HCL Tech Q3 FY23 results: Growth at lower end of guidance, hiring to slow down

IT services giant HCL Tech is set to announce its Q3 FY 2022-23 results on next Thursday. Amid macroeconomic headwinds and a global slowdown, the company’s growth is expected to be at the lower end of guidance.

Emkay Global, a brokerage and financial services company said in its recent report,  “The services business is expected to see a moderation in sequential growth due to furloughs and weakness in discretionary spending.”

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C Vijaykumar, the chief executive officer of the IT services company, shared similar views with investors during an event in New York. He mentioned that the company would perform at the lower end of the guidance.

He said, “We think it’s a December phenomenon because of the furloughs. Given the narrow band and macro feedback we have today, we will be at the lower ends of our guidance for the overall level at 13.5-14.5 per cent and 16-17 per cent growth in the services business.”

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Vijaykumar reasoned that the expenses on tech and telecom are higher than they expected at the beginning of the quarter. 

He said, “Some of the macros–like furloughs and drop in discretionary spend in tech, telecom, and other verticals–is a little bit more than what we expected at the beginning of the quarter.” 

Not just HCL Tech, Nirmal Bang Institutional Equities thinks that this would be an industry wide phenomenon. They said in a report, “We get the sense that December 2022 and possibly March 2023 are likely going to be growth challenged quarters for the industry; may be a bit more than earlier anticipated.”

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Moreover, hiring is also expected to slow down. An expert closely tracking the IT sector told Business Today, “The hiring for this quarter will slow down at HCL Tech. The company added over 8,000 people last quarter, and seeing the imminent IT slowdown, the company will report fewer additions this quarter. ”

It is worth noting that HCL Tech added 8,359 employees in Q2 FY 2022-23, as opposed to 2,089 in Q1 FY 2022-23. The company was the only large cap IT services company to increase hiring as compared to the previous quarter.

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