What is the impact of the second wave on business and the hiring environment? How is it different from the last year in terms of the shock that came in because of the lockdown?
I think the second wave has been very different from the first wave. I think if you look at the impact of the wave on us as a corporate community it has been far more personal. For most people, we know somebody who was very ill or our friends, and unfortunately many more people passed away. And I think the response of corporate India has certainly been moderated by that.
The response of corporate India is also moderated by the fact that people still feel that they can make their annual targets and they still want to see growth this year. A lot of our customers still want to see growth this year and I think the experience of wave one by Q4 last year the economy was growing and how people who wanted to hire were struggling to find talent.
So, what we have seen in wave two has been if you look at our numbers we still grew 1.5% in headcount through wave two. Clearly hiring completely moderated, the focus of corporate India shifted to looking after employees, increasing insurance coverage, vaccinations and so on and so forth. A very humanitarian response I would say.
With wave two hopefully behind us, I do think that the focus on growth is returning. We are certainly in the last few weeks seeing that IT has been one area much spoken about. IT has grown unabated through wave two, but even other areas now are seeing hiring come back. Obviously, executives do have one eye on wave three and what happens there will be important: the magnitude, timing and synchronicity of wave three will impact the outcomes. But right now, I would say we are back to growth.
What is your outlook on the workforce management segment where your revenue was actually flat on a quarter-on-quarter basis, but on a year-on-year it has seen a jump of about 24%? Could you tell us what is your growth outlook going ahead for the segment?
I think you should put this in context of wave one. Wave one saw a 20% decline in revenue quarter-on-quarter. If you look at Q1 21 versus Q4 20 versus wave two, they have seen let us say flattish revenues, slightly higher on headcount. I think that at this point the outlook is obviously sector dependent, but banking, BFSI, telecom, logistics clearly are all hiring.
The sectors like retail are still looking to see what happens and how quickly people come back to the streets for shopping. When I went out this weekend it seemed like a lot of people were out, which is good and bad in some ways. There is a couple of retail and businesses that require physical interaction that are taking a little bit longer, but by and large we do see people returning to hiring. I think the IT sector specifically – we just cannot hire enough.
I think the demand is very strong and it is not just IT services companies, I am talking about Indian enterprises. I think we have hit the tipping point as a business community where everybody wants some element of technology in our individual functions, units and we are all trying to ramp up as fast as we can.
The quarter was flat on the top line as far as GTS is concerned. There was very marginal growth while the domestic IT services businesses continue to see quite smartly quarter-on-quarter. What is the reason for the same?
I think actually GTS has outperformed my expectations. If you look at the CLM business for example, that has grown something like 38% year-on-year in top line and IT services has grown very high. The reason why you see, if you look at the segmental results, you see the EBITDA being a bit muted this quarter versus the last quarter. I think year-on-year you will see tremendous growth.
This quarter versus last quarter is because we do run a business called Digicare. It is one of the country’s largest after sales installation and services business. They have a network of stores and obviously during lockdown those stores were shut. So, there were some EBITDA losses in the quarter, but that is also open now and back to full steam. Overall, I would say the GTS year-on-year has actually been one of our good stories.
Do you think that the services sector is seeing a gradual improvement in the hiring activity? What about healthcare and the pharmaceutical space? Do you see them leading the pack within the services sector?
I would say that clearly, we see a lot of positive momentum in BFSI, especially institutions wanting to get sales people back on the streets to get retail loan acquisition going. So, we see a lot of hustle there. Retail will lag. Healthcare has had a huge amount of demand sustained since wave one. We have actually just launched a dedicated vertical focussing just on healthcare where we will partner with healthcare institutions to train and deploy healthcare professionals because at this point India just does not have enough. It is not just doctors, it is also paramedical staff. So, we see demand in healthcare absolutely being very strong on a sustained basis. We do think that they will be sustained investments now in healthcare infrastructure and that will require services and services providers behind it.
