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.
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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.
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