According to C Vijayakumar, CEO, HCL Technologies, India’s startup story “remains intact” and its tech innovation fundamentals remain vibrant and relevant despite volatility in valuations in the startup space. The comments by a top executive of Indian IT major HCL Technologies comes at a time when investment and venture capital deal volumes in the startup space are beginning to dwindle, as investors are wary of doing big checks amid uncertain market conditions.
Asked about startup valuations approaching their peak, and whether this space is heading for a potential reset, HCL Tech’s Vijayakumar in an interview with PTI said: “I am confident that India’s startup The story, the technological innovation, the product, it’s all coming out. India’s, very much intact”.
“Obviously there has been a dip in valuations… but barring that, the bigger picture is very vibrant and relevant to a lot of new things happening in the market. So, I am very positive on that,” Vijayakumar said. ,
After a dream run and head valuations over the years, the wave of venture capital chasing the Indian startup ecosystem (the third largest startup ecosystem in the world) seems to be waning. Panicked by concerns over profitability, cash burn and corporate governance issues, investors are defending themselves, while a recovery in the stock market has taken away the sheen of newly-listed startups.
According to industry body Nasscom, funding to startups fell 17 per cent sequentially to USD 6 billion (about Rs 47,800 crore) in the April-June period. According to a report by market intelligence platform Tracxn, total funding raised by Indian startups fell 33 per cent sequentially to USD 6.9 billion in the June quarter.
Tracxn reports that funding has come out of previous highs, a major consensus among market players of a “winter of funding” or a decline in investor confidence and sentiment towards funding startups. Indicating “. ,
When asked whether HCL Tech would consider startup space for acquisition given that valuations have become attractive, Vijayakumar said, “It all depends… based acquisitions. If we find something interesting, we can look at it.” HCL Technologies recently reported 2.4 per cent year-on-year growth in its consolidated net profit at Rs 3,283 crore for the three months ended June 2022. The Noida-headquartered firm’s revenue stood at Rs 23,464 crore, which is nearly 17 per cent higher than the year-ago period.
The company maintained its FY23 revenue outlook in the band of 12-14 per cent, citing “strong momentum in the market” and said it is positive about the growth trajectory. The company expects a guided EBIT (earnings before interest and taxes) of 18-20 per cent to be at the lower end of the margin band.
Vijayakumar stressed that the company is “on a good uptrend”, and will use multiple levers to mitigate challenges around margins. Asked whether the Russo-Ukraine war had any impact on operations, Vijayakumar said the company has no presence at these locations for sale or delivery.
“We have a presence in some nearby countries like Romania, Poland… so there is no problem in those countries, things are going well. We had no direct contact with Russia or Ukraine,” he said.
The company has not seen any material change in the overall pipeline or demand as far as Europe is concerned, and “remains quite strong”. To a question about the timeline by when the company plans to bring its employees back to the office, Vijayakumar said HCL Tech follows a ‘virtual-first hybrid operating model’.
“So wherever the work can be done virtually, we ask people to continue to do it virtually. We are putting together an engagement model where we expect them to be in one of our locations, Maybe a few days a month, or in some cases, a few weeks,” he said.
That model is still evolving. He said, “Maybe about 20 percent of our employee base is working from our locations, and that number varies from location to location. We think it will only increase marginally, not dramatically. will grow,” he said, but did not disclose a target ratio or timeline to achieve. Same.