With a 43 per cent rise in net profit during the December quarter, HCL Technologies is upbeat on outsourcing opportunities in the next three months amid the gloomy global economic environment, even though competitors have hinted at tough times ahead.
The company posted a 43.3 per cent jump in net profit to Rs 572.7 crore for the quarter ended December 31, 2011, from Rs 399.7 crore in the same quarter of 2010.
“I have said in the past few quarters that there will be opportunities that will originate not out of growth in the IT budgets, but from the churn which will happen out of existing vendors to new vendors,” HCL Technologies Vice-Chairman and CEO Vineet Nayar told reporters here.
There is a churn in the market, with 30 per cent of the deals coming up for renewal going to new vendors, he added.
The country’s second-largest software exporter Infosys last week lowered its annual revenue growth outlook and warned of lower IT budgets due to the euro zone debt crisis.
Mr. Nayar, however, added that while the recessionary trend might be a threat for a lot of IT vendors across the world, “We see that as a tremendous opportunity.”
“I truly believe we have an opportunity and a threat ahead of us. There are USD 47 billion worth of deals which are coming in for renewal in calendar year 2012 across 249 customers. If the 30 per cent churn continues, that represents a USD 15 billion opportunity and that makes me feel optimistic that the growth will continue,” he said.
However, he also expressed concern about client’s IT budgets being impacted as a result of the recessionary trend.
Analysts’ reports suggest overall IT budgets being flat or being reduced in the year 2012.
“The macroeconomic environment is pretty bad. Consumer confidence index, job index is not moving in the US... In Europe, there are huge concerns more on liquidity (issues), Asia is a mixed bag, I feel pessimistic,” Mr. Nayar said.
“So from an HCL point of view, we will have to approach a bit cautiously quarter-on-quarter and wait for the windows of opportunity to emerge and be free-footed so that we can grab those opportunities as and when they emerge,” he added.
HCL Tech’s revenues for Q2 FY’12 stood at Rs 5,245.2 crore, up 34.9 per cent from Rs 3,888.4 crore in the same quarter of FY’11. The company follows a July-June fiscal year.
Reacting to the results, the company’s scrips closed at Rs 424.75 apiece on the BSE on Tuesday, up 4.61 per cent from their previous close.