Enterprise revenues bounce back for HCL

Mirroring the recovery in the enterprise software market, HCL was able to get a higher share of its income from ‘custom application services’ — creating software tailored to individual companies — compared to before. Against 29.9% contributed by this segment a year ago, it accounted for 32% during the March quarter.

Custom application development is the first segment to see a shrinkage when companies go into a ‘cash conserving’ mode and postpone new deployments and IT projects. It had seen a fall during the recessionary quarters, both for HCL and other big IT firms in India.

Another core segment related to the revival of enterprise spending — Enterprise Application Services — too slightly was up, from 21.3% to 21.4% in one quarter.

EAP refers to the deployment and customization of ‘commodity’ enterprise applications, unlike the tailormade applications in the Custom Application service.

Similarly mirroring the growth was infrastructure services — managing corporate IT infrastructure, connectivity etc.. It was up from 22.2% of total revenues a year ago to 23.4% this quarter. HCL Tech has emerged as one of the strongest Indian players on the infrastructure management, if not the strongest one.

BPO continued to see relative revenue shrinkage, falling from 7.6% to 5.4% in a year, in line with the company’s decision to exit low margin businesses.

There were no big trends in terms of which industries HCL derived its revenues from. Financial services (banks, funds etc.) continued to be the top contributor with a 26.2% share, like it is for other big players. (see chart)