Ladies and gentlemen, good day and welcome to the HCL Technologies Limited Q4 FY 2023 and Annual FY 2023 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manan Batra, Senior Manager, Investor Relations. Thank you, and over to you, sir. Thank you, Aman. Good morning and good evening, everyone. A very warm welcome to HCLTech full year fiscal 2023 and Q4 earnings call. We have with us Mr. C. Vijayakumar, CEO and Managing Director, HCLTech. Mr. Prateek Aggarwal, Chief Financial Officer, along with the broader leadership team to discuss the performance of the company during the year and the quarter, followed by Q&A. In the course of this call, certain statements that will be made are forward-looking, which involve a number of risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from those in such forward-looking statements. All forward-looking statements made herein are based on information presently available to the management, and the company does not undertake to update any forward-looking statement that may be made in the course of this call. In this regard, please do review the safe harbor statements in the formal investor release document and all the factors that can cause the difference. Over to you, CVK, and thanks. Thank you, Manan. Good evening and good morning, everyone. Thank you for joining us for HCLTech FY 2023 and Q4 FY 2023 annual earnings announcement. When we started the year, there was good optimism around growth supported by strong market momentum, but within an uncertain geopolitical environment. When we started the year, there was high attrition and increasing resource costs industry-wide. I'm pleased to share that we've managed to deliver good growth with good control over profitability during such a volatile period. Our overall revenue grew 13.7% in Constant Currency year-on-year. The strong growth is attributed to good momentum both in our services as well as our software business. This was on back of strong and healthy growth across segments, sectors and geographies with a healthy margin performance. As a company, we are very proud to cross the INR 100,000 crores revenue in INR terms. I want to thank 225,000 plus HCL Techies all over the world who have contributed to make this very impressive milestone happen. In FY 2023, we delivered industry-leading growth for our services. We grew 15.8% year-on-year in Constant Currency. Almost the entire growth was organic. In the process, we've gained market share in the year in the services business. HCL Software business grew 1.8% excluding divestitures in Constant Currency on a year-on-year basis. Our operating margins came in at 18.2% for the full year. If you recall, we had started at 17% in the first quarter and have improved significantly to 18.1% in the latest quarter. I think this was the lowest EBIT dilution among our peers when the resource cost was under stress initially. Things are starting to look better now. In terms of our segmental performance, IT and business services grew 15.4%. Engineering services grew 16.8%. HCL Software grew 1.8% during the year on a year-on-year basis. Our software business continues to exceed expectations for the second consecutive quarter with 8.2% growth year-on-year, of course, excluding divestiture during the year. This is a traditionally weak quarter. We're also very proud to announce that we've crossed an ARR, annual recurring revenue, of $1 billion. This is a very important milestone. We've also disclosed more metrics around our software business in our investor release. During the quarter, our ERS business degrew, and it is attributed to two verticals, tech and telecom, which contributed to this degrowth. We do have the capability to navigate this dynamic kind of environment, primarily based on our resilient business model and more importantly, our portfolio mix. Our geography growth was led by Europe at 20.5% year-on-year in Constant Currency, followed by Americas at 14.4% and ROW 11% again year-on-year in Constant Currency. Top-performing verticals, primarily due to the significant performance in the first half, tech grew 22.5%, telecom media grew 22.4%, and manufacturing 18.3% on a year-on-year in Constant Currency. During this quarter, financial services grew the maximum on good demand for cloud and data as well as ramp up of large deals. All of them were executed very well in a timely manner to ensure we transition clients as per the timelines that we had committed to. Manufacturing segment was impacted due to one-off a program coming to an end and associated site work on that program. We've had very impressive client additions during the year. We added three $100 million clients. Now we have 19 $100 million clients. We have 46 $50 million clients where we added three clients during this year. Overall, $1 million client now stands at 939, which is an impressive addition of 57 clients during the year. These metrics reflect the strength of our mining, cross-selling and upselling in each of our clients, and also it provides a visibility into the potential in a significant number of $1 million clients that we signed up during the last financial year. From a booking perspective, our bookings grew 4.3% on ACV basis and 6.6% on a TCV basis year-on-year with 13 large deals across products and services. As you would know, the booking numbers that we call out, which is roughly $2.08 billion in this quarter, these are all net new booking, which is all the incremental business that we signed in existing customers and new customers. We also want to note that our total booking, which includes net new booking and renewals, grew 