Good morning and good evening, depending on which time zone you're in. Thank you so much for joining us. We have with us today the CEO of HCL Technologies, Mr. C Vijayak umar, who goes by C VK. Welcome, C VK, and thank you so much for taking the time to talk to us today. Before we start. Thank you, Ravi. Thank you for hosting this call. Thank you. Before we start, I'd just like to formally announce that this call is being recorded. We will start off with some questions that I have prepared, and some of you have also brought up. While we go through those, please do type in your questions in the Q&A box, and we will pick it up from there as well. That's part of the call. CVK, I think that what I've discussed most with investors is HCL Tech's infrastructure management services business and whether and how Cloud adoption impacts it. Let me first ask you whether there is any reduction in the need for infrastructure management services if a client adopts public Cloud. Let's try to follow that up with whether peers are trying to now catch up in data center deals. What should that tell us about the attractiveness of this market? If it's still an attractive market, why is it an attractive market? Yeah, thank you, Ravi, and thank you, everyone, for joining this call. Yes, HCL has a very convincing infrastructure management services. We led this service line, and we continue to be the top-rated infrastructure service provider globally. Now, Cloud has been on the horizon for many years. It's accelerating significantly in the last three years. Cloud presents a significant technology shift, which is an opportunity across the entire landscape of IT services. Infrastructure is just one element. A lot of application modernization, a lot of analytics, a lot of digital engineering, and the software product engineering, all of that has a significant tailwind due to this technology shift, which is being accelerated through Cloud. Now, coming specifically to infrastructure services, it is a headwind for the general infrastructure services market because a lot of traditional players in the infrastructure business, they have what is called an asset-heavy model. They built physical data centers, they bought hardware servers, and they hosted. They provided an end-to-end service. Whereas when HCL approached it even 15 years ago, we said we want to do an asset-light model. That was the differentiation between HCL and some of the traditional providers at that time, be it CSC, IBM, and a few other large infrastructure players, HPE services, and things like that. We consciously said we will try and do this business as a pure services business and an asset-light business, which means we do not have data centers. We do not buy and host servers. The majority of them are in the client's data centers, and we provide all the operational and implementation and program management services. Now, when it comes to Cloud, the component that are client-owned, that is really shifting to Cloud. A server which is sitting in a client's data center is now moving to a Cloud platform. That ownership is changing. It was a CapEx for the customer. It is now becoming an OpEx. The service layer, which is on top of it, to first migrate and then on an ongoing basis manage, a very large part continues to be with service providers like us. For our business model, which is an asset-light business model, we strongly believe it's a big opportunity. The migration itself is a one-time opportunity, and this, which is on top of it, also is a $150 billion kind of a market opportunity by 2025. Maybe if $1 was being spent on managed services, the same $1 may not be spent in managed services in the Cloud platform. It could be a little lower. At this point, a lot of that is getting offset through the migration and managed services business. You asked about the attractiveness of this opportunity for the industry. If you look at the trillion-dollar IT services spend, the biggest component, I think more than 40% of that is in the infrastructure space. Any broad-based provider cannot ignore such a large market opportunity. In the early days, 10, 15 years ago, when we were probably the only one who really had a very strong proposition from an India heritage provider perspective, maybe it was not so visible. Today, in any market analysis, infrastructure is a big market opportunity. A lot of our peer group are also significantly scaling up their capabilities on the infrastructure side. Even you being the market leader in infrastructure services, you said that you are the market leader. Would your market share be very high? Broadly, how much would this be? Yeah, see, it's a big market, but it's a quite fragmented market. Maybe if you take the top 15 players, maybe they will have maybe about $100 billion of annualized spend. If I were to do a market share, our market share is still low, right? I I think. That $100 billion may have a little more of assets and all of that. If you look at services alone, maybe it'll be at least in the top 15 players will have $60 billion-$70 billion, roughly, of services revenue. We have a modest, I mean, sub 10%, I mean, low single digit or high single digit kind of market share, depending on how exactly you calculate this. There is a lot of opportunity. I mean, market penetration, market share gain is the biggest driver for growth, while the overall infrastructure business, because of the modernization