SOURCE: HCL Technologies

August 01, 2008 10:41 ET

HCL Tech Announces Fourth Quarter and Year-End Results

Annual Revenues Up by 35.2%; EBIT Up by 36.8%; Deals Worth US$ 1 BN Signed in FY08; Q4 Revenues Up 3.9% Sequentially; EBIT Up by 10.9%; HCL Steps Up Q4 Dividend 1.5 Times to 150%

SUNNYVALE, CA and NOIDA, INDIA--(Marketwire - August 1, 2008) -


Business Highlights

--  HCL Technologies on US$ 2 bn annual run rate
--  Margin expansion for the fifth consecutive quarter and second
    consecutive year in a row
--  Declining attrition for the sixth consecutive quarter
--  Crosses 50,000 employee headcount
    

Financial Highlights for the Year (US$): FY 2007-08

--  Revenues at US$ 1878.9 mn; up 35.2% YoY
--  EBIT at US$ 341.4 mn; up 36.8% YoY
--  Net Income (before foreign exchange gain/loss) at US$  351.4 mn up
    49.1% YoY
--  Dividend for Q4 stepped up 1.5 times to 150% taking total dividend
    payout for the year to 450%
--  22,937 gross addition and 8,724 net addition in head count taking
    employee strength to 50,741 as of 30th June 2008
    

Financial Highlights for the Quarter (US$)

--  Revenues at US$ 504.0 mn; up 27.4% YoY and 3.9% sequentially
--  EBIT at US$ 98.4 mn; up 44.1% YoY & 10.9% sequentially
--  Net Income (before foreign exchange gain/loss) at US$ 102.5 mn; up
    76.6% YoY and 11.2% sequentially
--  Dividend for Q4 stepped up 1.5 times to 150%, the 22nd consecutive
    quarterly dividend
--  5,317 gross addition and 939 net addition in headcount
    

HCL is uniquely positioned as a co-sourcing partner because of the experience it has created for its customers through continued momentum in demonstrating leadership in execution experience in multi-service engagements. HCL's four pronged Blue Ocean strategy covering service innovation, pricing innovation, creation of new markets and technology disruption continues to pay rich dividends with innovative partnerships and revenue sharing business models being the highlights of this year.

"HCL has been able to maintain consistency in its growth over the last three years because of the investment we made in our transformation through creation of new services and new markets, and forging global partnerships, all with an objective of delivering value to our customers. We are confident of the direction we have taken and believe that HCL's tradition of creating disruptive innovation will ensure it continues to stay ahead of the curve in the coming years," said Shiv Nadar, Chairman and Chief Strategy Officer, HCL Technologies.

Commenting on the results, Vineet Nayar, CEO, HCL Technologies stated, "HCL registered a YoY growth of 35.2% following a YoY growth of 42.4% last year. HCL registered a QoQ growth of 3.9%, following three successful growth quarters of 8.4 %, 7.4% and 5.2% QoQ respectively. HCL has expanded its operating margins for the second year in a row. HCL has grown revenue ahead of manpower growth second year in a row. HCL has demonstrated global leadership in Remote Infrastructure Management (RIM) which was ranked No. 1 ahead of all global players this year by the Black Book of Outsourcing - a first in the Indian IT industry."

Commenting on BPO results, Ranjit Narasimhan, President & CEO, BPO Services, HCL Technologies stated, "During the year 2007-08, BPO revenues grew 21% ahead of headcount growth of 18%; this is the second year in a row when we have expanded our margins. Going forward there would be a strong focus on platform led services, the result of which will be visible in the coming quarters."

Highlights for Forex gains/losses

HCL has adopted a policy of hedging its business from currency fluctuation through long terms forex covers given the fact that HCL focus is on long term annuity based contracts. In the last three years, HCL has booked under the head "Other Income," a cumulative foreign exchange gain of US$ 0.4mn (a loss of US$ 7.5mn in FY 06, a gain of US$ 79.2 mn in FY '07 and a loss of US$ 71.3 mn in FY 08). The FY 08 forex loss was based on average mark to market rate of Rs. 44.21 to a dollar as on June 30th. HCL continues to adopt a policy of hedging its business against currency fluctuation and has outstanding covers of US$ 2bn as of June 30th.