19% during the year, on a year-on-year basis. We've had excellent renewals. We've had 99% renewal in our portfolio during the last 12 months. We continue to expand our reach in G2000 clients, which is one of our strategic objectives. We believe we have a great opportunity to address the larger market with increased reach. I want to call out a few things that are really helping us in this context. Our brand transformation, which is starting to give us a edge from being the best-kept secret to the best-in-class service provider. Started seeing good synergy opportunities for the services business from a few of our product clients. You would remember the mega deal I mentioned earlier in the year. Presence in many geographies through our focus on new frontier countries from a go-to-market perspective. The deal I'm about to mention is one such deal. This is also the largest deal in this quarter for us, and a big one as we look beyond our core geographies. A Global 100, top 100 banking and financial services firm in a new frontier market, who's, I mean, obviously a new client, selected HCLTech to transform its customer relationship channels. We will implement a modern Salesforce CRM and an omnichannel solution to enable the bank to deliver hyper-personalization to its clients. It's also a deal during a period when financial services globally is in a state of flux. We won a few other large deals both in U.S. and Europe in this sector, which is a sign of our propositions, which are seeing good demand in this market in financial services. Another deal that reflects our goals, a Fortune 500 existing client expanded their partnership with us to accelerate digital transformation across its operations through convergence of IT and OT. We will modernize the OT environment to drive automation, enhance the safety of employees and productivity of equipments, leading to a more sustainable operations. On the product side, one deal I want to call out is a U.S.-based digital solution provider for healthcare providers. They expanded their partnership with HCL Software for use of portal and content management software to meet the growing demands of its clients. The application of HCL Digital transformation DX platform is at the core of the client's business. Our pipeline continues to remain close to record high and is well distributed across the service lines. We believe after a period of optimization, I believe clients know the value of technology and what it brings for the overall business. Still early days for some green shoots, but I'm optimistic of the future outlook. Our people ramp-up continues. We had 3,674 net new additions in this quarter and 4,480 freshers during the quarter, which is lower than the last quarter, adjusting for the market conditions. Overall, headcount crossed 225,000 people. We've added more than 25,000 freshers in the year, the highest in our history. While we are scaling fresher intake, we still have an opportunity here. We will have sustained focus on this over the next two to three years to improve this further. Our attrition started trending down and has continued in the right direction. On an LTM basis, our services, IT services volunteer attrition is now at 19.5%, which we believe is one of the lowest in the industry. We now have dedicated leadership to drive growth in nearshore locations, which is a very important component of our business strategy. It's starting to show results both as people and revenue ramp-up and as profitability improvements. Morocco is a new nearshore center for us, aligning with the opportunities that we're seeing in Europe. In the last quarter, we won many awards. Some notable ones, we've been recognized as the fastest-growing India-headquartered IT services brand, among the top 10 IT services company globally according to Brand Finance. HCLTech positioned as a leader in Avasant SAP S/4HANA services. We were positioned as a leader in Avasant digital commerce. We were positioned as a leader in Gartner's Magic Quadrant on outsourced digital workplace services. We're also positioned as a leader in the Forrester Wave multicloud managed services providers. We also received gold award at The Economic Times Human Capital Awards for innovative hiring and unique practices for our TechBee program, which is HCLTech's early career program. I'm also glad that the progress has been very good with the dedicated leadership that we have in place on the ESG front. A few recognitions we received this quarter for our efforts. MSCI has rated HCLTech as an ESG leader in the software and services industry and upgraded our ESG rating from A to AA. We've also been included in the S&P Global Sustainability Yearbook 2023 as an industry mover for demonstrating sustainable business practices. In terms of the overall demand environment, there are still evergreen demand for a lot of relevant services, be it the IT operating model change proposition, data modernization, cloud, and cybersecurity. We successfully embedded CloudSMART as a part of all our propositions, leveraging the ecosystem strategy. More than 90 CloudSMART services offerings built existing services across service lines are also mapped to support the CloudSMART factory delivery model. We also wanted to remind you that we are the only service provider in all six IT services Gartner Magic Quadrant to be positioned as a leader. A great pole position to be in for the next year's race. We were anticipating a cyclical trend change from the early last year, and we are well prepared for this section of the economic cycle as we move forward. Though there has been some