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    HCL Tech to roll out salary hikes for all employees in phases

    Synopsis

    All our employees up to E3 levels will get increments starting October and E4 and above will get their increments starting 1st of January, says C Vijayakumar.

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    By Chandra Srikanth

    The salary hike would be around 6% odd for the India population for the onsite and near shore it will be slightly lower. C Vijayakumar, CEO, and Prateek Aggarwal, CFO, HCL Tech, in conversation with ETNOW.

    Are you happy with your performance?

    C Vijayakumar: We have delivered a stellar performance. We delivered 4.5% constant currency growth which translates to 6.4% in US dollar terms. It is almost a perfect V-shaped recovery and what is even more impressive is our EBIT percentage is 21.6. This is actually a 5-year or a 22-quarter high.

    We signed 15 transformational deals. The momentum in the market for modernisation and digital transformation services has been great. Our life sciences and healthcare vertical and the retail CPG vertical grew 8% plus sequentially which is a very impressive performance. All verticals, all geographies, all service lines, all modes had a sequential growth. So it is a very good all round performance.

    Of course some amount of recovery is due to the dip that we have had in the first quarter but a lot of transition of deals that were done in the previous quarter got done extremely well which helped in ramping up revenues. Lots of existing customers continue to demonstrate their faith in us by giving us more projects and some incremental work which all got built. The digital foundation, which is our erstwhile infrastructure services, is very strong.

    We have been ahead of the pack for a long time and the demand for making a robust digital foundation as a basis for digital transformation is a theme that we see in almost every large enterprise. So, all of this and of course, last but not the least, our employees. They have done an amazing job. They walked the extra mile to keep our clients happy despite all the odds that they faced. So we are also coming up with an incremental cycle. All our employees up to E3 levels will get increments starting October and E4 and above will get their increments starting 1st of January which is a three month lag from the regular cycle. We are very thankful for everything that has happened.

    Are you seeing pricing power in some of the newer digital businesses?

    C Vijayakumar: In the second half also we have projected an overall margin growth. We have upgraded the guidance. It was 19.5-20.5%, now 20%-21% is the full year EBIT guidance. So in the second half, we will continue to see a good margin performance. Of course, the salary increases that we are giving will create a certain impact as we get into the second half of the year. That is why overall margins in H1 was 21.1 but the full year we are guiding it to be 20% to 21%.

    Mode 2 for you seems to have grown faster compared to the Mode 1 and Mode 3 businesses. Are you seeing acceleration in one particular kind of business?

    C Vijayakumar: We had a very balanced growth. Mode 1 has got a lot of digital foundation services that has also grown impressively. Mode 2 of course has grown almost 7% sequentially and almost 15% plus from a year-on-year perspective. This is all the new technologies including cloud solutions, application modernisation, analytics, internet of things and cyber security. This is good for the margin profile apart from the cost controls that are automatically in place. Due to some of the higher value services increasing as a ratio is also good from a margin perspective.

    Is a buyback on the cards? What plans do you have there?

    Prateek Aggarwal: Our board has decided to double the dividend that we have been paying on a per quarter basis. So far we were paying Rs 2 per share per quarter and even after the bonus issue which we had announced last October and issued in December, we have been paying Rs 2 per share per quarter on double the number of shares and now in this quarter, the board has doubled the Rs 2 per share per quarter to now Rs 4 per share per quarter.

    The important thing is this is not a one-time kind of a thing. It is something that we intend to continue for the quarters going forward and that is the important thing. It is a doubling not only for now but going forward as well. So, apart from the employees increments, the shareholders are also getting double the benefit and that is really the icing on the cake.

    Chandra Srikanth: What will be the percentage of hikes?

    Prateek Aggarwal: It is going to be across the employee base. As usual we will stagger it over a couple of quarters. For the larger part of the employees, E3 and below, it will be effective from October 1 and for certain higher ratings amongst them and the rest of the people, the senior members as well as the rest of the teams would get it from January 1. It would be around 6% odd for the India population for the onsite and near shore it will be slightly lower.

    Can we expect HCL to come again in the middle of Q3 and hike its revenue guidance? What is the deal momentum looking like?

    C Vijayakumar: Well the overall pipeline is at an all-time high. Our pipeline has increased almost 35% compared to what it was. Our booking increased 35% compared to what it was in the last quarter. Pipeline has increased almost 20% and it is at an all-time high. However, conversion of these deals and that converting into revenue is normally a 3-6-months cycle . We have done good bookings in the last two quarters.
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    3 Comments on this Story

    Kishore Chandra Kumar12 days ago
    this is a sign for enhance of confidence by the employees on the company
    sanujit roy12 days ago
    on the other hand what will happen to vast majority of employees?
    RajeshK13 days ago
    The Most Important Thing:
    https://amzn.to/353i6sl
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