SOURCE: HCL Technologies

April 15, 2008 10:44 ET

HCL Tech Announces Third Quarter Results

Revenues Up by 34% YoY, With Deals Worth US$500 MN Inked During the Quarter; Fourth Consecutive Quarter of Margin Expansion and Fifth Consecutive Quarter With Declining Attrition

SUNNYVALE, CA and NOIDA, INDIA--(Marketwire - April 15, 2008) -


Highlights for the Quarter (US$)

--  Revenues at US$484.9 mn; up 33.8% YoY and 5.2% sequentially
--  LTM (last twelve months) revenues at US$1.8 bn
--  EBIT at US$ 88.7 mn; up 28.3% YoY
--  Net Income at US$85.4 mn; up 12.0% YoY and 1.1% sequentially
--  Interim dividend of 100%, the 21st consecutive quarterly dividend
--  1,848 net additions in headcount
    

Over the past few years, HCL has set the pace for the industry by pioneering Value Centricity and Employee First -- a focus that has been a key ingredient of our continued leadership. Towards the end of 2007, the company promised to continue this transformation journey, and enhance it by way of Collaboration. The quarter under review, we once again witnesses results owing to the strong foundation laid with Collaborative Transformation as a way of doing business.

"The HCL strategy embodying a unique kind of disruptive innovation in its business model, focusing on Value Centricity and internal organization focused on Employee First, has resulted in deepening customer relationships and strategic partnerships where there is collaboration, goal alignment and substantive engagement," said Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies.

"HCL continues its leadership in winning large transformational deals with this quarter closing deals worth US$500 million. Our Blue Ocean approach to business continues to pay rich dividends, this quarter being fourth consecutive for margin expansion and fifth consecutive with declining attrition. HCL's Global Services partnership with SAP and strategic acquisition of Capital Stream are some specific steps we have taken towards enhancing value and accelerating growth for our customers," said Vineet Nayar, CEO, HCL Technologies.

"This was a quarter of consolidation for the BPO Division. We managed to sustain our profitability despite the various pressures on margins. Attrition was one of the lowest during this quarter, and there was a net head count addition of 1,374 employees during this quarter," said Ranjit Narasimhan, President & CEO, HCL Technologies-BPO Services.

Key Catalysts for Growth

--  The growth in the US geography for HCL has been consistent over the
    last two quarters, and the trend continues in this quarter as well.  This
    is in addition to geographies such as Europe that continue with steady
    performance
--  Engineering and R&D services (ERS), Infrastructure Services and Custom
    Applications witnessed accelerated growth, reaffirming HCL's dominant
    market position in these service lines
--  Over the last four quarters, HCL has witnessed growth in Life
    Sciences, Financial Services, Hi-Tech & Manufacturing and Media Publishing
    & Entertainment verticals
--  The traction from existing large customers maintains its momentum in
    this quarter as well, which is reflected in the company's average growth
    rate
    

Leading the Way with Collaborative Transformation

--  This quarter, HCL inked deals worth US$500 mn, spread across five
    deals covering the Telecom, Financial Services and Hi-Tech verticals and
    the US, Europe and Australia geographies
--  HCL became an SAP Global Services partner to deliver joint business
    value through Customer Centric Ecosystem.  This milestone partnership based
    on Blue Ocean thinking is aimed at enabling customers to access the
    business benefits of SAP's enterprise service-oriented architecture
    (enterprise SOA) and draw upon HCL's strengths in emerging geographies,
    strong domain experience, risk taking and service innovation capabilities.
--  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.
    

Transformation @ HCL

--  The strategic Capital Stream acquisition 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 announced the fourth chapter of its Global Customer Meet 2008,
    scheduled for November 17-18, 2008.  This meet, the first conclave of its
    kind on "Transformation," will engage thought leaders and practitioners
    from around the world to debate and discuss trends that impact the business
    of technology
--  HCL's series of Financial Services Thought leadership events,
    InvesTECH@HCL, was successfully conducted across 8 locations globally,
    including London, Krakow, Germany, Malaysia, Singapore, New York, Atlanta
    and Sydney.  With a theme of Transformational Technology for Financial
    Services, this forum sets the stage for industry leaders to debate on new
    technology trends in the Financial Services domain
--  HCL was a part of the World Economic Forum Annual Meeting 2008 at
    Davos. The company was among the two examples of companies with "Authentic
    Leadership."
    

