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HCL hardly noticed COVID – revenue and profit rose and further growth predicted

Helped by product business growing well and staff not being keen on new jobs right now

Indian services outfit HCL says the worst of the COVID-19-induced economic downturn is behind it. And we should all wish that our worst is as bad as HCL’s because the company just posted strong results for Q1 2021.

Revenue reached 2.35bn, just $8m lower than the same period in 2019 but up one percent in common currency. Gross profit soared from $833m to $939m year on year. Net income was up 31.7 percent year on year. Execs said customers signed for new deals and remain interested in talking about future work. The quantum of orders for the quarter ending June 30 was higher than for the March quarter and featured 11 big deals ranging from $30m to $100m.

Execs were especially pleased with growth in the company’s products business, which surged by 77 percent year on year and saw especially high interest in its e-commerce offerings.

Customers also clamored for help building hybrid clouds, consolidating their vendors then migrating the results into clouds, and securing systems.

Hiring was made hard by the difficulty of getting people onto campuses for training, but staff attrition fell so the need for new hands fell. 1,000 new staff still started in the quarter, about half of HCL’s usual quarterly headcount climb.

President and CEO C Vijaykumar was chuffed with the quarter’s performance.

“We have been able to re-engineer our organisation to work in a normal way,” he said, before predicting revenue growth of between 1.5 percent and 2.5 percent for the remainder of the calendar year, and operating margin of between 19.5 percent and 20.5 percent.

HCL’s view of the world isn’t vastly different to those of fellow Indian giant TCS, Infosys and Wipro, as all reported modest growth for the quarter ended June 30th and then talked up strong pipelines.

If they’re right it’s good news for all of us because it indicates strong economic activity despite the ongoing pandemic.

But HCL execs did offer the caveat that their optimism is dependent on no second COVID-19 wave further disrupting economic activity. Yet such waves appear already to be cresting in some nations. ®

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