HCL Tech Q1 net falls 35% on higher costs

HCL Tech Q1 net falls 35% on higher costs

New Delhi: HCL Technologies said its September-profit fell by a little more than a third from a year ago, as hiring expenses jumped sharply.

The software services firm reported net profit of Rs1.95 billion for the period, down 35% from Rs3.01 billion a year ago. Revenue rose 20% to Rs14.98 billion.

Personnel expenses for the quarter jumped 54% to Rs7.67 billion.

The IT sector, one of India’s biggest employers, has seen firms scramble for skilled employees following a rise in outsourcing demand but is also facing increased attrition levels.

Under US accounting norms, on a consolidated basis, profit rose slightly to $71.8 million. Revenue rose 28% to $803.8 million.

Last week, Infosys Technologies, India’s No. 2 software services exporter, warned currency volatility could crimp growth for India’s outsourcing sector, despite beating quarterly estimates and raising its annual sales forecast.

Indian software companies, who earn in foreign exchange, hedge some of their currency risk but a chunk of their costs are in rupees, and therefore currency appreciation tends to squeeze margins.

At 10.05 a.m., HCL Technologies shares, which the market values at almost Rs300 billion, were trading down about a percent at Rs435 in early trade, in a flat Mumbai market.