Constantly looking for capability-led acquisitions: HCLTech CEO & MD

C. Vijayakumar, CEO and MD, HCLTech talks about the deal pipeline, acquisitions strategy, and focus areas

HCLTech has maintained its revenue growth guidance of 6-8 per cent in constant currency terms for 2023-24 on the back of a stable deal pipeline amid a cautious macroeconomic environment. It has also acquired Germany-based automotive engineering services provider ASAP Group, an acquisition it made after a long time. C VIJAYAKUMAR, chief executive officer and managing director, HCLTech, talks about the deal pipeline, acquisition strategy, and focus areas in an interview with Ayushman Baruah. Edited excerpts: 

What does your large deal pipeline look like at this point in time?
 

Our pipeline is the highest that we have ever had. Even last quarter, we highlighted that our pipeline had grown by a significant percentage, and it is seeing an increase even this quarter. Our qualified pipeline is at an all-time high, and is fairly broad-based across industries, geographies, and service lines.

Which are some of the newer markets you are focusing on?
 

Three years ago, we announced our Focus and New Frontier countries. The Focus countries include geographies like Japan, Germany, and Canada. The New Frontier countries include Brazil, Mexico, North Asia, Spain, Portugal, Siberia, etc.

This is a strategy we put in place three years ago to diversify our footprint into all the large technology-spending geographies and countries.

India continues to be a strong growth opportunity for providers like us, and our strategy here is to be a dominant software solutions provider.

We have a very strong presence in several verticals where our software is being used, and we continue to build on that.

You just announced the acquisition of Germany-based ASAP Group. What is your acquisition strategy this year?
 

We are very focused on capability-led acquisitions. This is probably the first time in a long time we announced an acquisition. We have been looking for assets that have automotive engineering capabilities, especially in the modern vehicle space.

ASAP brings a lot of capabilities around connected, autonomous, sustainable, and electric vehicles.

We already have strong capabilities in the areas of automotive engineering, but this acquisition brings a lot of modern capabilities. As a joint entity, we will become a very strong player in the automotive engineering space.

While the focus is on Germany now, this is a capability that we can take globally. We constantly look for other acquisitions that are very capability-specific.

Given that some of your competitors are investing billions of dollars specifically in artificial intelligence (AI), what is HCLTech’s focus on AI and other emerging technologies?
 

We have been investing in AI for the past decade, and it is not something new. As an engineering service provider, we have been doing a lot of work in AI and machine learning in multiple areas, including developing chips for this industry, developing data and analytics, AI for IT operations (AIOps), etc.

Of course, now that generative AI is the new area to focus on, it is a very strategic area for us where we have strong capabilities. We will continue to nurture those capabilities and bring solutions to our clients.

Some of the other key emerging technologies we are focusing on are quantum computing, low-code development, 5G, etc, which are emerging and new ideas.

Factoring in a challenging macroeconomic environment, how do you see the pricing environment?

The pricing environment is quite stable. Customers seem to understand that to get high-quality service, you need to recognise what it takes to do that.