and Cloud, is still growing at a low single digit number. I think our biggest opportunity is to gain more market share. There are three or four players who are considered traditional, and they're struggling in this business because of their fixed cost models and asset-heavy models. I think that's a big opportunity for us. We continuously win clients from some of the traditional players. Thanks, CVK. The perception has been that HCL lacks peers in application services. Do you think that this perception is true or was true? Could you go back to the historical reasons why this could have happened? Could we take up whether this digital transformation opportunity is a good time to catch up in applications? Yeah. If I just reflect back a little, a few years, a couple of decades ago, I think the whole software services business, application business, was catalyzed by the Y2K opportunity, right? That is when a lot of India-headquartered companies really gained access to significantly larger technology spenders, typically the big banks. They gained access, and that was the entry into the market. Honestly, HCL, we missed the bus. We did not actively participate in the Y2K opportunity. At that time, we were pivoting from an India-headquartered hardware company into an engineering services company. That is why if you see our engineering services has almost a 40-plus year heritage, and we have a very strong presence in engineering. Our start point was definitely not the same as others, which obviously meant our client access was not so great for the application services. That was Y2K. And then, I mean, that gave a lot of impetus to the industry, and all the big companies grew. I mean, HCL had a much lower footprint on the application services. Now, in the last five years, we consciously said we need to create this mode two services where we will focus on the digital transformation aspect. We will not worry about the traditional aspects, the application support, the mainframes, and the AD, regular traditional application development, and said we will focus on all the modern AD, modern application development, application modernization, data analytics, and SaaS. These are the things that we put emphasis on. It was a very small part of our application business. Now, in the last five years, it has become more than 60% of our application business, the new part, new services. As we stand today, it's a very strong offering. If you look at our FY 2022 revenue, almost 50, in fact, more than 50% of the incremental revenue that we clocked in in FY 2022 came from this application services, which is the digital transformation, analytics, SaaS, a lot of SAP migration to Cloud, SAP modernization. Today, it's a very strong capability. We have also approached it a little differently. We consciously ignored just the standalone application support and maintenance type of deals. We focused on integrated opportunities because we had a very strong capability on the infrastructure management, trying to bring infrastructure and application management together. In the last year, we won at least 20 deals, which is integrated infrastructure and application integrated, and then take responsibility of operations and then take responsibility of modernizing that landscape, migrating to Cloud, modernize applications. We then get into the change the business or the development spend of our clients. When this is happening, from a business perspective, there is an operating model change. A lot of customers had the traditional waterfall kind of approach. Now, almost everybody has adopted DevSecOps and Agile operating model. We talk to customers about what is called a product operating model. That's a model where we are leading the market. We are able to displace several traditional long-term incumbents in the application space through this. Today, it's the fastest-growing business for us. CVK. Do you think that this technology change is a good time to catch up? I mean, because credentials matter less, is that why you've chosen to accelerate your focus on applications now? See, credentials in a certain new way, right? I mean, there is a big incumbency in this space. If you're able to approach it in line with what the customers today want, you have an opportunity to think really with an open kind of charter. That is where our focus on changing the operating model, that is, from a horizontal model to a more product-centric operating model, which is what a lot of our clients, CIOs, are trying to transform their operating model. I think that is where we also acquired some capabilities. We acquired a company called Strong Bridge Envision, which is focused on the change management and the operating model change. I think bringing that capability with our modern AD and bringing Cloud and integrated operations, today, we have a very, very compelling proposition to companies. Recently, one of the deals that we announced, customer has consolidated multiple vendors into one strategic vendor. Everything, infrastructure, application, all the development, and the modern operating model, all of that is with us as a single provider. That is because of the compelling value prop and the capabilities that we could bring to the table. There are many, many deals in this construct as we speak. You spoke of how you made one acquisition, but I think that you've not made too many to help your buildup in digital. You decided