Birlasoft eyes new deal wins during fiscal

Abhishek Law Kolkata | Updated on August 04, 2021

Dharmender Kapoor, MD and CEO, Birlasoft

US and Europe together account for over 90 per cent of company’s revenues

As primary markets like the US and Europe open up post Covid-induced lockdowns and “larger mid-sized deals” gain traction, Birlasoft – the IT arm of CK Birla Group – is eyeing an increase in new deal wins during the fiscal.

While deal wins in the first quarter (Q1FY22) at $153 million were lower than the prior three months ($325 million), net new business was $94 million in the June quarter, versus $89 million in the year-ago-period.

Birlasoft witnesses jump in new mid-sized deals

According to Dharmender Kapoor, MD and CEO, Birlasoft, net new wins were at 19 per cent (of total deals) in Q1FY22, against 2 per cent in the year-ago-period.

Looking at new verticals

“In the previous fiscal, most of the growth came from cross-selling as people were not meeting sales teams. Moreover, big markets were not awarding new contracts either. The net new business was lower QoQ because sales activity didn’t happen due to no travel or meetings with clients,” he told BusinessLine.

“We took the count of ‘$10 million and above’ clients from eight a year ago to 10 in April-June and added five more $5 million+ clients (from 17 last year). Demand is high but there are capacity and supply-side constraints. Smaller, quicker deals are more of a trend now,” Kapoor added.

Birlasoft eyes consistent growth

According to him, net new wins are expected to average out in the 5-8 per cent range with upselling happening to existing clients. The projections will be “in line” with the post pandemic normalisation trends.

The US and Europe together account for over 90 per cent of the company’s revenues. Despite offsite revenues improving, onsite revenues still account for nearly 51 per cent of the revenues.

Verticals like BFSI and Life Sciences continue to have a flattish growth due to change in business strategies or due to the second wave of the pandemic that saw slower execution of projects. “We’re working on our Europe strategy so that the segment can grow there. Some new verticals are being looked at too,” he said.

Business outlook

Kapoor said initial trends suggest that attrition — at 16.5 per cent — will continue to be high, thereby leading to increase in average salaries from the second half of the fiscal, while employee retention costs will have “some impact on margins at least till Q2FY22 (September-end)”. Margins are expected to improve post-September.

The company is also increasing hiring. Nearly 500 lateral hires took place in Q1FY22 while 140 offers were made at the fresher levels. In coming quarters, another “couple of 100s” lateral hires are expected while 300 offer letters are expected in Q2.

“Large deal wins will be enough to overcome pressures by under-delivering segments or wage hikes. But we stick to our guidance of 15-16 per cent EBITDA margins and double-digit revenue growth. We are on course towards our $1-billion journey,” he said.

EBITDA margins stood at 16 per cent for the quarter ending June 30, 2021.

Published on August 04, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like