‘Numbers weak but pipeline strongest ever,' says HCLTech CFO; IT firm to defer hikes for senior employees

Indian IT services company HCLTech announced its Q1 FY 2023-24 results on Wednesday. The numbers missed street estimates as well as the company’s own guidance released earlier this year. Business Today caught up with Chief Financial Officer Prateek Aggarwal to get more insights on the results.

Aggarwal noted that although the past quarter numbers have been weak, the company has the strongest deal pipeline ever. He said, “While the Q1 numbers have been weak, the good news is that our pipeline is at its highest ever. We have seen sequential growth of almost 18 per cent and a year-on-year growth of 26 per cent. Additionally, some deals in the pipeline are at an advanced stage.”

The CFO believes that the strong pipeline would reflect in numbers in the second half of the current fiscal.

“Despite the weak Q1, our guidance remains unchanged at 6-8 per cent for the company level and 6.5-8.5 per cent for services. We are confident in our pipeline, which is expected to deliver good revenue in the second half,” Aggarwal noted.

Adding to that, he attributed the weakness in Q1 to slow down in deals from Telecom, Technology, Engineering Research and Development, etc.

He said, “The weakness in Q1 can be attributed to two verticals, primarily Telecom, which has experienced a sharp decline, and Technology and Services, which are smaller verticals for us but have also seen a significant decline.”

“Our IT and Business Services are flat quarter-on-quarter, while ER&D (Engineering and R&D) services have shown a 5 percent decline sequentially, resulting in the 1 per cent decline in overall services. Regarding software, it is flat on a year-on-year basis, and sequential comparison is not accurate due to seasonality,” the CFO explained.

The CFO highlighted that the company is taking active measures to compensate for the fall in revenue. This includes deferring salary hikes for senior staff members and cutbacks on variable pay for others.

He said, “Based on the actions we have announced, we are confident in returning to the 18-19 per cent range. The actions include wage increment deferrals for senior staff and a decision on junior staff increments to be made in October. Variable pay will be determined in line with company policies and results.”

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