HCL Tech Announces First Quarter Results: Financial News

Q1 Revenues (US$) up 17.6% YoY and 0.1% Sequentially; (INR) up 38.6% YoY and 9.2% Sequentially

SUNNYVALE, CA and NOIDA, INDIA--(MARKET WIRE)--Oct 15, 2008 --
Business Highlights

 
--  Deals worth more than US$ 270 mn inked during the quarter
--  150% Dividend for Q1 announced
--  Gross employee addition on track at 5,597 and net addition for the
    quarter at 1,973
--  Seventh consecutive quarter with declining attrition
--  29 new clients added during this quarter

Financial Highlights for the Quarter (US$)

 
--  Revenues at US$ 504.7 mn; up 17.6% YoY and 0.1% sequentially
--  Revenue on constant currency basis, up 19.2% YoY and 2.4% sequentially
--  Net Income at US$ 75.9 mn; down 2.0% YoY and up 131.5% sequentially
--  Interim dividend of 150%, the 23rd consecutive quarterly dividend
    payout
--  Gross additions at 5,597 (Net 1,973) taking headcount to 52,714

HCL's Blue Ocean strategy continues to gain momentum with its focus on new markets, solutions and offerings that bring enhanced value for customers. Differentiated business and pricing models that HCL pioneered a few years ago are today adding more value and transforming the customers' business. This is especially relevant in today's environment where we have created a firm basis for growth and enhanced our readiness to help our customers become more cost efficient and competitive.

"HCL's ability to anticipate change and adapt to the changing market dynamics ahead of time has stood us in good stead. The strong foundation we laid in focusing on creating customer value through innovative pricing models and integrated service offerings have enhanced our readiness to execute in the long term," said Shiv Nadar, Chairman and Chief Strategy Officer, HCL Technologies.

Commenting on the results, Vineet Nayar, CEO, HCL Technologies, said, "The inking of deals worth US$ 270 mn providing integrated services to customers demonstrates our ability to keep growth steady in a challenging environment. HCL will focus on 'right spending' and aim to be globally significant, through organic and inorganic growth in the 8 specific areas we have identified."

"This quarter, HCL BPO successfully completed the acquisition of Liberata Financial Services and Control Point Solutions. These two acquisitions reinforce our strategy to move away from linear monotonic growth and delink the growth in revenue from the growth in headcount, and strengthen our platform-based service offerings," said Ranjit Narasimhan, President and CEO, BPO Services, HCL Technologies Ltd.

Key Catalysts for Growth

 
--  HCL continues to post growth in key geographies this quarter
--  Amongst Service Lines, Engineering and R&D services, Infrastructure
    services, Custom Applications witnessed accelerated growth
--  HCL has witnessed growth in key verticals including Life Sciences,
    Manufacturing, Telecom and Media Publishing & Entertainment during the
    quarter

Multi-serivce; Multi-year; Multi-million dollar deals

 
--  This quarter, HCL inks eight deals worth more than US$ 270 mn providing
    integrated services to customers helping them bring in cost
    efficiencies in the immediate term and competitive advantage in the
    long run. These deals are spread across Telecom, Financial Services,
    Media & Entertainment verticals
--  HCL signs UAE's first multi-million dollar, multi-year engagement to
    be delivered remotely. The scope of the project includes integrated
    IT Operations Management and end-to-end IT infrastructure management
    for UAE's fastest growing bank
--  HCL announces opening of its U.S. Delivery Center in North Carolina
    as part of its global delivery strategy to offer customers support
    from various locations around the world.  HCL currently operates
    delivery centers in India, China, Poland, Singapore, Sydney and
    N. Ireland

Transformation @ HCL

 
--  The fourth chapter of HCL Global Customer Meet - "Unstructure" to be
    held in November '08 renews customer commitment towards HCL with more than
    500 business leaders from around the world expected to participate in a
    free flowing debate on topics that will result in insights and ideas for
    action to help businesses become more competent and sustainable in a
    challenging environment. A stellar speaker list including Nobel prize
    winner Al Gore; Prof. Gary Hamel; Anne Mulcahy -- CEO and Chairman, Xerox;
    Dennis McGuire -- Co-Founder and CEO, TPI; Hanif Lalani, Group CFO, BT;
    Greg Tomb, President and CEO, North America, SAP; Ronald Buschur, CEO
    Powerwave, to name a few, will be leading the discussions
--  HCL presents its unique perspective on "Thinking Globally" at the
    Fortune Brainstorm Tech 2008 event at Half Moon Bay, California. The event
    is a convergence of Thought Leaders around the world to discuss the impact
    of technology on 'what is happening in the world'
--  HCL concludes Directions '09 for the year, a unique platform for the
    management to engage with employees to share the strategy for enhancing its
    readiness to meet the challenging environment and setting directions for
    the coming year. The event, started in 2005, was the first step to
    translate HCL's Employee First commitment on the ground empowering its
    employees to participate actively in HCL's transformation journey

Recognitions

 
--  IDC mentions HCL is moving away from manpower-based pricing to output-
    based pricing, from India-focused delivery centers to globally distributed
    delivery centers
--  Ovum believes HCL has a solid strategy and proposition in applications
    outsourcing for European customers. It has a growing emphasis on larger
    deals under its asset-light and consulting-light 'full service co-sourcing'
    model
--  HCL features in Workforce case study by the Harvard Business School
    and Kauffman Foundation on identifying best workforce management practices
    in the world, especially from emerging nations. The study presents an
    overview of the organizations' best practices in recruiting, training,
    managerial development, and employee retention
--  Information Week recognizes HCL's Employee First and highlighting the
    school of thought that believes 'if you treat your people right, they'll be
    far more motivated and equipped to engage with (and maximize returns from)
    your customers'
--  HCL voted as the Most Innovative Company in the world for its
    workforce practices and wins the Optimas Award instituted by Workforce
    Management
--  HCL wins multiple awards including Organization with Innovative HR
    Practices recognition at the Asia Pacific HR Congress - Global HR
    Excellence Awards