to do that organically, and you instead allocated capital to the acquisition of IPM products. I think this was an interesting choice. People have thought of this as somewhat end-of-life products. What gave you the confidence? We know HCL has been having a history as an ISV support partner. Why did you choose to acquire these particular products? What gave you the confidence that you can sustain and even grow these products? See, first of all, I mean, from a strategy perspective, we said all the services capability is much more efficient or easily built by organically building capability because it's really about getting the right talent and then scaling that up because you have a good client base. We chose that approach. If you see from 2016 to 2020, our mode two margins were significantly low, which means we were investing organically in this business. That was very evident in all the numbers that we had published. Mode three was, again, it was a strategy. We wanted to, while we had a big services business, we also believed that services is something in the long run can continue to be commoditized. It is always good to create an intellectual property-led business stream. That's where we've been looking for software product companies to acquire. This is also coming from our engineering heritage. We built software products for a lot of companies as a part of our engineering services. They have created more than $100 billion market cap for our clients. We have taken end-to-end responsibility in such scenarios. Bringing our engineering capability and a desire to build a software product business, we thought, what is the best way to do it? The first and foremost is to really have market permission for us to play as a software product company. Market permission is possible by acquiring an install base. I think we looked at the IBM products as acquiring an install base more than the specific products. Products itself was one of the criteria. The biggest thing is the client base. IBM has clients all across the globe, very strong install base. These products are embedded. Some of them are, I mean, many of them are in the mature stages, mature life cycle. They are all very sticky, right? I think one constant question I get asked is about Domino, for example. Domino is, there is Lotus Notes, which is an email component, which is a very small part of Domino. Maybe 10% of the Domino install base is Lotus Notes. But 90% is all the applications that have been set up. Today, they are so embedded in a lot of large clients. To really modernize and migrate to a new platform is a very expensive proposition. Customers had no option because IBM was not modernizing these products. They had not released new versions for five years, seven years. We found an opportunity there that we can modernize and provide a path for customers to be on a new platform, which is a modernized version of Domino. That strategy has been very successful. The install base is very sticky, and we've been able to renew and maintain the revenue stream, very profitable revenue stream. It may not have growth, but of course, it's a stable and highly profitable revenue stream. Now, if you have an install base where you have market permission to sell software products, you have the relationships, you have the software license agreements. Now, we can sell a lot more newer products into that base. That was the whole hypothesis, like DRYiCE or our industry software solutions. Actian has products like Avalanche, which is a hybrid Cloud data warehouse solution. I think we're trying to inject more new products into this to really leverage this whole big base that we have and continue to find growth opportunities. If you think that the product acquisition has been successful, why not actually go in and acquire something that's an established and fast-growing product right now? Yeah. First, I think the objective is to get an install base, which we have. We have sales teams, which is a completely independent sales team. This team works as a separate organization. It only consolidates at my level. There are separate marketing, separate HR, finance, everything is separate, sales and engineering, everything. I think that install base and the whole operating model is what we wanted. I think that we have it at a very, very good scale now. Whether we can buy high-growth products, big products, I do n't think so. We think there are some niche high-growth products either in our portfolio or maybe there are some potential acquisition opportunities. They are not big. They are small, high-growth, more newer areas is what we will look at. At this point, a lot of focus is on how can we grow this business organically. When you mentioned niche, I mean, I think something along the lines of what you've done with Actian, taken that. Yes, Actian had a very good product. There are a lot of products around machine learning and AIOps. A lot of it, we have it in our DRYiCE portfolio. If there are some gaps that we need to plug in that portfolio, today, we may be buying that software from another vendor. Maybe there are possibilities to look at that. Your R&D portfolio, that's growing faster than apps and infra. You did say that HCL has a 40-year history in engineering services. Why is your R&D growing now faster than applications and infra? What specific parts of the portfolio are growing? How sustainable is this? Yeah. Yes, in the last