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HCL Tech
We hosted Mr. Rahul Singh - President, BPO Business Services, for interaction with investors
at the DB Access India Conference. The salient points discussed were as follows:
Dramatic changes in demand post recession
The improvement in demand is largely on account of business led spending on IT services vs
pure technology/CIO driven spending. With an obvious focus on costs, this has meant higher
spend towards offshore IT service companies. Additionally, a steady improvement in the
outlook for discretionary IT services will increase blended realizations going forward.
BPO - making the transition from horizontal to vertical focus
BPO contributes to 7% of the revenues of the company. It reported negative growth over the
past few quarters because of the restructuring of its business model. The company has
moved low returns industry verticals to partners and is retaining profitable ones. It is also
making bundled offerings with a consulting layer and is also looking to provide platform
based BPO services. Owing to these changes the management expects this business
segment to turn profitable by end of CY11E.
Changes in key operating metrics to have a positive impact on margins
Even though the company has traditionally relied on a higher proportion of lateral hires to
execute business, the management believes that an increase in revenue contribution from
solutions will result in improved revenue productivity and hence margins. Thus, utilisation
which was ~70% in 2QFY11 is expected to increase to 74-75% for FY11.
Investing to provide cloud computing based services
The company has over 35 engagements in providing cloud computing based services with
most clients opting for private cloud implementation. It also plans to provide IP for cloud and
to pass the incidental infrastructural investments onto the partners.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HCL Tech
We hosted Mr. Rahul Singh - President, BPO Business Services, for interaction with investors
at the DB Access India Conference. The salient points discussed were as follows:
Dramatic changes in demand post recession
The improvement in demand is largely on account of business led spending on IT services vs
pure technology/CIO driven spending. With an obvious focus on costs, this has meant higher
spend towards offshore IT service companies. Additionally, a steady improvement in the
outlook for discretionary IT services will increase blended realizations going forward.
BPO - making the transition from horizontal to vertical focus
BPO contributes to 7% of the revenues of the company. It reported negative growth over the
past few quarters because of the restructuring of its business model. The company has
moved low returns industry verticals to partners and is retaining profitable ones. It is also
making bundled offerings with a consulting layer and is also looking to provide platform
based BPO services. Owing to these changes the management expects this business
segment to turn profitable by end of CY11E.
Changes in key operating metrics to have a positive impact on margins
Even though the company has traditionally relied on a higher proportion of lateral hires to
execute business, the management believes that an increase in revenue contribution from
solutions will result in improved revenue productivity and hence margins. Thus, utilisation
which was ~70% in 2QFY11 is expected to increase to 74-75% for FY11.
Investing to provide cloud computing based services
The company has over 35 engagements in providing cloud computing based services with
most clients opting for private cloud implementation. It also plans to provide IP for cloud and
to pass the incidental infrastructural investments onto the partners.
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