When the pandemic began, it forced organizations to reimagine and rapidly accelerate their digitalization journeys. Upgrades, transitions and new operating models were launched at an unimaginable pace. A year thereafter, this momentum shows no sign of abating but with the added ask of foundational restructuring to build long-term sustainable business growth models. This h as required both technology providers and consumers to invest in order to progress for the long run.
At HCL Technologies, our performance in FY 2022 reflected this sentiment. We grew at a healthy 12.7% YoY in constant currency and also focused on architecting the ‘next normal’ for our clients with proactive investments in several arenas that will ensure our long-term competitiveness.
The year scripted many successes for us along these two broad themes of momentum and investment.
We continued to build on our growth strategy. Our services business grew at a rate of 14.9% YoY, headlined by the digital application services, engineering services, and the cloud transformation services. Over the last three years, the share of our digital services portfolio has gone up from 18.2% to 34.5%, which is a strong validation of our approach to winning in the digital-first era.
Our front-runner credentials in Cloud have further strengthened this positioning. We believe that by 2025, more than 50% of tech spend in the IT Services market is going to be on Cloud. Having been amongst the first in the market to recognize this potential, we have partnered with all the leading hyperscalers and are well positioned to leverage the emerging opportunities.
Another unique differentiation is our strategy of product and service diversification to better serve client needs. Today, our Products & Platform (P&P) business is not just a profitable and cash generating portfolio, but also a door-opener in net new client groups and micro-verticals.
We also took exceptional strides on the environmental, social and governance (ESG) front and integrated ESG across our business operations.
At the very helm of our actions is a dedicated committee constituted within the Board of HCL Technologies to oversee and govern our diversity, equity, inclusion and ESG actions. The overall constitution and mix of our Board is itself very diverse, with more 30% women Directors and 60% international Directors.
On the climate change agenda, we have committed to achieving net zero by 2040, joining a group of only ~20% of the world’s public companies who have so far committed to net-zero carbon emissions targets. On this journey our sub-target for 2030 has been validated by the Science-Based Targets initiative to be aligned with the 1.5°C pathway.
Moving forward, we have identified 12 ESG topics as ‘material’ to our business. Under these canopies, we are currently tracking 100-plus metrics to drive sustainability within the organization and leveraging technology to create solutions, including sustainable products, for our clients too. Our hard work in this arena led us to achieve a ranking of 24 among all the software and services companies in the world by Sustainalytics.
From making our Company more sustainable to creating technology-enabled sustainable solutions that we offer to our clients, to purposefully contributing to the communities that we operate in, we are taking every action to continue to make a positive impact on our planet’s health and resilience.
Employer of Choice
At HCL Technologies, we have taken pioneering steps in our talent strategy. We are very proud of our global team of diligent, diverse and passionate people, all 200,000+ of them across 52 countries, who are delivering extraordinary experience to our clients under the leadership of a world-class management team and rooted in our culture of “Ideapreneurship”.
Not only are we re-skilling our employees at a massive scale on next-gen technologies, but we are also creating net-new talent pools for the industry. On the latter, three programs led the charge again this year – TechBee, our Global Apprenticeship Program, and New Vistas. Overall, we made record hiring this fiscal year, with 39,900 net new additions to the organization.
This dual focus on evolving, grooming and empowering our teams, as well as diversifying our talent pipeline, has continued to put us at a position of strength in the market. Our efforts in this direction have been widely lauded. We were featured in Forbes’ 2021 list of the “World’s Best Employers” for the second consecutive year in FY 2022, and we also emerged as the top ranked company globally in the professional services sector and one of the only five India-headquartered multinationals across all sectors. Today, we are recognized as a “Top Employer” in 17 countries and hope to add several more territories to this list next year. Additionally, leading analyst group Avasant has ranked us a “Leader” in its Digital Talent Capability 2021 RadarViewTM , a citation we are very proud of.
Preferred Digital Partner for Global 2000 enterprises
Our vision is to remain the preferred digital partner for Global 2000 enterprises. To deliver on this ambition, our strategic focus for client acquisition and retention is built on two key directives: being selective about the clients we pursue and building deep, strategic relationships as a trusted partner with the chosen ones.
Last year, the number of $100 million clients increased to 16, and our $50 million clients increased from 29 to 43, proving the efficacy of this strategy. 85% of our revenue growth came from 50 accounts, 40 of which are Fortune 500 or Global 500 accounts. This growth was led by client-centric initiatives alongside delivery of strong digital propositions in 35 existing clients and 15 new accounts. We are very proud of the deeper, multi-service line relationships that we are building on this journey.
Our bookings have also remained strong, cutting across verticals, geographies, and service lines. From a year-on-year perspective, our total contract value (TCV) has increased by 14% and annual contract value (ACV) has grown 21% YoY.
The positive financial impact of our chosen business strategies has been significant. Over the last three years, we have reached a momentous milestone of 10% CAGR, representing $11.5 billion revenue, despite the challenges brought on by the pandemic. During the same period, our operating cash flow grew by 21% CAGR.
As digital transformation continues to remain paramount for enterprises, we are optimally positioned to partner with them through their digital journeys. We are going through a product portfolio transformation, evolving our services mix to better align with their spend patterns, and leaning into the rapid growth of our digital business.
Driven by our focus on momentum and investment, we aim to deliver organic growth in the most capital-efficient ways, employing the most sustainable profitability improvement strategies. To ensure our shareholders get the benefit of our successful business model, we have improved our capital allocation policy, increasing payout to a minimum of 75% of net income for the next five consecutive financial years. Above all, we will continue to invest in our people, who are the biggest enablers of our ability to deliver innovative and differentiated solutions to our clients.
We look forward to the next phase of our growth with optimism and confidence, ready to harness the disruptions and seize the many opportunities that are ahead of us.