six quarters, we've had some amazing growth, very consistent, almost 5% sequential growth. We continue to see a similar momentum moving forward. It's primarily triggered around the whole digital engineering, which is industry 4.0, Internet of Things, softwarization, converting on-prem ISV software products into Cloud. These are the big opportunities. We play in two segments. One is, again, all the communications technology and internet and software platform companies, which is almost half of our engineering business. There continues to be a very good demand for platform engineering, platform support, testing, all of that. There are certain other industries like manufacturing and industrial manufacturing and healthcare, li scences, which is also driven by the manufacturing value chain. There, again, the industry 4.0, IoT works, the smart manufacturing, digital twins. These are all in the early stages in a lot of big industrial firms. I think we are quite entrenched there. Auto is, again, a big space. Transportation is a big space. I think it's a very, I would say, a very secular kind of demand trend in all these areas. The only thing is the opportunities may not be big opportunities. It may not be like there are not too many $100 million kind of deals in engineering services. A big part of it is land and expand. You do one program very well, and then you get more trust and expand. We have a very good customer base, almost, I think, 60 of the top 100 R&D spenders are our clients. That base is also growing quite nicely. I think it's a more secular trend driven by technology, our technology transformation that's happening in the industry, our unique positioning as a leader in this space. We have the largest number of R&D engineers delivering outsourced R&D services for the clients in the world. There may be others who are bigger in revenue, but in terms of, I mean, that's because they're more Europe-centric players. If you take a global delivery model, we have the largest talent pool delivering outsourced R&D services. That's the largest in the world. I think one of the things you had mentioned that your senior management team, you've seen extremely good retention. Can we try to quantify this? Yeah. I think during the invest today, I did say this. I think over the last, we have corporate officers or my direct reports. We've lost only one person in the last three years of 30 people. So it's a pretty stable leadership team. We continue to hire some talent from outside for some of the leadership roles. Like we hired a Chief Marketing Officer. She joined us a year ago. One or two positions, like a risk and compliance person was hired about six years ago. A large part of the team really enjoys the culture of the company. The culture, I would kind of put it in two key things. One is people. We are very, very people-centric. Even today, in this great resignation kind of market, our attrition is one of the lowest among the peer group. It could be lower, but everything is driven by the market dynamics. The amount of passion that people have, the entrepreneurship, the innovation kind of mindset, I think that's what is the core to HCL DNA. From a leadership perspective, I think the entrepreneurship DNA, like the level of independence, the level of decision-making that some of these leaders can do on an ongoing basis, I think they really enjoy the culture and the space that they have to perform. You spoke about attrition, so I think we should move on to talking about people. I think I had been under the impression that a large part of the hires that you did last year were 12-standard graduates. Correct me if I'm wrong. How has your experience been anywhere with hiring 12-standard graduates? No, I wouldn't say a large part. In fact, it's a small part of our total hiring. I think we talked about in FY 2022, we talked about 23,000 freshers, I think. And we're talking about 30,000-35,000 this financial year. It is a small part. Maybe in last year, it was 10% of our fresh hires. In fact, 10% also, they joined us as trainees. They take a year before they come back. If you really see the people who completed training last year, maybe less than 5% would be the 12th-grade students. This is a model which is giving us a lot of confidence. We started this in 2017 in a small way. We hired just 50 or 60 12th-grade students. We had a very stringent criteria. We picked the top of the class who want to make a difference, who have a bigger aspiration, and they want to do things differently. That talent, the experience that we have with them is quite mind-boggling, the amount of energy, enthusiasm, learning ability, all of that, even the soft skills, communication skills. A lot of them are even better than fresh graduates that we hired. Because fresh graduate pool, there are some real limitations, right? If you see the engineering, computer science, electrical, electronic branches, approximately 300,000 people graduate every year. Like last year, for example, the top five companies hired pretty much the entire pool. If you really want to hire more, then you are going to compromise on the quality of the graduate hires. That is also the reason we increased the compensation significantly at the graduate level. This 12th graders is a model today. I think a lot of companies are using it globally. I mean, I see a lot of tech companies using. In fact, while we started in 2017, I saw a study