stress and uncertainties in the system, be it as booking delays or ramp-up delays, it's largely restricted to the discretionary spend. While modernization is running into some near-term headwinds due to cost pressures, this is also the right time for clients to look at optimizing mature digital estates and optimize cloud costs. We don't see so much stress on the run the business side, and it gives us good confidence given our strength in a number of areas which are very, very mission-critical in running the business for our clients. There is obviously a huge uptick in the efficiency-led large deals. Cost optimization and vendor consolidation continue to be very strong, strongly visible in our pipeline. We also believe the spending will increase in areas like applied AI and analytics, edge computing, sustainability, supply chain optimization, and data and app modernization. Amidst all the volatility, I want to call out the financial services which the industry has been very concerned about. We've had very strong growth, 6.9% sequentially, and we continue to remain very optimistic about our outlook for financial services. We see good opportunities with clients seeing relevance of our propositions, especially taking over the existing digital foundation landscapes and modernizing them and to the target state of hybrid cloud or the predominantly public cloud kind of solutions. Our recent wins in this space, it spans across all geographies, Americas, Europe, and even our Latin American countries. If I have to summarize, there is a slowdown, but still we believe there is a floor level which will be higher than the pre-pandemic cycle, and the time to recovery also should be shorter. This message about recovery will be shorter is based on the pipelines and the decision timelines that we have seen in all the opportunities that we are working on. In terms of FY 2024 guidance, we believe the technology spend which has continued over the last many quarters, it's time to kind of review and consolidate for our clients to consolidate to the most efficient and impactful technologies and the most efficient and scalable service providers. We are gaining significantly in vendor consolidation opportunities, not only in our existing clients, but also as a differentiated challenger in few of the clients where we are not there. Our guidance for FY 2024, we expect the revenue growth to be in the range of 6%-8%, our operating margins to be in 18%-19% range. I will request Prateek to cover some more details about the financials, and then we will take questions. Thank you. Thank you, CVK. Wish you all good evening, good morning, good afternoon, wherever, whichever time zone you are. From our perspective, the key milestone for the quarter and for the year really is the INR 1 lakh crores of revenue in rupee terms. So having mentioned that key milestone, let me go on to the quarter, fourth overview, and then I'll follow it up with the full year numbers. Lot of numbers to be discussed, so I'll try to make it as rapid as possible. HCLTech revenue for the quarter stands at $3.235 billion, $3.2 billion, which is a reduction sequentially due to the seasonality of HCL Software, which hits a peak in the December quarter. For the quarter, services revenue stood at $2.9 billion, which was an increase of 0.6% sequentially in Constant Currency. The year-on-year growth in CC is 10.6%. ITBS, IT and business services reported decent growth of 1.6% sequentially and 11.4% year-on-year in Constant Currency. ERS, however, showed a sequential decline of 3.8% due to customers cutting back on some of their discretionary spends, leading to project ramp-downs and paused or delayed programs. But in year-on-year terms, they continued to show a 7.3% increase in Constant Currency terms. HCL Software reported a year-on-year growth of 7.9%. If you exclude the divested business from the base, the growth was actually 8.2% in year-on-year Constant Currency terms. In the software business, we have been talking about publishing some additional metrics. We have a new page that we've added to this quarter's and the annual investor release. Apart from providing the revenue by type of contract, by the type of sales, we have also added the annual recurring revenue as a new metric, ARR, which I'm sure you know that typical software businesses and relevant stakeholders tend to focus a lot on. We started publishing that from this quarter. As on 31st March, the ARR stands at $1+ billion and has shown a growth of 5.2% on a year-on-year basis in Constant Currency. For the quarter, EBITDA margin came in at 21.9% and EBIT at 18.1%. I'll shortly explain the quarter-on-quarter variance on EBIT. Net income for the quarter came in at $481 million, which was 14.9% and up 1.3% year-on-year. The work from previous December quarter to the current March quarter is actually a very simple work. HCL Software seasonality impact itself is about 125 basis points, which basically reflects most of what changed. There was a additional 30 basis points drop in the services margin. That was entirely due to ERS, ER&D margins coming in lower by 50 basis points, which was partly recouped from operational efficiency and improvement in EBIT in the ITBS segment, which grew by 30 basis points. At a services level, that contributed 20 basis points. 