HCL Tech has had a quarterly performance in line with analyst expectations but better than peers TCS and Infosys. C Vijayakumar, President and CEO, who took charge in October last year, spoke to BusinessLine on a range of issues from how the company is addressing challenges posed as a result of stricter curbs on H1-B visas, to the opportunities opening up despite a trend of rising protectionism in developed markets. Excerpts:

How does HCL Tech plan to counter the recent stance of the Donald Trump administration regarding H1-B visas?

Our dependence on visas is very small. Historically, we have been building capabilities spread across six development centres in developed markets. At present more than 55 per cent of our workforce in the US is made up of locals.

The industry maintains that there is not enough skilled software engineers in the US…

The way I look at it there is sufficient number of available talent as a lot of companies have given the pink slip to many employees. The question is are they equipped with the right skill sets. Currently there is a gap.

Is this gap widening because people are unable to keep pace with technology?

Change is all around us. Earlier, the industry used to manage the world’s back office. Now, the back office is moving to cloud, and this trend has gathered steam – something being considered by every corporation.

In this environment, the classical model of IT services outsourcing will not work and hence it is going through a sea of change. Now, core engineering of IT is a differentiator. Ironically, the areas that we were not present in significantly (like software testing) – which was our weak spot in the days when our peers were growing at a faster pace – turned to our advantage as now we are better wired from engineering R&D standpoint.

Are clients holding on to spends because of political uncertainties?

The deal pipeline continues to be healthy. In fact only 47 per cent of the Forbes 2000 companies have outsourced till date. Add to that we estimate the rebid market to be $140 billion, half of which is expected to see a change in vendor.

As everybody in the industry starts embracing digital, what will be the differentiator?

Customers want someone to challenge the status quo and not tide it over approach. For this, there needs to be an IP-led approach.

We have expanded our IP partnership with IBM, wherein we are defining the future roadmaps of products that can go in mainframe management, security and the way data can influence a company’s business model.

Our investments to come up with stuff like this is $155 million. HCL has licensed IBM technology and will build additional features and functionalities based on business realities and client priorities.

I think the industry has been stuck on the cost arbitrage mindset for far too long. Companies that are hard wired in this approach cannot succeed.

What resulted in the rise in margins since the last couple of quarters?

Our Autonomics technology framework is now getting extensively deployed in our infrastructure engagements. Since the last two quarters the framework has been extended to BPO and application services.

Adding to that, growth was good in different areas like infrastructure management, engineering R&D and even BPO.

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