last year, a Harvard study, which said the graduate requirements in all the new job postings has come down by 30%-50%, 30% at the higher skill levels and 42% or something in that range for the mid-level. The predominant shift has happened in the tech sector, right? I think there is a lot more emphasis on skills and capabilities than a graduate degree. Today, every big company is, at least global companies, they're all adopting this. We have a head start. We have a good model. We have experimented it. We've fine-tuned this model. Most of them enroll in a full engineering program. We have a few colleges. We have expanded this in the U.S. We call it as apprenticeship. Here, students can graduate debt-free. That is a huge value proposition for young people, especially in some of the Western countries, because otherwise, they end up taking a lot of debt. We have created a model where they can graduate debt-free. We started in Australia. It is again picking up. Of course, U.S. and Australia are still very, very small numbers. Even this year, we may hire close to 5,000, of the 5,000 plus we may hire in this category. It is a very successful model. We feel extremely confident. We get very good feedback from customers. It takes about a year, 18 months before you really can get them to a good productive model. It is again, it is not a cost play. It's more of a stability and quality because we pay them after this stipend, after this one year when they get a stipend. After that, they get paid very close to what a graduate engineer would join us at. They're much more stable because they go through the education program. At least six, seven years of stability is a big thing. Whereas with the graduates, that's definitely not there. There is a good attrition that happens after two years, three years because of captive startups, a lot of other sources. We have also heard that HCL is the only firm among the large Indian service providers that actually charges people for training. Could you correct that impression? Yes, I've heard this before as well. I think there is a small fraction of our fresher hires who come in through a one-year train-and-deploy model. They come from, while they all have graduate degrees, but they're not really fit for deployment with a three-month training. They need a significant amount of intervention. This is below the 300,000 that I talked about, right? People from mechanical, civil, a lot of other branches, and from colleges where there isn't a great infrastructure to really increase the skills and capabilities. It's almost like an extension of the college. We put them through a one-year program. This is a small percentage. Maybe less than 10%-15% of our fresher hires would come through this model. With our increased salaries in the campuses, that component is the component where we charge for one year. That is even reducing further. It might become zero very soon. When we talk about attrition, I think we've always had this impression that growth and margins go hand in hand. I mean, it's been very rare that we have good growth and then we can't actually get margins. Now, with the pressure in the lateral hiring market, it doesn't seem to be the case, right? Is there a sweet spot where you can balance between growth and margins now? Do you see this as a more or less permanent shift, or should we think about this as something that's temporary and we will go back to an era where growth actually means better margins as well? Yeah, it's a very deep question. I think it's, I do believe this is a short-term challenge that we are facing because the demand went up and there wasn't adequate supply. That created this huge imbalance. People, it was just like musical chairs, people going from one company to another, getting some big hikes and things like that. The virtual operating model also made it easier for people to just keep looking for opportunities and things like that. We are seeing some moderation. I do think in the next two to three quarters, this will moderate due to two reasons. One is a lot of freshers that all the big companies hired are also coming into production. If you look at some of the hiring numbers, they're also moderating because everybody has a trainee bench, which they want to kind of productively deploy and things like that. Eventually, with growth, margins should also improve, in my view. Now, we'll take a few questions that have come up. One is not sure, but it says HCL scores very poorly on privacy and data security. MSCI ESG puts HCL in the first or the fourth quartile with the low rating of 20. What has the company done to enhance its privacy and data security? Are there any training or security policies or infrastructure? Yeah. There are multiple ratings. If you look at the bid site score, HCL has the highest bid site score. I will specifically look into this. We have very strong data security, privacy. We have a Chief Privacy Officer who's part of our risk management office. I would feel very, very strongly about our process, policies, and compliance. I can come back if there is anything specific on this front. Could you spell out the, you sent out according to a particular report, right? Who did you say is the benchmark that we should look at? No, BidSite is an organization which scores all the providers, external vulnerability, data security, and all of that. That is a metric which a lot of firms use. We have the highest