50 minus 20, 30 basis points is what the services QoQ margin drop was sequentially. You will see that ERS basically had a $18 million revenue impact, which came towards the end of the quarter, last month of the quarter, and basically flew down to EBIT without providing the ability to sort of really manage costs in the last few weeks. That's something which will obviously improve going forward. For this quarter, the $18 million pretty much flew down to the EBIT margins. On the ROIC front, which is the other additional metric that we have been publishing last two, three quarters. You know, we are focused on improving ROIC. The last 12-month ROIC is now at 30.4%, which has increased 150 basis points on a year-on-year basis. Services now is at 37.3% and software, given the good quarter, is at 15.5%. Additionally, I would like to indicate that the incremental ROIC, so incremental growth in margin divided by the incremental additional capital deployed, is in the last two years and three-year periods more than 50% plus. That's an additional factor that I thought I would share with you. We've been publishing the ROIC and incrementally it has grown at 50%+. I also wanted to share there have been questions about, you know, some of the events that have happened on the banking sector in the last month. In the current operating environment, there are concerns on the stability of some banks. We want to clarify that our exposure to these events and risks to our business and projected growth is frankly minimal. As per our health assessment of our banking clients, based on their credit rating and detailed working that we have done, including the impact of mark-to-market hits on their hold-to-maturity investments, et cetera. Our banking clients with average or below average lower credit rating is about 1% of the financial services business that we have, which as you know, is about 20% odd of our overall revenues. The discretionary spend is even smaller than that 1% data point that I shared. Moving on to the full year numbers, just a few bullet points. The full year revenue came in at $12,586 million, so twelve and a half billion dollars. Revenue growth of 13.7% in Constant Currency terms, somewhat in the middle of the last guided range that we had given you, 13.5%-14%. HCL Software grew at 1.8% excluding divested business. The services growth came in at 15.8% year-on-year in Constant Currency. EBITDA margin came in at 22.3% for the full year and EBIT at 18.2%. Again, somewhat in the middle of the guided range of 18%-18.5% that we had given. Net income for FY 2023, $1.837 billion, $1.8 billion, which is 14.6% of revenue, which is up 1.7% year-on-year. Our guidance for the year is services at 6.5%-8.5%. For the company as a whole it is 6%-8%. I would just like to point out that this is Constant Currency and based on the March closing rates, exchange rates at the end of March, there is an additional 70 basis points that we expect in reported U.S. dollar terms. The Constant Currency guidance translates to 6.7%-8.7% for the company as a whole. For the services part it is 7.2%-9.2%. EBIT, as you know, we've guided there 18%-19%, a narrow range. The operating margin guidance assumes dollar rupee currency rate of the current rate of about INR 82 per dollar. The other currencies at average FY 2023 exchange rates. The tax rate for FY 2024 will go up. We expect it to be between 25.5%-26.5%. I mean, the last year FY 2023 came in at 23.9%. At the midpoint it's going to be an increase of about 2 percentage points. We will see increased ETR simply because of certain new units, moving to different slabs in the SEZ regime, and some coming out of the SEZ tax benefits as well. However, the important point which I've always maintained with all of you is the cash tax rate will be significantly lower by about 5 percentage points. In cash tax terms, we will continue to be in 20.5%-21.5%. Say 21% at the midpoint. There is a 5 percentage point difference between the cash that we actually pay out, as we would continue to pay MAT, M-A-T, in India, using about half of the accumulated MAT that we have in the balance sheet as on 31st March, which is about $225 million. We expect to use that over the next two years, about half of it in the FY 2024 and the balance half in FY 2025. I just want to flag up once again that the ETR in the P&L and the ETR in actual cash flow terms is going to be a wide variance of that 5 percentage points. Cash generation for the year came in at $2,230 million for operating cash flow on a last 12 months basis, which is at a 121% of net income. That continues to be at that range of 120% plus that we have been mentioning in both of our investor days in the last year and as per the promise that we have made to you. Free cash flow as well came in at $2 billion plus, $2,024 million to be precise, and that comes in at 110% of net income. Both those metrics are extremely good to look at. Our balance sheet therefore continues to strengthen with gross cash now at $2.8 billion and the net cash at $2.5 billion. Remember in this quarter, we actually retired $248 million worth of bonds that we had issued two years back. That reduces the gross cash. Without that, the gross cash would have been $248 higher and therefore over $3 billion, $3,058 million to be precise. But net cash obviously remains the same because it is post reducing the impact of borrowings. Overall DSO reduced by two days on a sequential basis, including the UDR, unbilled revenue. It now stands at 88 days. Shareholders' aspects, ultimately the net income or profit after tax, on an EPS basis, earnings per share, diluted EPS, for the last 12 months comes in at INR 54.79, which is a 10.1% increase on a year-on-year basis. Looking at that and all the financials and projections, the board is happy to declare a dividend of INR 18 for the quarter. That brings up the full year dividend to INR 48 per