HCL fails to meet expectations

HCL's results did not follow the upbeat trend in the outsourcing market

Quarterly net profit at Indian IT services firm HCL Technologies has fallen by a fifth, after its costs went up by more than 30 per cent, largely due to a wage hike.

The company failed to meet analysts’ expectations with a whopping net income loss of 2.97bn rupees (£39.8m) for its fiscal second quarter, down from 3.73bn (£80.8m) a year ago, according to the firm’s results out today.

The numbers reflect higher wage costs for the company, and were despite some noteworthy deals closed during 2009 with firms including insurer Equitable Life and investment bank JP Morgan.

The firm also reported a 23 per cent growth in consolidated revenue to 30.33bn rupees (£656m) from 24.6bn rupees (£533m) in the previous year.

However, the numbers represent almost no improvement on the previous quarter with revenue of 30.31bn rupees reported in the first quarter.

HCL’s chief executive Vineet Nayar has been quoted as saying that he expects the economic recovery to gather momentum by mid-2010 and that client spending on discretionary projects would return by mid-2011.

The company’s rivals Infosys, Wipro and Tata Consultancy Services have all posted upbeat results over the past two weeks.