HCL Technologies‘s revenue growth of 11.4 percent in Q3 2016 primarily due to accelerated expansion in ITO has shown that the IT services provider has performed well than its rivals.
HCL Technologies experienced faster top-line revenue growth than its peers, including Infosys (6 percent) and TCS (5.8 percent), over the same period. Wipro will be announcing its financial result shortly.
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HCL Technologies — through initiatives such as BEYONDigital and Next-gen ITO — aims to build end-to-end ecosystems to deliver customized transformation services for clients across its vertical segments, leading to double-digit revenue growth in Retail & Consumer Packaged Goods (10.3 percent), Manufacturing (19.9 percent) and Public Services (17.8 percent).
Analyst firm TBR expects HCL Technologies to continue to pursue acquisitions in 2017 similar to Geometric Limited and Butler America Aerospace as the company continues to invest to develop core services areas such as engineering and R&D services.
ALSO READ: HCL Technologies revenue analysis by TBR
HCL Technologies reported an operating margin of 20.4 percent, an improvement of 40 basis points due to its ability to leverage automated frameworks such as its DryICE platform and artificial intelligence technologies internally, offsetting the company’s increasing onboarding of expensive onshore resources.
The software major said it expects its annual revenue for fiscal 2017) to be in the middle of 10-12 percent range in dollar terms, based on the December 31 exchange rates. The company in October guided revenue to grow 12-14 percent, based on the average exchange rates of fiscal 2015-16.
The operating margin – earnings before interest and tax (Ebit) for the fiscal is expected to be 19.5-20.5 percent post-acquisitions.
HCL adds employees
The company added 8,467 techies for the quarter, taking the headcount to 111,092 by December 31 from 103,696 year ago and 109,795 quarter ago.
HCL Technologies’ employee attrition increased annually to 17.9 percent in Q3 from 16.7 percent year ago and declined from 18.6 percent quarter ago, it declined sequentially to 5.3 percent in Q3 from 6.4 percent year ago and 7.4 percent year ago.
HCL Technologies on acquisition spree
HCL Technologies has ramped up acquisition activity since July 2015 to build capabilities in strategic areas such as application services, engineering and ITO.
In 2016 HCL Technologies announced five acquisitions: Point to Point, HCL Training and Staffing Services, Volvo Group’s external IT business, Geometric and Butler America Aerospace to support its onshore presence across North America and EMEA.
Rival IT service companies such as Wipro and Cognizant have begun targeting HCL Technologies’s investments around cloud through their acquisitions of companies such as Appirio and KBACE, respectively.