share, as we have paid INR 10 per share per quarter in the first three quarters. INR 30 plus INR 18 for this quarter makes it INR 48. Against the INR 54.79 of EPS, that payout ratio stands at 87.5%. We have promised a minimum of 75%, so we are staying fairly high compared to that. Hopefully shareholders should be happy with that. I just want to take a minute more on explaining the deal wins narrative because there have been some questions and, you know, everybody does it a little differently, so I want to be clear how we in actual fact, publish these. Booking for the quarter has been $2.1 billion, and that is on a Constant Currency basis. The ACV growth of that number, ACV is annual contract value, has actually grown by 7.6% on a sequential basis. Just for clarity and for your understanding, we have what we call the budgeted exchange rates. We refresh the currency rates at the beginning of the year based on our study of the last quarter and the last year and what projections are available. Based on that, we refresh the currency rates and the booking numbers that we report, the deal wins numbers that we report are carried at the same rate throughout the year. There were some questions on that. That is the reason I'm getting to that level of detail. FY 2023 budgeted exchange rates were the same as the FY 2022 budgeted foreign exchange rates. All the $8.8 billion-$8.9 billion of deal wins that we've published are actually at Constant Currency rates because the budgeted numbers were exactly the same, the Forex rates. Having clarified that, let me elaborate on some of the other attributes. As I hope all of you already know, the TCV that we report includes only the net new deals. We do not include any renewals in that, except of course, if there is any incremental work that comes in as part of the renewal, we report only the incremental part. This includes large, medium, small, all kinds of deals. We don't sort of differentiate. All the numbers that we report are only the net new deals for both services and products. This number comes in only when they are committed by the customers. We don't take projections given at the time of RFP and during the discussions, and we don't publish that till it actually converts into a signed SOW or purchase order. Rate card deals, we don't publish any TCV upfront. Only when the work actually granted the work, I mean the purchase order of the SOW comes in, that is when we publish the TCV and related ACV. We do use the term large deals. Large deals, the threshold that we use for that characterization is for the services business, it's greater than $25 million, and for the products business it is $2.5 million. In the year, we signed 57 large deals. 32 in services were all individually greater than $25 million each, and the 25 in software were each individually greater than $2.5 million. With those list of clarifications, I'm happy to sort of take a pause here and open up for Q&A. Thank you. Thank you very much. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets for asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Girish Pai from Nirmal Bang Institutional Equities. Please go ahead. Yeah, thanks for the opportunity. I wanted to know the 6%-8% guidance you've given. Is this front-loaded or back-loaded? What volume price mix that you have? Girish, thank you for the question. At this point, we don't want to call out how it is going to pan out on a quarterly basis. I think the best reference point will be to look at our past year's performance. We do believe, it will follow a similar trend. Usually, you see our quarterly growth rates low in the beginning of the year and it goes up. It starts from JFM, it's probably at the lowest and then it keeps going up, and it will peak in December. That's the trend that we have seen in the past, and I do think that will reflect. In terms of the volume price, angle to give a guidance, is it completely driven the volume? Yes. We have not made. I don't believe there is going to be a price expansion in this environment, and I don't think we have baked in that in the revenue or the margins. It's primarily due to volume. Okay. On the margin side, what do you think are going to be the key headwinds in FY 2024? The general impression has been that, there are gonna be a lot more tailwinds for you to expand margins in FY 2024, but that doesn't seem to be kind of coming through. Yeah. I think, Girish, we are factoring in the fact that it is a very different macro that we are facing at the beginning of this year as compared to the last year. We do hope and expect to some extent that, you know, it will change for the better fairly quickly as it has the last few times that we've seen this kind of turbulence. We are factoring all of that, and we've given you a pretty tight range. There are tailwinds expected and foreseeable from the supply side. At the same time, there are potential headwinds that we might have to factor in. That's all factored into the guidance that we've given, and we'll see how it plays out and see if there's a need to correct later on. Just on that, just to, you know, push this a little bit more, besides salary increases, what else do you see as headwinds? I think I don't want to really get that specific, Girish. I think, you know, there is an environment that I already called out. Beyond that, what do you want me to say? Yeah, I mean, apart from regular wage-related dynamics, there is also productivity benefits and things like that. I think these are the two things which we think are significant to be called out, nothing more. Okay. Lastly, on software, HCL