Recognitions

--  HCL once again ranked as the World's Best Infrastructure Services
    provider in the  2008 Global Services 100 Survey, following the recent
    recognitions of being the world's best Infrastructure Services provider by
    Brown & Wilson Black Book of Outsourcing and National Outsourcing
    Association, Europe
--  HCL ranked No. 1 in IT Services in DQ-IDC Customer Satisfaction Audit
    2008 for the second consecutive year
--  People Management Magazine, a prominent HR publication in Europe,
    talked about HCL's people management practices with Employee First having a
    positive impact on employee attrition rates both in India and Europe
--  The Banker, one of the most influential publication in the Financial
    Services space, recognized HCL's thought leadership position in the way
    service companies look at employees globally
--  HCL recognized as the Top Partner of Singapore Region for its
    commitment and approach to work alongside SAP as a part of crucial deals in
    the region across verticals -- Government, Utilities and Retail; and
    championing and evangelizing new SAP solutions to the customer ecosystem
--  IDC recognized HCL's vision of SOA as a way of integrating and
    automating business processes. SOA-driven integration and test automation,
    an offshore connector factory, SOA road map and engineering include methods
    are used by HCL in promoting an evolution toward plug-and-play IT
    environments.
--  Forrester rated HCL as a leader with its SAP and Oracle retail
    implementations.  HCL is differentiated by a strong focus on enabling
    supply chain visibility solutions and helping customers pull together their
    Oracle product suite to get the maximum return on investment (ROI).
    

Core Software Services Highlights

--  HCL's Blue Ocean approach and strategy of focusing on domain expertise
    and service offerings has reaped rich dividends leading to growth in
    key verticals and horizontals, in addition to the multi-million dollar
    engagements:
    - Entered into strategic partnership with Chordiant Software, leading
      provider of Customer Experience (Cx™) software and services to
      provide world class "Customer Experience" solutions to the global
      financial services industry
    - Announced an SAP Retail engagement with a leading Grocery &
      Supermarket Retail chain in the Asia Pacific region
    - Achieved path breaking Greenfield SAP ECC 6.0 Implementation win in
      Hi-Tech space for Zep Inc., a leading provider of specialty
      chemicals, in the US
    - Inked deal with leading airline company based in Asia for Microsoft
      CRM and an SAP based implementation of their financial systems
    - AMR recognized HCLs Enterprise Application Management Services for
      flexible capabilities across infrastructure, legacy, and packaged
      applications
    - Won Independent Testing Service project dedicated to promoting
      workplace health and safety for the workers and employers
    - Won a legacy conversion deal with a top worldwide manufacturer of
      medical imaging equipment
    - Won design & development of ultrasound imaging system for one of
      the world's leading manufacturers of advanced imaging systems
--  Revenues for Q3 at US$356.8 mn; up 36.0% YoY
--  EBIT at US$67.9 mn; up 27.4% YoY

Infrastructure Services Highlights

--  HCL inked a Global System Integration Partnership with VMware to offer
    best-of-world Virtualization Solutions
--  HCL became the first Company in India and 9th Worldwide to achieve
    Cisco Master Security Specialization for its Infrastructure Services
--  Revenues for Q3 at $71.7 mn;  up 42.7% YoY
--  EBIT at $9.2 mn; up 51.8% YoY
    

BPO Services Highlights

--  HCL added one client in Financials & Accounting, one in Supply Chain
    Management and two in Technical Support Services space
--  Revenues for Q3 at $56.5 mn; up 13.6% YoY
--  EBIT at $11.6 mn; up 18.8% YoY
    

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 18 countries to deliver solutions across select verticals including Financial Services, Retail & Consumer, Life Sciences & Healthcare, Hi-Tech, Telecom and Media & Entertainment (M&E). For the quarter ended 31st March 2008, HCL Technologies, along with its subsidiaries had last twelve months (LTM) revenue of US $ 1.8 billion (Rs. 7083 crores) and employed 49,802 professionals. For more information, please visit www.hcltech.com

About HCL Enterprise

HCL Enterprise is a $ 4.7 billion (Rs. 19,215 crore) 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 spans Product Engineering, Custom & Package Applications, BPO, IT Infrastructure Services, IT Hardware, Systems Integration, and distribution of ICT products. The HCL team comprises over 53,000 professionals of diverse nationalities, who operate from 18 countries including 360 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.

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