score there. Of course, this is an area where we constantly need to improve and evolve. Nobody is perfect or nobody can be assured that everything is absolutely foolproof. We constantly work towards it. Let me come back on this MCSI, MSCI rating and come back. Sure. I think the next question is not factually right because it is about the company's attrition rates and saying that 23% over 2018 to 2020, it is higher than the industry average of approximately 14% in FY 2021. I think they are probably not the right time frames because 2021, I think everybody's attrition was low because of a COVID era. Overall, though, I mean, how are you thinking about attrition? What are you trying to reduce? Yeah, I think it's just the focus on career development, training, upskilling. I think that is, in my view, the most important lever. My comment was on FY 2021 and 2022. In 2021, we were probably the lowest, and FY 2022 also, we were in the, from a retention perspective, top quartile. It's not related to contract workers or anything. That's what I see in the question. I mean, we don't track attrition in the contract workers. Your headcount, your disclosed personal count does not actually include contract workers. Employees only. The next question is about those investigation reports that allege that HCL was underpaying foreign workers on H-1B. Is there any update or do you have a response? No, I think we are very, very compliant with every regulation. Probably this report had a significant amount of data inaccuracies. There was nothing to be done. Somebody wrote an article. From our perspective, we are very compliant and that's it. Next one is about clients of focus. I think there are so many questions that are coming up. Sorry, it's crawling past me. Let me take this one. Clients are focusing on cost takeout and infrastructure services will probably face a little bit more pricing pressure. Do you think, first of all, do you agree with that statement? How can we mitigate that? Yes, I think it's not just infrastructure services. Any run-the-business scope that you have for the customers, whether you're managing business process operations, infrastructure operations, or application operations, I think customers are going to expect lower cost because of the economy and things like that. Automation is the most important lever that we have. I mean, we've constantly broadened automation as a big lever. That's only accelerating in this current environment. With more tools, more technologies, AI, machine learning-led resolution, we can resolve 50% of the infrastructure incidents automatically. That's probably a very high benchmark across the industry. That's because we have the runbook repositories, the automation tools, all of that. I think there is a fair expectation on cost takeout. We do think we can bring automation and deliver the savings that our customers are expecting in most scenarios. For all the modernization projects, in fact, we are able to get better rates because there is a talent shortfall. The niche skills and modernization in the new areas, absolutely customers are open. Especially where we have people who have very strong domain knowledge of the client's business, I think customers have been very supportive. That is one of the questions that even though there is a supply shortage, why can't IT services firms take up pricing? I think is that only for new business or even for the existing contracts which are coming up for renewal? Can we actually take up prices given the current environment? See, there are certain provisions we have, like cost of living adjustments and things like that. We have been able to negotiate more than what we had in the contract in some of the situations. But it's also a complicated market, there are some areas where we can get better prices. There are some areas where we have to optimize more and deliver the reductions the customers want. Do you think that now is a supply of talent building up faster than demand? Are we near the end of this kind of supply shortage? I would think there was a big gap between the demand and supply that has narrowed down. I still think there is a gap. It's not that we have a situation which is reversed. I think the gap is narrowed. I think we are still in a supply-constrained environment for the tech portion. Do you think that could change at all if there is a U.S. recession? It can. It can. Basically, then there also you have to now split the whole talent base into two categories. I think in the newer skills, I think that that's not going to be bridged anytime sooner. Like the demand for security professionals, the demand for analytics, a lot of this SaaS and Cloud modernization, all of that. I think it's going to remain supply-constrained for a few years. For some of the traditional skills, also there was a big constraint, supply constraint, because people were leaving the workforce and a lot of customers wanted to outsource and things like that. I think there the gap is getting bridged quite fast. Why not embrace the IP install base or buy more products and sell through? I think you answered that partly. I think there is a follow-up with that. Do you envisage HCL creating products organically which can become $100 million plus on their own? Yes, definitely. I think the thought process, at least we have five or six very strong products like Avalanche is one. We have a low-code platform called