HCL Tech CEO says there are challenges in tech, telecom verticals but things will recover

Further, Vijayakumar said HCL Tech is now focused on sequential improvements. "I really don't have a good sense of the year-on-year numbers,” he said.

Addressing media queries during its earnings conference, Vijayakumar also said that although the June quarter is typically a soft quarter for the firm, the performance was below the management’s expectations.

“Q1 is typically a soft quarter for HCLTech as productivity benefits for a large number of contracts kick in during the quarter. Though we expected it to be a slow quarter, our performance was lower than our expectations,” he said.

HCL Technologies has also signed a definitive agreement to acquire 100 percent equity in the German automotive engineering company ASAP Group. The acquisition was done at an enterprise valuation of €251.1 million. The acquisition will be done through HCLTech UK Ltd, a wholly-owned step-down subsidiary of HCLTech.

"Germany is a very big market for the automotive business. We are a little bit under-indexed in that space and we have been always highlighting that we were under-indexed on the automotive side. And this is going to give us big support in reaching out to customers and also having the right offerings, which will really drive momentum here," Vijayakumar said.

Vijayakumar expects the ASAP acquisition to be closed by September this year. The acquisition will need approval from the German Federal Cartel Office and from the German Federal Ministry for Economic Affairs and Climate Action.

The company's chief financial officer (CFO) Prateek Aggarwal said that there will be no increments for senior employees this year.

"We do have an action plan beyond that. And the actions that we have announced are related to the salary increments. So, for the senior employees, there will be no increments this year, given where we have started the year in Q1 with. And for the junior and mid employees there won't be a deferrer of one quarter," he noted.

Meanwhile, attrition for the June quarter at HCL Tech came in at 16.3 percent, compared to 19.5 percent in the last quarter. The company’s headcount at the end of the first quarter stood at 223,438, with a drop of 2,506 over the previous quarter, said chief people officer Ramachandran Sundararajan. This compares to 1,597 hired last quarter — the highest among peers in a slow-demand environment.

HCL Tech also said that it has taken a conscious decision to delay its annual compensation reviews by a quarter.

HCL Technologies reported a nearly 8 percent year-on-year (YoY) increase in consolidated net profit for the June quarter to Rs 3,534 crore, lower than estimates as the Indian IT sector hits the slow lane with clients cutting ramping down deals and reassessing discretionary spending amid macroeconomic challenges.

On a sequential basis, the software services provider saw the topline fall by 1.2 percent, and the bottom line by 11.3 percent.