Companies
‘Hexaware actively seeking mid-sized and large deals’
Summary
- The competition for talent will remain fierce in the coming year, with companies focusing on data, AI, and automation to drive cost savings instead of relying on labour arbitrage.
New Delhi: Amid the global economic crisis, Hexaware Technologies, a global IT services provider, is seeing substantial growth prospects. In an interview with TechCircle, chief executive Srikrishna Ramakarthikeyan shares his views on using digital technologies for growing its business, besides outlining the company’s strategy for emerging technologies like generative artificial intelligence, and plans for future growth and acquisitions. Edited excerpts:
How has the transition been from a publicly-listed company to a private firm?
Our philosophy is that a change in ownership does not impact how we operate as a company and what we do right. The focus on our employees has not changed materially following the change from public to private or due to the transition to Carlyle. The long-term trajectory of what we do remains unchanged because the management, including myself, outlives any ownership cycle. I have been with the company for nine years and witnessed all these changes. Our view on building the business is longer term than specific ownership cycles, and our goals and approach with clients and employees remain the same.
The firm changed ownership from one private equity firm to another. How does the strategic direction of the two private equity firms differ? Is a strategic buyout or an IPO the only probable outcome?
In terms of growth, 2022 was a bit of an aberration due to various factors, including escalating labour costs and intense attrition affecting every company, including ours. However, we have already recovered and grown in most areas where we witnessed losses last year. At this point, all options are open. But considering our size, going public is perhaps the most promising option.
In FY22, the company grew by 28% and crossed ₹9,000 crore in revenue. In the domestic market, we embarked on a major expansion drive, focusing on emerging cities to tap their potential and talent pools. We had recently launched a delivery centre in Bhopal.
How is Hexaware leveraging digital transformation to drive business growth and adapt to changing markets?
We are undergoing a digital transformation as an enterprise, while also helping our customers do the same. We are utilizing technologies like data, machine learning, and artificial intelligence to predict demand and better understand the needs of our customers. For example, in the IT industry with complex skill requirements, we developed over 100,000 SKUs to predict demand for each skill in each city and country we operate, as well as for each customer. Our digital capabilities allow us to effectively address this complex problem. Additionally, we are preparing to launch a virtual presence in the metaverse, further embracing emerging techs.
Are you planning any acquisitions in the coming months? If so, which domains and geographies are you targeting?
While we have not been aggressive on acquisitions in the past, we are currently actively seeking opportunities for acquisitions. We have only made one acquisition in the last nine years since I joined the company. Currently, we are focused on three domains: software engineering, data analytics, and cloud. Our acquisitions will align with these areas. We have a significant amount of funds available for acquisitions, approximately half a billion dollars, and you can expect to hear about some acquisitions by Hexaware in the next couple of months. We are actively seeking deals, both mid-sized and large deals, ranging from $25 million to $200 million in revenue.
In July, Hexaware had launched its generative AI consulting and practice unit for enterprise. What are your plans around Gen AI for the coming months?
We have partnered with Microsoft for this initiative, and this partnership is centered on Hexaware’s knowledge ecosystem solution ‘Tensai,’ which utilizes Microsoft Azure’s OpenAI Service to create dynamic, scalable, and highly precise knowledge ecosystems using generative AI.
Our goal is to have nearly 100% of our tech workforce trained in Chennai. Currently, we already have 11,000 employees in the process of training, with over 3,000 having completed it. By the end of this year, we expect around 20,000 employees to have finished training, and by mid-next year, close to 100% of our tech workforce will be covered.
What could be the biggest opportunities and challenges in the coming year?
Despite the economic challenges in 2022 and 2023, I believe there are opportunities. For example, despite a volatile market, we onboarded around 4,500 people in 2022, taking our headcount to over 28,000 employees. Employee retention rate increased from 68% in 2021 to 73% in 2022, though it is still lower than 2020 (80%).
In the coming months, we may see a combination of past patterns during economic downturns—cost-cutting leading to increased outsourcing and growth due to investments in digital technologies. This means that the competition for talent will remain fierce in the coming year, with companies focusing on data, AI, and automation to drive cost savings instead of relying on labour arbitrage. Going forward, I see a great opportunity in securing assets, which will undoubtedly be a high priority for enterprises in the coming year.