IT Services Highlights

 
--  HCL Enterprise Application Services wins multi-million dollar deals
    across industry verticals including Life Sciences, Retail, Financial
    Services
--  HCL signs three 360 degree partnerships with global product companies
    and new wins especially covering Asia. HCL's traction of new business from
    existing customers in Financial Services covers two significant wins this
    quarter
--  HCL migrates for a leading global Telecom Service Provider, critical
    business applications that are directly tied with customer's revenue. HCL
    is the integrator of this complex multi-vendor deal, leading business
    continuity for the customer
--  HCL selected for a large application development project at one of the
    world's largest Quick Service Restaurant brands. The application will be
    used to configure and send pricing, promotional information to the Point of
    Sale systems from the central hub
--  HCL customer Veolia Environmental Services (Australia) wins the SAP
    ANZ Excellence Award for best eSOA implementation in Australia and New
    Zealand
--  HCL awarded the 2007 Outstanding Operational Award for Information
    Technology by Merck & Co. Inc. The Award is based on the criteria of
    scorecard performance, contributions towards the Key Business Result (KBR)
    for Merck, ability to align IT Services with Merck's business goals and
    operational excellence
--  HCL unveils Green Datacenter Services at Computerworld Green IT
    Symposium that will help enterprise IT organizations reduce their
    companies' environmental impact through assessing, planning, and
    implementing green initiatives around their DC environment
--  HCL awarded Global Managed Services Channel Partner that recognizes
    HCL's mature delivery model and market success in providing Managed IT
    infra services to India and Global Clients. HCL is one of the three
    organizations worldwide and presently the only organization outside US to
    be successfully audited to be a 'Cisco Powered Datacenter Services Partner'
--  Revenues for Q1 at US$ 447.5 mn; up 19.7% YoY
--  EBIT at US$ 86.0 mn; up 36.1% YoY

BPO Services Highlights

 
--  HCL completes the acquisition of Liberata Financial Services and
    Control Point Solutions as part of its strategy of investing in re-
    structuring its BPO service offering. The restructured portfolio would have
    higher emphasis on platform based services. This would have adverse impact
    on margins in the short term starting this quarter
--  HCL ranked 3rd in the DQ IDC BPO E-SAT survey 2008 rating HCL BPO 5th
    in the Satisfaction Quotient, and 3rd on relevant appraisal parameters
--  HCL wins the India Times BPO Industry Technology Award 2008. This
    award acknowledges the significant contribution of HCL BPO's internal
    Information Technology (IT) function, and is an endorsement of the
    innovative use of technology in providing business value
--  Revenues for Q1 at US$ 57.2 mn; up 3.7% YoY
--  EBIT at US$ 7.7 mn; down 29.1% YoY

Complete Financial results for the quarter can be found at: http://www.hcltech.com/investors/Downloads/FR/Q1%20FY09.pdf

About HCL Technologies

HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefine the core of their businesses. Since its inception into the global landscape after its IPO in 1999, HCL focuses on 'transformational outsourcing,' underlined by innovation and value creation, and offers integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO. HCL leverages its extensive global offshore infrastructure and network of offices in 19 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Aerospace & Defense, Telecom, Retail & CPG, Life Sciences & Healthcare, Media & Entertainment, Travel, Transportation & Logistics, Automotive, Government and Energies & Utilities. HCL takes pride in its philosophy of 'Employee First' which empowers our 52,714 transformers to create a real value for the customers. HCL Technologies, along with its subsidiaries, had consolidated revenues of US$ 2.0 billion (Rs. 8300 crores), as on 30th September 2008. For more information, please visit www.hcl.in

About HCL Enterprise

HCL is a $5 billion leading Global Technology and IT Enterprise that comprises two companies listed in India -- HCL Technologies & HCL Infosystems. The 3-decade-old Enterprise, founded in 1976, is one of India's original IT garage start-ups. Its range of offerings spans Product Engineering, Custom & Package Applications, BPO, IT Infrastructure Services, IT Hardware, Systems Integration, and distribution of ICT products. The HCL team comprises over 56,000 professionals of diverse nationalities, who operate from 19 countries including 360 points of presence in India. HCL has global partnerships with several leading Fortune 1000 firms, including leading IT and Technology firms. For more information, please visit www.hcl.in

Forward-looking Statements

Certain statements in this release are forward-looking statements, which involve a number of risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those in such forward-looking statements. All statements, other than statements of historical fact are statements that could be deemed forward looking statements, including but not limited to the statements containing the words 'planned', 'expects', 'believes', 'strategy', 'opportunity', 'anticipates', 'hopes' or other similar words. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding impact of pending regulatory proceedings, fluctuations in earnings, our ability to manage growth, intense competition in IT services, Business Process Outsourcing and consulting services including those factors which may affect our cost advantage, wage increases in India, customer acceptances of our services, products and fee structures, our ability to attract and retain highly skilled professionals, our ability to integrate acquired assets in a cost effective and timely manner, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, the success of our brand development efforts, liability for damages on our service contracts, the success of the companies / entities in which we have made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property, other risks, uncertainties and general economic conditions affecting our industry. There can be no assurance that the forward looking statements made herein will prove to be accurate, and issuance of such forward looking statements should not be regarded as a representation by the Company, or any other person, that the objective and plans of the Company will be achieved. All forward looking statements made herein are based on information presently available to the management of the Company and the Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.