Volt MX. BigFix, again, it's already a multi-hundred million dollar product, but it has got a much stronger growth trajectory. AppScan is another one. This whole AIOps, the entire DRYiCE automation framework. There are many new products which have a $100 million kind of potential in our portfolio at this point. How would we differentiate ourselves in the new spend areas? What is our go-to-market in Horizon 2 and Horizon 3 spends? Are we trying to be leaders here in these areas? Absolutely. I think Cloud, if you look at the Gartner Magic Quadrant, HCL is in the leaders quadrant for the second consecutive time. There are very few; there are only three players last year, and this year there are four. We were in the leaders quadrant. Gartner has written very nicely about how we have differentiated, how we have created the ecosystem business units. It is not just a business unit, but extends into delivery solution, offering all of that. I think the whole on the Cloud, we are positioned as a very, very strong player. A little bit is coming due to our infrastructure heritage. Also, a lot more is coming due to the new modernization, application modernization, the topic that I talked about in the new part of this conversation. The second aspect is on the application side, it is the product operating model, which is what most big customers who have a set of legacy incumbent application providers are constantly looking at bringing a differentiated challenger. We are positioned as a differentiated challenger. That positioning is resonating very well. Some of the big deals that we have won are really taking away market share from incumbents in defining the new operating model. I think that is a difference that we've been able to. Yeah, I think we saw one of the examples, one of the case studies during an analyst meet of T-Mobile, how you guys have played a role there. That's right. That's right. Yeah, a lot of them. I think you had a number of big customers talk in our analyst meet. What were your expectations at the time of acquisition of the product business from IBM? Where have you reached? Have you made significant changes to these products which are distinguishable? I think it's still a work in progress. I think we are doing whatever financial business case, I would say we are definitely doing better than the financial business case. How to leverage this install base and create growth, organic growth for products, and also leverage this install base for services. I think those two are the focus now. We're already seeing some good traction in some of these install-based clients looking at some big services opportunities where we had a good edge over our competitors. It's still early days, I would say, how to leverage the synergy. We have a lot more work to do. The question on growth, that many larger firms and smaller firms have been able to grow faster than us. What do we need to fix to become industry leaders on growth as we used to be? I think if you look at our services growth, year on year, we've grown 19%. That's pretty much the highest growth in the industry if you take out some pass-through type of revenues that some other players have. I don't know where this question is really coming from. Our growth has been the highest. Services growth has been the highest in the last five quarters. The product is a— is a product which is a product business that drags on the overall growth. That was expected. That is a different business model. It was the right way to compare services. I think we are winning very well. We are executing. We are being also selective. We are not picking up a lot of pass-through revenue. When you do large deals, we are consciously structuring the deals to take the pass-through components and keep it outside our book. We also want to grow in a very capital-efficient way. All of that considered, I feel we are doing very well, even by any comparisons that you want to draw from industry players. I think there is some— Whether we can do more, I do think we can do more because all the services are firing, right? I mean, our application service was a little soft maybe three, four years ago. That's really now the leading service line. Engineering services is growing much faster than the company. Infrastructure has been a stable growth story. I think services growth is very strong. I think that's the question. This probably helped that it's framed differently. It's a question about the margins. Again, the deals that we signed would have been not really anticipating the high talent costs. How do we make the correction to the deal frameworks to ensure that new business will get us to 19-20% effort? Yeah, I think from January, we changed our rate cards and the costing and all that. Can you hear me? We can hear you. Yeah. I think some deals that were signed in the second half of last year when costs went up, our pricing did not proportionately go up. From January, we have revised and all the deals that we've signed from January are using the new cost structure that is there. We have a lot of levers to improve margins. While there are headwinds like average compensation, average employee compensation continues to go up even if you hire freshers because you lose some people, you backfill them from the market, that cost is. While the rate at which the average compensation was increasing, that has come down. If you see quarter on quarter, there is a