New Delhi: HCL Technologies today said it has"stepped up" efforts in the US for campus and entry-level hires to support growth in coming quarters even though a "very high percentage of employees" is already local hires.
There are concerns that the new government in the US, under Donald Trump, is likely to push for a stricter visa regime to curb "abuse" of H1-B and L1 visas used by foreign workers.
Such a move will have a significant impact on Indian IT firms, which get about 60 per cent of their revenues from the US. "We have really looked at our current base of employees and looked at which part of those could be replaced by local hiring... We are stepping up our campus and entry-level hiring in the US to support some of the growth that we will see in coming quarters," HCL Technologies President and CEO C Vijayakumar told reporters here.
He added that the company has been applying for "less than 1,000 visas a year" on an average over the past 3-4 years. "It has been coming down. Our strategy has been in all IT outsourcing deals, we re-badge a lot of people from our clients and we hire people from local geographies.
So, that's why we have a very high percentage of our employees in the US who are local hires," he added. While Vijayakumar did not disclose specific number of local hires, he said the company currently recruits over 55 per cent local employees in the US.
Local hiring may result in lower operating margins as this increases operating costs. HCL Technologies, however, did not provide guidance on the possible impact in case any adverse regulations are introduced.
It has maintained its outlook of 19.5-20.5 per cent operating margin for 2016-17. In terms of revenue, it expects growth to be between 12-14 per cent in constant dollar for the fiscal, based on 2015-16 currency rates.
About demand environment in the US, Vijayakumar said there is no reduction in spending or outsourcing that the company has seen yet. "Intuitively, you will feel that they are cautious.
But if you really see, no one has done anything different. They continue to do the same programmes, similar RFPs (request for proposals). Of course, there is a little more conversation on how much visa dependent are you, will you have an impact?" he said. Vijayakumar said while there may be pros and cons of some of the decisions taken in the US, largely there will be a "business friendly" environment.
About the impact of new technologies like automation and artificial intelligence on future hiring, Vijayakumar said the headcount may grow only 5-6 per cent. "There is going to be some optimisation due to automation... Last 4 years, our revenues have grown at about
12 per cent CAGR, but headcount has grown only 6-7 per cent, which means it's non-linear. This year, we are growing at 12-14 per cent, but headcount may grow only 5-6 per cent," he said.
He maintained that hiring will be across categories, including laterals and freshers. HCL Technologies reported broad-based growth across all revenue segments with the Americas and Europe growing by 13.6 per cent and 17.6 per cent, respectively, year-on-year.
For the quarter to December, HCL Technologies had cash and cash equivalents of Rs 2,214.5 crore. It signed nine transformational deals this quarter across service lines,
industry verticals and geographies.
"HCL Tech has a significant focus on utilities, healthcare, manufacturing and life sciences, among other verticals, that are witnessing a higher need for digital transformation and hence, higher margins," Greyhound Research V-P and Principal Analyst Anshoo Nandwaan said.
Public services grew at 24.1 per cent, retail and consumer packaged goods (CPG) at 22.7 per cent, lifesciences and healthcare at 14 per cent and financial services at 5.4 per cent on LTM y-o-y in terms of constant currency.
