Showing posts with label Hexaware Technologies. Show all posts
Showing posts with label Hexaware Technologies. Show all posts

Wednesday 12 September 2012

Hexaware sees strong order pipeline; 20% growth: Nishar

Atul Nishar, chairman, Hexaware, says that we remain quite positive on growing at 20% or more. We feel that if the situation improves with US elections and no debacle in Europe then the environment could only improve.


Atul Nishar, Chairman, Hexaware
Atul Nishar, chairman, Hexaware , says that we remain quite positive on growing at 20% or more. We feel that if the situation improves with US elections and no debacle in Europe then the environment could only improve.

He also says that currently there are five deals in the pipeline and one is in the advance stage. The deals are spread across from the United States and Europe, and across major verticals like capital markets, travel and emerging verticals. And in the last nine quarters the company has signed seven large deals.


Below is the edited transcript of his interview to CNBC-TV18.


Q: Hexaware recently had a deal and there have been reports or analyst notes which suggest that the company is in conversation with potential clients for four deals and one is in advance stages. Do you think something could fructify in the near-term?


A: Currently, there are five deals in the pipeline and one is in the advance stage. The deals are spread across from the United States and Europe, and across major verticals like capital markets, travel and emerging verticals. And in the last nine quarters we have signed seven large deals.


Q: Are billings under pressure even if the deals are coming? Are they coming from tight fisted managements?


A: In over last two years, we have marginally improved our average billing on both on onsite and offshore. We don’t see any pressure on pricing on the IT industry. Repeatedly, we have guided that our pricing should be assumed to be stable.


The important point is that the client want value, greater performance, result oriented projects and fixed priced or greater commitment by off shoring companies.  Clients do want to cut their costs and get more value, but they also know if it is all done at the cost of the service provider, it will not sustain that particular situation.


Q: How much do you think is Nasscom’s 13-14% growth target under threat? What might it fall to half or high single digits?


A: Nasscom has guided for 11-14% and it is a wide enough range. In the industry we saw that some companies like mid-sized companies and companies who are scale players have also done very well. It is a mixed reason. We have seen more client specific issues coincidence for downsizing for whatever reason that may dent revenue that doesn’t mean they will not be able to grow in future.  


Q: Do you think Nasscom will hold the lower end of their 11% range?


A: That is the current optimism. So, there is no reason to believe that there is material change from the guided number.


Q: The one concern around Hexaware has been for some time that you have seen an improvement in margins, but going forward it would come under pressure because in Q3 wage hikes are expected to shave off margins to a certain extent. How do you respond to that?


A: In Q2, ours being calendar year, Hexaware reported 22.9% EBITDA which was higher than Q1. We gave normal 10% increment to all our off shore employees. The impact was absorbed in our margin and in spite of that the margin improved.


We also absorbed the significant visa costs that traditionally come in that quarter. In the coming quarter there will be onsite increase in wages. For off shore workers the date of increment is April 1 and for onsite employees the date is July 1, which remains unchanged. And we feel with this we can guide stable margins.


We are proud that at Hexaware, we have grown at higher than the industry average at good margins. We don’t believe in taking new deals by compromising on margins in any manner.


Q: So at this juncture you don't want to change your guidance of 20% dollar revenue growth any which way, up or down?


A: We remain quite positive on growing at 20% or more. We feel that if the situation improves with US elections and no debacle in Europe then the environment could only improve. 


 

 

 

Friday 10 August 2012

Short-term contracts give mid-cap IT cos new lease of life

With the duration of outsourcing deals getting shorter, deals worth nearly USD 85 billion are up for renegotiations this year, reports CNBC-TV18’s Shreya Roy.

Shreya Roy, Reporter, CNBC TV18

Midcap IT players may get a new lease of life. With the duration of outsourcing deals getting shorter, deals worth nearly USD 85 billion are up for renegotiations this year, reports CNBC-TV18’s Shreya Roy.

Over the last few years, uncertain times have forced IT companies to go in for more short-term contracts. For mid-cap IT companies, this may have been a blessing in disguise.

Data from outsourcing advisory firm TPI says that around 700 contracts will be up for renegotiations this fiscal year, compared to 530 last year.

“There is a significant reduction in the tenure of contracts as they were originally signed. Compared to 10 years ago, when 500 of these were being done, there are 1000 a year. The tenure has gone down to five years instead of seven, so a lot of deals are naturally coming back to the market as renewals. In itself, this is a very large opportunity,” said Siddharth Pai, partner and MD at TPI India.

For many IT players, this may be just what the doctor ordered. After all, renewals account for almost 65% of the outsourcing market. Advisory firm Everest estimates that by October 2013, deals worth nearly USD 85 billion will be up for renewal.

These include a contract between HP and Bank of America, a mega deal from Shell group which is currently with AT&T, HP, and T-Systems, a blue cross blue shield deal with Dell and Manu Life's deal with IBM.

Many of these contracts are expected to be broken up into smaller chunks, as outsourcers are looking increasingly towards multi-sourcing. Analysts say this could work in the favour of the smaller players, especially those like Mindtree and Hexaware, which have been focusing on developing niche capabilities to help differentiate from larger players.