marginal uptick in the average compensation. That continues to be a headwind. I think the tailwinds is, I mean, our utilization, I mean, a lot of talent that we hired, they still need a little bit more deployment and realization. I think ultimately we have to get better realization from the customers. That's our biggest focus. Wherever possible, we've been able to position the right win-win themes with our clients and get the increase. In the run the business, we have to drive more automation. I think that is during the COVID, some of those initiatives took a slightly backseat from an automation perspective. Now they're again the top of the mind and there is an opportunity there. I think all of this is what is going to help us improve margins. We remain quite positive on how this will turn out. I think the next question on SaaS, do you think that SaaS offerings can be better than pure products? I think that's a confusion about the license model. I think there can be a SaaS level. Maybe you can explain that better than I can. See, I mean, a majority of our install base, 99% is on-prem install base. You can have a perpetual license or a term license, but it's still on-prem. We have now the SaaS version for a number of products. Gradually we are trying to convert. I think there is, while initially customers are keen, but that uptick is not going to be dramatic. It is going to happen slowly. We will give you some more metrics on how SaaS adoption is happening as we move forward. Look at the gross margin change. I mean, I think I'm not sure. I think this is about a bit promptly that its margins are down almost 600 basis points in the last six quarters. Do you think that this shows a lack of pricing pressure and we've not been able to get price hikes? No, I think the whole pricing conversations have started only in the last four months. It was, we always believed it's a temporary situation and we will be able to recover. Maybe from the beginning of this year, we've been a lot more focused on, of course, increasing our rate cards, getting better pricing, all of that. See, we have a certain goal of how much rate increase that we need to achieve for this year. In the first quarter, we did not achieve what we wanted to achieve. That was also one reason margins were lower. I feel confident that we will be able to achieve the annual number on the price increase that we wanted to achieve. How should we think about the talk about recession? I mean, do you think that when you're talking to clients, are you seeing nervousness about spending? Are you seeing them start to at least talk about putting some programs on hold? Are you starting to see any signs that people may be turning very cautious? Sorry, can you just repeat that again? With the talk about the US recession, do you think that clients are turning more cautious now? Are they starting to talk about putting any programs on pause? In some pockets, yes, definitely. Some long-term programs which were in the early stages, probably customers are relooking at it. A lot of them are also at the same breadth saying that these are very important and we have to continue. I would say some pockets we've seen some pullback. It's not something material to look from an overall demand environment perspective. Because even in the, let's say, three months ago, we were still having a lot of demand and we were not able to fulfill all the demand. Even if the demand comes down a little bit, it's still the growth trajectory is expected to continue. I think that maybe let me clarify. We were also talking about no changes too. People are actually putting pause only on new programs, right? Anything that's really in flight, what is happening right now, no one's talking about cutting any of that. Yeah, in fact, they want to accelerate and realize the benefits faster. That is what we are hearing. If Europe actually has a recession, do you think that visibility in the ER&D and our bullish outlook for that segment, will that change? Marginally, yes. I mean, our ER&D business is predominantly a big part of it is in the US. There can be some projects which can slow down. In a tighter economy, there are value props that we have, which becomes much more like the entire run the business, cost takeout, which is there even in engineering. A lot of traditional products, customers may want to take out significant cost and leverage a global delivery model. That also triggers some sizable opportunities on the engineering front. I think in each of the service lines, we have a good mix of more change the business and development type of programs and run the business and operations. I think that is what I feel confident will help us continue growing well. We take one last question here. I think it's a funny one. What would be the one thing that you'd like to change for HCL right now and possibly HCL five years from now? I think we need to, our marketing and brand is one thing which I think we need to invest in. We've generally been a best kept secret kind of thing for the type of work, amazing client base, the programs that we do, the recognitions that we have. We are a little bit under leveraging that. If there's one thing I would think a little more visibility and brand is what I would think. Thank you so much. We are at the top of the. Thank you so much again, CVK. Thank you everyone for joining us. Have a good night. Have a good day. Thank you. Thank you.