Key Catalysts for Growth

--  Our key geographies achieved significant milestones this year with US
    and European revenues crossing the US$ 1bn and US$ 0.5bn marks,
    respectively
--  Engineering and R&D Services, Infrastructure Services and Custom
    Applications witnessed accelerated growth reaffirming HCL's dominant market
    position and competitiveness in these service lines respectively
--  Among the verticals, Financial Services and Manufacturing crossed the
    US$ 0.5 bn mark. The fastest growth was recorded in Life Sciences, while
    Manufacturing and Media, Publishing & Entertainment continue to grow
    consistently
    

Year in Perspective

The HCL strategy embodying a unique kind of disruptive innovation in its business model focusing on Value Centricity and a Blue Ocean approach to business has resulted in deepening customer relationships, creation of new markets and strategic partnerships where there is collaboration, goal alignment and substantive engagement.

Value Centricity

--  The momentum in inking transformational deals that began in 2005
    continued this year with a total value of deals in excess of US$ 1 bn being
    signed including eight deals worth US$ 310 mn this quarter
--  HCL is uniquely positioned to deliver customer value with its blend of
    onsite presence and offshore economics.  We have focussed in building
    scalability in offshore through investments in Technology Hubs across
    India, while expanding our onsite presence in geographies like Poland and
    China
--  HCL acquired Capital Stream, Inc., a US-based industry leader in
    lending automation solutions.  This strategic acquisition is a part of
    HCL's well structured M&A strategy and will enhance HCL's ability to
    provide end-to-end solutions through product and multi-service delivery
    capability to commercial and retail financial institutions globally
--  HCL launched the SAP Revenue Recognition solution, pre-configured SAP
    Metals template,  Auto Template for Auto ancillaries in the SMB sector and
    solution to avoid SAP Business Information Warehouse Slowdowns that helped
    customers reduce their total cost of outsourcing (TCO)
--  The year, HCL also signed partnerships across verticals that focus on
    delivering further value to customers. Some of these include partnerships
    with Lombardi Software to deliver value to our customers in Life Sciences
    (LSH) and Financial Services (FS) space, Quest Diagnostics in LSH and Misys
    plc. and Chordiant Software in FS
    

Blue Ocean

--  HCL launched Integrated Operations and Management Centre (IOMC) that
    integrates offerings across Global Services, Infrastructure Operations and
    Application Operations. It acts as a single window to deliver, manage and
    monitor Infrastructure Support and Application Operations giving customers
    increased efficiencies and enhanced business impact
--  In continuation of co-creating value with our customers and partners
    on a risk sharing model, HCL rolled out the Global Risk Reward Partnership
    (GRRP) based on the principle of a joint ownership of a product. This year
    HCL has initiated three new engagements under this model, including the
    strategic partnership with CA, and entering into newer such engagements
    with customers
--  HCL signed the SAP Global Services partnership based on Blue Ocean
    thinking to deliver joint business value through Customer Centric
    Ecosystem. This milestone partnership drawing upon HCL's strengths in
    emerging geographies, strong domain experience, risk taking and service
    innovation capabilities has already started delivering results
    

Thought Leadership

--  HCL has been the pioneer of Remote Infrastructure Management (RIM) in
    India and HCL's leadership in RIM has been recognized by various
    independent analyst and media firms.  This year HCL's RIM was acknowledged
    by Brown & Wilson Global User Survey 2008 as World's No 1, ahead of leading
    global players
--  HCL pioneered the concept of co-sourcing in 2005, and moved it to the
    next level of an integrated service approach of Full Service Co Sourcing
    recently recognized by Ovum as having a clear and differentiated
    positioning in the applications outsourcing market.  HCL has a growing
    emphasis on larger deals under its asset-light and consulting-light 'full
    service co-sourcing' model delivered using unique service-model IPs, a
    first of its kind integrated service offshore transitioning model
--  HCL's biggest differentiator has been the adoption of the Employee
    First philosophy that was lauded by some of the world's most influential
    thought leaders as the management mantra for the next generation. Harvard
    Business Review and Business Week heralded HCL's Employee First as "the
    radical management philosophy that will catch on with the world sooner or
    later." HCL was also invited to share thoughts in some of the most
    respected global platforms such as WEF, MLab and INSEAD
--  HCL has conceptualized a unique collaborative platform called
    "Unstructure" where business and technology practitioners can contribute
    their thought to address the major issues and trends affecting the business
    of technology.  The platform is a combination of an online portal, a
    physical event and an annual compendium of thought is gaining participation
    by some of the world's most notable thought leaders and business stalwarts
    

