We've always been better prepared on protectionism: HCL Tech's C Vijaykumar

Interview with C Vijaykumar, President & CEO, HCL Technologies

While the Indian IT sector goes on with its rhetoric on global protectionist measures, C Vijaykumar, President & CEO, HCL Technologies is hardly breaking a sweat. Having already laid the groundwork for growth in foreign shores, CVK- as he is called by his peers- knows that from here on his the company would only rise in the IT industry pecking order. Having surprised the market with the highest-ever growth forecast, C Vijaykumar tells Karan Choudhury the reasons behind this confidence. Edited Excerpts:

It has been three quarters since you have taken over. What has changed and what has worked for you?

We identified that there is a lot of potential to cross sell and upsell in our existing customers. Creating a strong client-partner model for the top 150 customers, we can channelise a lot of services to our clients. Some of the new generation services require multiple teams to work in a unified manner. Bringing this together and creating an end-to-end proposition is resonating much better with our clients. That is giving a lot of confidence to the customers. We have got some of the key themes right.

What is the reason behind this confidence?

We are evolving faster and accelerating a revolution into the next generation technology services. It started three quarters back, when I clearly laid out the mode 1, 2 and 3 strategy, primarily to build a better groundwork, improve revenues and costs, and provide the right level of management attention in areas that would be relevant in the long run. We have grown 30 per cent year-on-year (Y-oY) on mode 3 services.

There is rhetoric in the IT industry related to protectionism, what you are saying is contrary to that. What are the reasons behind this?

I am not contradicting protectionism, we have just been better prepared. We invested in global delivery centres seven years back. We have 12 such centres in US alone and over 12,000 employees and probably, in terms of percentage, the highest local hiring in the industry. We have always been, looking at how can we increase local talent and that is why 55 per cent of our employee base is local. We have been a lot more proactive and all of this has helped us.

So with the foundation laid in foreign shores, do you think this would help you rise in the pecking order among your peers?

That is what we hope and wish for. We have given a guidance that is obviously better than all the other guidance one has seen. We will also increase local hiring in Europe, US, Australia and Singapore. In the US, we have been hiring consistently for many years now and the strategy would continue.

But are you planning to cut down on Indian workforce in US and Europe?

It all depends on the project. If the project gets over and that particular skill is needed elsewhere, we will open centres for more people. We have a talent-supply chain function, which looks at project requirements function across the globe and sees how talent should be redeployed.

What are the cost implications of hiring local talent?

Local hiring is going to be in a similar proportion like any other year. If you see we have given a margin guidance which is the same as what it was last year inspite of significant strengthening of rupee.

What is the percentage of automation?

If you see our margin improvement, a large part of it would be associated with Dry Ice Autonomics Platform and effort elimination. Of the top 200 customers, at least 150 of them have multiple modules of Dry Ice implemented.

When junior roles are being automated, HCL has launched a programme to hire students and train them. Isn't this contradictory?

Junior roles are getting eliminated but there are lot of new areas, where a fresher from college can be trained for delivering revenue sources, such as cloud migration. I do not see any disadvantage. One has to just invest in the right kind of training.

People say mid-level executives are under threat due to automation and focus on costs. Is it the same for HCL?

I would not call out any particular level, we run a lean operation and focusing on automation, we expect high productivity from teams and create the right enabling mechanisms for that. So, I would not say there is any particular level in the pyramid structure.

Though there might be a global disadvantage at play, are you confident of HCL's growth?

Absolutely. In FY17 what has worked, it is differentiating and a long-term strategy, and we are confident it will work in FY18. Our margins would be around 19.5 per cent to 20.5 per cent at a currency rate of Rs 65.50.