The Hindu Business Line : $2-b deals waiting to be decided: HCL Tech

HCL Technologies’ CEO, Mr Vineet Nayar, has said he sees deals worth about $2 billion, on which decisions would be made by clients in the next 90 days.

Revealing this in a conference call with analysts after announcing results for the quarter ended September 2008, Mr Nayar said, “I haven’t seen something like this in the last 3 years.”

He cited outsourcing advisory companies as saying that deal flows would slow down. “Despite this, I feel that Indian service providers would see a larger deal flow should decisions go in their favour,” referring to the same deals.

Of these deals waiting to be decided on, 45 per cent are from the manufacturing sector, 25 per cent from the media and entertainment segment while financial services brought in the rest, according to him.

He also clarified that 55 per cent of deals that HCL Technologies pitches for is populated by non-Indian MNCs as competition. “That is, no other Indian provider figures in these deals we pitch for. Also, for 34 per cent of these deals, or five deals, in this context, we have to compete with only one large player.”

Asked if HCL Tech has seen significant reductions in business with customers, Mr Nayar said, “Clients have frozen (action, on the overall front). There has been no considered response to what has been happening (in the macro economic environment). They are not sure what the impact of these events (such as Lehman Brothers filing for bankruptcy, Wachovia being bought over and importantly, the global liquidity crunch) would be on their business.”

He added that he would have to wait for the end of this calendar before he could respond to questions on what HCL’s customers are saying. He also said that there had been no significant change in customers making decisions on the IT front in the last month. “In sum, if you look at the data points, things are not as bad as newspapers make them out to be,” he said.

Responding to a query on the company’s top 5, top 10 and top 20 clients showing reduction in revenues quarter on quarter, Mr Nayar said, “There has been a significant reduction in business given to us by one customer. Also, due to cross-currency fluctuations that impact our non-US growth, there has been (a slump) in dollar terms.”

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