Transformation @ HCL

--  HCL was invited to participate in the "Future of Management" MLab
    Conference, headed by Professor Gary Hamel. The event was attended by some
    of the world's most progressive and strategic business thinkers to identify
    the fundamental flaws that organizations today face, either in their
    structure or management approach, and the possible fixes that could alter
    or transform these flaws
--  HCL was invited to speak at the INSEAD Leadership Summit in France
    that brought together global leaders from business, government, media and
    academia to explore the links between business, environment and society.
    HCL presented a unique perspective on sustainable corporate growth to a
    distinguished global audience
--  HCL announced the fourth chapter of its Global Customer Meet 2008 -
    "Unstructure," where some of the most noteworthy thought leaders will
    mentor conversations on topics that explore the trends in the business of
    technology.  Slated for November 17-18, 2008, the event will be held in
    Orlando, Florida.
--  HCL held the latest in its series of Financial Services Thought
    leadership events -- InvesTECH@HCL -- in New York this quarter. The
    highlight of the forum was an exclusive panel discussion on 'Risk
    Management Strategies in a Downturn Economy' by industry experts and
    practitioners. A new operating model from HCL called Run the Enterprise to
    help the Financial Services Institutions enhance their ongoing business
    performance was also showcased during the event
    

Recognitions

--  Forrester counts HCL as the leader in SAP implementation in the
    Forrester Wave: Australia/ New Zealand SAP Implementation Providers 08
    Report.  HCL is a Leader in ANZ that leverages its offshore capabilities
    very well for its SAP clients and has won a number of its projects due to
    its capabilities implementing niche solutions
--  IDC considers HCL as a formidable opponent in Application Outsourcing
    in the Worldwide Application Outsourcing 2007 Service Provider Analysis.
    IDC believes that HCL's transformed and modernized applications will be
    prime candidates for AO, further growing its business in this area. HCL's
    willingness to work with clients using risk-reward or self-funding
    transformation contracts has made it an up-and-coming company to watch.
--  Voice & Data 100 survey ranks HCL No.1 in Network Management & Network
    Security Services and No. 2 in Network Integration Services
--  "Strategy + Business" magazine published by Booze Allen Hamilton, in
    its story on the topic of Indian companies "reverse investing" in the US,
    talks about HCL's drive to engage in more complex work with clients and
    firmly positions HCL and its differentiated business strategy
--  The CEO Forum magazine (ANZ) appreciates HCL's inspiring effective
    organizational innovation and positions Vineet Nayar as a "Change Master"
    

Core Software Services Highlights

--  Strategy of focusing on domain expertise and developing service
    offerings in select verticals continues to bring rich dividends
--  Won a multi-year multi-million SAP contract with a multinational
    electronics manufacturing services (EMS) company operating a global
    manufacturing network with operations in Asia, Europe and the Americas,
    providing a broad range of integrated services and solutions to leading
    OEMs (original equipment manufacturers)
--  Announced partnership with Gemstone to meet ultra low-latency
    requirements of financial firms
--  Launched on-demand Software Test Lab open for all ISVs and Application
    users/providers
--  Launched first of its kind "SaaS enablement framework" called Agora
    that will significantly reduce time for ISVs to deliver Saas solutions
    based on existing non-SaaS products
--  Won Stanley Cup Award for improving Siebel Performance for the
    successful go-live of Siebel upgrade and optimization project in record
    time
--  Insurance practice won LOMA Excellence in Education award for the
    fifth consecutive time
--  ASSeT and CrossFIT solutions won the Technology Innovation awards at
    the FSO Annual summit
--  Revenues for Q4 at US$  371.2 mn, up 31.5% YoY; Revenue for Fiscal '08
    at US$ 1,372.0 mn, up by 35.9%
--  EBITDA (before non cash charge) for Q4 at US$ 87.9 mn, up 42.9% YoY;
    EBITDA (before non cash charge) for Fiscal '08 at US$  306.7 mn, up by
    34.1%
--  EBIT for Q4 at US$ 74.6 mn up 45.4% YoY; EBIT for Fiscal '08 at US$
    258.8 mn, up by 33.0%
    

