In the rupee terms, as well, HCLTech fared better than TCS. While the latter’s revenue dropped sequentially by 0.5% to Rs63,973 crore, HCLTech’s top line rose by 3.6% to Rs29,890 crore. Net profit shot up by 8.4% to Rs4,591 crore compared with the 4% growth for TCS at Rs12,380 crore.
Like TCS, HCLTech showed an uptick in employee attrition amid the rising clout of global capability centres (GCCs) set up by multinational clients in India. For HCLTech, attrition inched up to 13% from 12.3% in the previous quarter. The headcount improved sequentially by 2,134 to 2,20,755 after falling in the previous two quarters. On the year-on-year basis, however, it fell for the third consecutive quarter, this time by 4,001. Given the expectation of a gradual recovery in discretionary demand in the coming quarters, a rising attrition rate may result in elevated employee retention costs thereby affecting profitability.
HCLTech’s operating margin (EBIT margin) rose by 90 basis points sequentially to 19.5% for the December quarter, marking the second consecutive quarter of expansion. For TCS, margin expanded by 40 basis points to 24.5%.
The total contract value (TCV) of large deals remained above $2,000 million for the second straight quarter and though it fell to $2,095 million from $2,218 million in the previous quarter owing to seasonal weakness in the third quarter due to furloughs and holidays, it was above $1,927 recorded in the year-ago quarter.
The company reported its highest ever cash balance of Rs27,707 crore fuelled by higher cash conversion compared with net profit and expanding return on capital employed. This would come in handy if the company selects an inorganic route to add capabilities in new technologies to stay ahead of competition.
