The pandemic has shifted the way technology is adopted by businesses and cloud has become a business strategy for a lot of clients, rather than just a technology strategy. The digital nature of deals has also changed the size and duration of deals. In an interview with Mint, C. Vijayakumar, chief executive officer and managing director, HCL Technologies Ltd, talks about the changing nature of deals, expansion plans, and acquisitions strategy. Edited excerpts:
Have the client budgets for this fiscal finalised yet and which areas are they investing in?
We are pretty much almost halfway to the calendar year, so the client budgets are already decided and as you would expect, a lot of them are investing in technology initiatives. One big initiative where we see a lot of customers investing is cloud adoption. The whole cloud strategy has become a business strategy for a lot of clients. This is because cloud offers a scalable platform, it allows the flexibility to scale up and down, and it allows you to collaborate with multiple industries. It is really the platform of innovation for a number of businesses.
Given the digital nature of deals, have the deal sizes actually become smaller and of shorter durations?
Some customers want to introduce a big digital programme, so they break it into smaller programmes and then take it step by step. So, we see a higher percentage of smaller deals in the overall pipeline. As we see, I think there are lots of mid-sized and large deals as well in the pipeline. We have always enjoyed a very good renewal rate of over 90% in our services business, and it continues to be in that range.
What’s your strategy to expand into other markets apart from your core ones?
We have a new strategy – one is called focus countries and the other is called new frontier countries. In the focus countries, there are five geographies where we are focusing on – Germany, France, Japan, Australia, and Canada. These five are significant in terms of spending and we want to expand in these geographies. In the new frontier countries, we have low presence but building up our presence. These countries include Brazil, Mexico, Spain, Portugal, South Korea, and Vietnam. We have already set up our presence there in the last couple of years and we are already seeing good traction in these countries.
In the context of the Russia-Ukraine war, did you have any operations in either of these countries and do you continue to expand in other European countries?
We did not have any operations in either of the two countries. We continue to ramp up in other Eastern European countries such as Bulgaria, Romania, and Poland. These are three important countries where we are continuing to scale up. There has been no noticeable impact from the war.
What is your acquisitions strategy for this year?
Our acquisitions will be mostly from a capability building point of view. We recently announced the acquisition of Confinale AG, a Switzerland-based digital banking and wealth management consulting specialist, which is expected to increase our footprint in the global wealth management market. We will be open to looking at acquisitions, as we see opportunities to add more capabilities. But our big focus is on organic growth.
How has the pandemic changed the role of a CIO and what are the trends you see during your recent conversations?
The pandemic has made resilience a very important requirement for every business and every leader. And the CIOs (Chief Information Officers) have played a huge role in demonstrating or establishing resilience for a number of businesses, whether it is work from home or managing the volume fluctuations that were part of what happened during the pandemic. I think the CIO’s role has become even more important because technology is driving a big part of the business outcomes today.
What are some of the new technologies HCL will be focussing on this year and beyond?
Internet of things (IoT) is definitely a sharp focus area. Digital engineering is the other important area which includes 5G, softwarisation, data engineering, and cloud modernisation of applications. On the digital foundation side, we are very focused on security, SD-WAN (software-defined wide area network). In the digital workplace front, we are focused on experience services as the employees of our clients are so distributed today, working from anywhere. So, it is about offering a good experience of the IT platform.