 "Long-term goals matter more than results: Anil Chanana")
For Anil Chanana, chief financial officer of HCL Technologies, the next wave of growth would come from internet of things (IoT) and massive digitalisation. Speaking to Business Standard, Chanana says he has strong belief in long-term goals, not just quarterly results. Edited excerpts:
Do think you are back on track with higher growth?
I think we always have been on track. Out of the past eight, we have had an above average performance in six quarters of the top-three providers out of India. We are consistently outperforming the average industry growth rate if you take the top-three providers into consideration. Even in calendar year 2015, we have been at the higher-end of the growth rate with 13.5 per cent.
The growth was significant from retail, oil, gas and utilities. The segments were important for us from this quarter's perceptive as well as from a full year's point of view. On a full-year basis, life sciences did extremely well with almost a 27 per cent growth, followed by telecom, media publishing and entertainment.
Will you continue to sacrifice margins for growth? When would you look at improving margins, considering that HCL's margins are lower than industry standards?
We have a sweet spot and we said that we want to play in a certain service offering and our margins are aligned to service offering. At the same time, we are not building a model for the immediate future, our plans are long term. When we contract for any business, we do it with a five to 10-year view. We are not focused on just the next quarter. We don't sacrifice margins for any revenue growth.
There could be a large deal coming in that could disrupt the margin for some time, but again it would come back to the steady state mode. The key is to keep the growth sustainable over a period of time and not focus on a quarter.
Have you started generating revenue from your acquisitions?
Yes, they have. But they are marginal at this point. We made two acquisitions and entered one joint venture in the past couple of months.
What are the broad trends you see happening in the industry?
The industry is moving towards next generation information technology outsourcing (ITO), digitalisation and IoT works. So, this is what our organisation is prepared for. It will change the need for manpower; revenue per employee will go up. We serve end-to-end digitalisation. We serve not just infrastructure services, but next-generation ITO, which means hybrid clouds, combining the applications and infrastructure. So, we have very differentiated offerings in the marketplace.
What are your expansion plans?
We would be expanding our China facility. We will provide more services in certain countries in Africa for our retail and telecom clients. We have had a number of healthy deal wins in that country. We will try and increase our presence in areas where we are not there in a major way, such as the government sector abroad.
Do think you are back on track with higher growth?
I think we always have been on track. Out of the past eight, we have had an above average performance in six quarters of the top-three providers out of India. We are consistently outperforming the average industry growth rate if you take the top-three providers into consideration. Even in calendar year 2015, we have been at the higher-end of the growth rate with 13.5 per cent.
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Which are the verticals you see the growth coming from?
The growth was significant from retail, oil, gas and utilities. The segments were important for us from this quarter's perceptive as well as from a full year's point of view. On a full-year basis, life sciences did extremely well with almost a 27 per cent growth, followed by telecom, media publishing and entertainment.
Will you continue to sacrifice margins for growth? When would you look at improving margins, considering that HCL's margins are lower than industry standards?
We have a sweet spot and we said that we want to play in a certain service offering and our margins are aligned to service offering. At the same time, we are not building a model for the immediate future, our plans are long term. When we contract for any business, we do it with a five to 10-year view. We are not focused on just the next quarter. We don't sacrifice margins for any revenue growth.
There could be a large deal coming in that could disrupt the margin for some time, but again it would come back to the steady state mode. The key is to keep the growth sustainable over a period of time and not focus on a quarter.
Have you started generating revenue from your acquisitions?
Yes, they have. But they are marginal at this point. We made two acquisitions and entered one joint venture in the past couple of months.
What are the broad trends you see happening in the industry?
The industry is moving towards next generation information technology outsourcing (ITO), digitalisation and IoT works. So, this is what our organisation is prepared for. It will change the need for manpower; revenue per employee will go up. We serve end-to-end digitalisation. We serve not just infrastructure services, but next-generation ITO, which means hybrid clouds, combining the applications and infrastructure. So, we have very differentiated offerings in the marketplace.
What are your expansion plans?
We would be expanding our China facility. We will provide more services in certain countries in Africa for our retail and telecom clients. We have had a number of healthy deal wins in that country. We will try and increase our presence in areas where we are not there in a major way, such as the government sector abroad.