Infrastructure Services Highlights

--  HCL Infrastructure Services exceeds Rs. 1000 crore (US$ 283 mn)
    revenues
--  Announced partnership with VMware to offer Virtualization Lifecycle
    Services
--  Signed a turnkey Network Outsourcing engagement with Union Bank of
    India
--  Launched Tivoli Center of Excellence for IT Service Management through
    Managed Services partnership with IBM
--  Revenues for Q4 at US$ 76.2 mn, up 28.5% YoY; Revenue for Fiscal '08
    at US$ 283.3 mn, up by 44.7%
--  EBITDA (before non cash charge) for Q4 at US$ 14.3 mn, up 44.4% YoY;
    EBITDA (before non cash charge) for Fiscal '08 at US$ 49.9 mn, up by 47.1%
--  EBIT for Q4 at US$ 10.7 mn, up 59.7% YoY; EBIT for Fiscal '08 at US$
    36.0 mn, up by 57.2%
    

BPO Services Highlights

--  Acquired multi-location Financials and Accounting client and moves up
    the value-chain with a consulting opportunity in the Telecom vertical
--  Ranked as the 4th major BPO player worldwide by the Black Book of
    Outsourcing, 2008
--  Acquired ISO 20000 certification of IT Service Management System
--  Revenues for Q4 at US$ 56.5 mn, up 4.6% YoY ; Revenue for Fiscal '08
    at US$ 223.6 mn, up by 21.4%
--  EBITDA (before non cash charge) for Q4 at US$ 16.0 mn, up 15.1% YoY ;
    EBITDA (before non cash charge) for Fiscal '08 at US$ 59.4 mn, up by 31.1%
--  EBIT for Q4 at US$ 13.1 mn, up 27.2% YoY; EBIT for Fiscal '08 at US$
    46.6 mn, up by 46.1%
    

Complete Audited Financial results for the quarter and year ended June 30th, 2008 can be found at: http://www.hcltech.com/investors/Downloads/FR/Q4%20FY08.pdf

About HCL Technologies

HCL Technologies is one of India's leading global IT Services companies, providing software-led IT solutions, remote infrastructure management services and BPO. Having made a foray into the global IT landscape in 1999 after its IPO, HCL Technologies focuses on Transformational Outsourcing, working with clients in areas that impact and re-define the core of their business. The company leverages an extensive global offshore infrastructure and its global network of offices in 16 countries to deliver solutions across select verticals including Financial Services, Retail & Consumer, Life Sciences Aerospace, Automotive, Semiconductors, Telecom and MPE (Media Publishing & Entertainment). For the year ended 30th June 2008, HCL Technologies, along with its subsidiaries had revenues of US$ 1.9 billion (Rs. 7,639crore) and employed 50,741 professionals. For more information, please visit www.hcltech.com

About HCL Enterprise

HCL Enterprise is a leading Global Technology and IT enterprise that comprises two companies listed in India -- HCL Technologies & HCL Infosystems. The 3-decade-old enterprise, founded in 1976, is one of India's original IT garage start-ups. Its range of offerings span Product Engineering, Technology and Application Services, BPO, Infrastructure Services, IT Hardware, Systems Integration, and distribution of ICT products. The HCL team comprises approximately 44,000 professionals of diverse nationalities, who operate from 16 countries including 300 points of presence in India. HCL has global partnerships with several leading Fortune 1000 firms, including leading IT and Technology firms. For more information, please visit www.hcl.in

Forward-looking Statements

Certain statements in this release are forward-looking statements, which involve a number of risks, uncertainties,assumptions and other factors that could cause actual results to differ materially from those in such forward-looking statements. All statements, other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to the statements containing the words 'planned,' 'expects,' 'believes,' 'strategy,' 'opportunity,' 'anticipates,' 'hopes' or other similar words. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding impact of pending regulatory proceedings, fluctuations in earnings, our ability to manage growth, intense competition in IT services, Business Process Outsourcing and consulting services including those factors which may affect our cost advantage, wage increases in India, customer acceptances of our services, products and fee structures, our ability to attract and retain highly skilled professionals, our ability to integrate acquired assets in a cost effective and timely manner, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, the success of our brand development efforts, liability for damages on our service contracts, the success of the companies / entities in which we have made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property, other risks, uncertainties and general economic conditions affecting our industry. There can be no assurance that the forward-looking statements made herein will prove to be accurate, and issuance of such forward-looking statements should not be regarded as a representation by the Company, or any other person, that the objective and plans of the Company will be achieved. All forward-looking statements made herein are based on information presently available to the management of the Company and the Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.

Contact Information

  • For details, contact
    Kirsten Paragona
    HCL America
    Email Contact
    +1 978 356 3342

    Sandy George
    Citigate Cunningham
    Email Contact
    +1 617 374 4210