Q4. What led to this and when do you expect the talent crunch to start stabilising? What’s the hiring plan for FY23?

Already, if you take quarterly numbers, attrition rates have started to come down. We think it will stabilise in the next 2-3 quarters. We expect to hire 35,000-40,000 freshers this year.

Which segments will HCL be hiring more for? Will we see more hiring happening from Tier-II and Tier-III markets?

We already have 20,000 people in new vistas locations, and we may take it up to 25,000-30,000. We are also globally expanding into new vistas locations in other geographies, where we also have these skilling programmes.

You have been talking about HCL’s talent model transformation. What initiatives HCL has been taking up to upskill talent? 

We have several programmes internally. We have a number of skill cohorts wherein employees are trained in a set of closely related skills after identifying their cores and checking the skill cohort they belong to. We ensure that they also get trained in all the adjacent areas. We are constantly increasing our fresher hiring and trying to get them trained and gain the necessary competence to execute on programmes. That’s a big focus for us. Once they are deployed on a programme, we look at what will be the next ideal programme for them if there’s any skill gap with respect to the next assignment. We also have a lot of learning materials online.

Overall, how is the education system for engineers looking in India? Are you finding freshers who are already skilled in robotics and other emerging technologies?

We have a lot of presence across a number of colleges. We continue to hire from them. We also have some advanced programmes they do in their final year. Those freshers perform better than others who are completely new.  

Most freshers have basic level skills if they are taking certain relevant courses, then here they go through rigorous boot camps before being assigned programmes at HCL.

Segment wise, we will be looking to hire from cloud, digital engineering, applications and analytics. These are then breaks down to sub areas. In each sub-area, there are hundreds of skills, which we call skill cohorts.

Published on May 13, 2022