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| Edited By: Beryl Menezes |Source: DNA |Updated: Mar 19, 2018, 03:11 AM IST
Atul Nishar, Hexaware’s chairman, told Beryl Menezes about better expectations from Q3, above-average wage hikes to offshore employees and strategy to prepare for the US Immigration Bill outcome. Excerpts from the interview:
Your profit improved in the last quarter, what was the reason?
This was on the back of gross margin improvement of 1.7%, or 170 basis points, due to a 100 bps impact of rupee depreciation and the rest from volume growth. Secondly, our sales and general administration expenses went down by 270 bps. This aided in a rupee revenue growth of 5.7% quarter on quarter. The operating profit increased 23.7% qoq to Rs 97.7 crore. This was despite a Rs 4 crore forex loss in the quarter.
You were expecting more growth from US and APAC in Q2...
Our top 10 clients contributed 53% to revenues, as compared with 51% in the last quarter, aided by growth of 35.5% in banking and captial markets – our best performing and largest vertical. In June quarter, growth from Americas was 67.1%, from Europe 26.3% and APAC 6.6% -- showing flat growth in Europe and a 0.3% decline in APAC on late project closing.
In Q3, we expect similar growth for the US and Europe. This is the main reason behind our prediction of between $98.1 million and $100 million in the September quarter, a 3.5-5.5% sequential growth. We are maintaining a 10% growth guidance for this fiscal. In Q3, we expect Ebitda to be stable, except for about 1% impact of currency.
How is your deal pipeline looking?
We are currently pursuing four large deals (over $25 million) -- two in North America and two in Europe. We expect to close one deal each in US and Europe in the next two quarters. We also have two $10 million deals in the pipeline. Pricing is expected to be stable. We are hoping to announce an acquisition in early 2014.
What about wage hikes?
We are giving above-industry average hikes of around 10% for offshore employees, to be spread over the June quarter. The staggered hikes are to ensure they match company revenue increase. We have not yet decided on onsite wage hikes. But the offshore hikes will have a 100 bps impact on Q3 earnings.
Please throw some light on hiring, attrition and utilisation in the quarter?
We had a net addition of 30 people in the quarter, taking our total employee strength to 8,700. Utilisation rose marginally to 70.9%, as compared with 70.6% in the March quarter. Attrition stood at 11%, a slight increase from the 9.9% last quarter, on account of seasonality.
What about your preparations for the US Immigration Bill?
While it is yet early to comment on the impact, we want to be prepared for all eventualities. Thus, we have a three-pronged approach. First, we intend to apply for more green cards, secondly increase our number of employees from Mexico who do not need the HI L1 visas. Thirdly, we are steadily increasing our local onsite centres and local hiring -- with more fresher hiring and reducing the H1 L1 dependent employees. Today, 31% of our employees abroad are non- H1 L1.
