The COVID-19 pandemic has been a turbulent phase for everyone in the world but it has also been the time when technology has played a major role in ensuring that most businesses continue to thrive and survive.
It is during this time that India’s third-largest IT services provider, HCL Technologies Ltd. has reported a 32% increase in its net profit for Q1, FY21 quarter, due to 11 transformational deals, healthy cash reserves, and a strong pipeline of clients.
The signing of 11 transformational deals during COVID-19 helped HCL sail through the crisis, says their CEO C Vijayakumar
CEO Vijaykumar said that the client pipeline by the end of June is 40% stronger than a quarter ago, despite COVID-19. He mentioned that the resilience of their operating model helped them deliver stellar operating margins and cashflows. Along with the 11 transformational deals, HCL has also renewed several large deals during the quarter.
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The Noida headquartered tech firm provided revenue guidance for FY21 in the range of 1.5-2.5% revenue growth (QoQ) basis and operating margin in the range of 19.5-20.5%. Currently, 96% of the employees in the firm are working from home.
The company also has a net cash reserve of $1.3 billion which is excluding the $812 million payouts for acquisitions. The Q1, FY21 has accounted for $757 million which is half of the total cash flow i.e $1.48 billion. The company has also said that it has experienced an IT service attrition of 11.7% in Q1, FY21, which is a decline by 270 basis points.
Minimal Impact due to H1-B visa suspension
When asked about the impact of H1-B visa suspension by the US government, CEO Vijaykumar said that HCL has been investing in localization in the US for 10 years. Hence, this suspension will have a minimal impact, at least in the near term. In the case of long term, he mentioned that they will have to relook at new ways to address the demand. As of now, 67% of their employees in the US are locals and HCL has adequate people to fulfill the demand.
Roshni Nadar Malhotra appointed as HCL Chairman as Shiv Nadar stepped down from his position
Meanwhile, the HCL Tech chairman, Shiv Nadar stepped down from his position. He will continue to work as the Managing Director of the company with the designation of Chief Strategy Officer. Roshni Nadar Malhotra has joined in his stead as the Chairman of the Board of Directors and the company from June 17, 2020, onwards.