HCLTech faces ransomware attack, launches probe

HCL Technologies (HCLTech) on Wednesday said it has become aware of a ransomware incident in an isolated cloud environment for one of its projects.

"A detailed investigation is underway in consultation with relevant stakeholders to assess the root cause and take remedial action as necessary," the software services major says in a stock exchange filing.

There has been no impact observed due to this incident on the overall HCLTech network, the company says, adding that "cybersecurity and data protection is a top priority for HCLTech."

Reacting to the development, shares of HCLTech fell 3.38% today to ₹1,437 apiece on the National Stock Exchange (NSE). The broader NSE Nifty 50 was down 1.4%.

HCLTech had slashed its revenue growth guidance for the current fiscal. For 2023-24, HCLTech's revenue growth guidance is expected to be between 5% and 6% on a constant currency basis. This includes revenue from the recent acquisition of German automotive engineering services provider ASAP.

"The environment is quite volatile. So it’s quite difficult to take a call from a long term perspective. We are focused on executing this financial year," HCL Tech managing director and CEO C Vijayakumar said in the company’s post-earnings press conference in October.

Net profit of HCL Technologies rose 9.8% year-on-year to ₹3,832 crore for the quarter ended September compared with ₹3,489 crore in the same quarter last fiscal. Consolidated revenue of the IT company grew 8% year-on-year to ₹26,672 crore as against ₹24,686 in the year-ago period.

EBIT margins rose to 18.5% in the second quarter, an increase of 50 basis points year-on-year and 154 bps quarter-on-quarter. The software firm expects operating margin to remain within the stated guidance of 18-19% in the ongoing fiscal.

“One of the big highlights for the quarter is our operating margins. We recorded an 18.5% operating margin. This margin improvement is primarily through driving efficiencies in our managed services engagement through automation and AI capabilities,” said Vijayakumar.

Total contract value of new deal wins stood at $4 billion, a 154% growth on a quarter-on-quarter basis and a 67% growth on a year-on-year basis. “Our new bookings of $4 billion this quarter is at an all-time high, driven by a standout mega deal,” Vijayakumar says.

The HCLTech CEO, however, said that the first half of the ongoing fiscal has been soft. “We expect a very strong second half. The discretionary spend is still very soft. We have not seen the discretionary spend pick up like we anticipated. But the bookings we have done in the last quarter, some of them will convert into revenue. That followed by a large deal acquisition will deliver solid growth in Q3 and Q4,” says Vijayakumar.

The IT firm significantly reduced its dependence on subcontractors. “We also controlled some of the discretionary spends on travel during the quarter which has delivered an exceptional margin performance,” says Vijayakumar.

Attrition continued to trend down at 14.2% in Q2 FY24 from 23.8% in the same quarter last year. The company’s workforce stood at 2,21,139, a decline of 2,299 employees. Headcount decreased by 1% on a sequential basis.