Software, it seems like you're kind of building in a little bit of decline in FY 2024. Can you throw some light or color on the product space? I don't think we're building in a decline. We do believe, it's been a great year for the software business. From a negative trajectory, we are well into a positive trajectory. Our general expectation is, we will continue that kind of trend. Obviously, there are always lots of gives and takes, and we provide some kind of easy numbers from a guidance perspective rather than going to the second decimal and things like that. Okay, thank you. Thank you. Thank you. Before we take the next question, I'd like to remind our participants to limit their questions to one per participant. If time permits, you may join the queue for any follow-up. The next question is from the line of Kawaljeet Saluja from Kotak Securities. Please go ahead. Yeah, hi. Thank you. You know, just a couple of questions from my side. First is on guidance. CVK, what gives you the comfort on the guidance, when you're coming off bookings, you know, growth, which was just 4% in ACV in FY 2023? I remember when you gave guidance for FY 2023 at the end of FY2022, it was coming off of fairly robust bookings, including $3.1 billion somewhere in March 2021. Whereas the booking trends are fairly muted in, you know, this time around. Just want some, you know, qualitative color as to what gives you that comfort. Kawal, first is the $3.1 billion, that really kind of contributed to the growth in FY 2022. If you look at the bookings, during FY 2022, I think on a year-on-year basis, it had grown probably about 10% or just in that range. Every year I think the growth is driven. As you know, we report only net new deals. Renewals are not counted. Net new deals are really technically they add to the overall revenue, but the headwind there is there could be project completions and there could be ram downs and things like that. Now what gives me the confidence, I think, even from an exit perspective in the services business, I think we would have a tailwind of about 2.8%. With that kind of an exit, 6%-8% really factors in a very modest sequential growth rates. Even if you assume Q1, which is a little soft for us, even if I factor that in Q2 to Q4, is very manageable kind of sequential growth rates, for upper and lower end of the guidance. I mean, okay, I understand CVK, but that's just math, right? For Q4 in December, you called out a growth rate of 1.5% to 3% and you came in at 0.5%. This definitely can change depending on the environment. Okay, nonetheless, I drop this topic. I mean, the other aspect, and this is just a couple of related questions, is that, you know, the first is, you mentioned the time to recovery could be shorter, you know, this time around. What gives you that comfort, you know, any data points, any anecdotes basically, which you can relate to the past, you know, cycles, which gives you that comfort that time to recovery should be shorter? A question for Prateek that does this quarter include, you know, I mean, you know, does Q1 revenue include that contribution from mega deals or has that contribution come in the fourth quarter itself? Yeah. Kawal, let me first address the first one. See, first is, in our business, we feel financial services will continue to deliver strong growth. Let's keep the outlook for financial services outside this. The recovery is really focused on tech, because tech is the vertical where we saw ram downs in the last two quarters. Usually, I mean, what we've seen in the tech is there is obviously significant layoffs and things like that which happened. Then projects need to be done. We see customers using a lot of external vendors. We've already started to see that in some pockets. At least in one very large, kind of like those kind of clients we're already seeing, they start consolidating. They, they kind of, where they cannot hire, they use external providers like us. Usually, I think this kind of trend we have seen in one or two quarters, we keep seeing this thing coming. Not only when there is a cyclical thing, even if one particular client, goes through some restructuring, we've just seen in three to four months, lots of external service providers are used. I think, we have that's the basis, and we're also seeing some of that. Visible, vendor consolidation opportunities in, big tech, where, which is one of our forte, and we believe, that's definitely gonna help us. Got that. That is, you know, are there other mega deals signed which are supposed to contribute in Q1? Is it stated to contribute in Q1 or has the contribution come in Q4 itself? Kawal, there are actually multiple mega deals. Just to refresh, there was one mega deal we talked about at the end of September, which is what I think you are referring to, which we said would start towards the second of Q4, which has started pretty much exactly on the dot when it was planned. Yes, that has come in in this quarter itself, albeit for the last month of the quarter. The next quarter is going to be the full quarter impact of that. Also you will remember there were large deals in the financial services that we talked about in the December quarter. Those are going to be starting now and going pretty much as per plan. That will again come in the Q1 of FY 2024. Got that. Thank you. Just a final question, actually. You know, thanks a lot, Prateek, for those additional disclosures on products. I mean, I see that subscription and support has that, you know, quarterly volatility. You know, is it largely consumption-based, volatility on a sequential basis, or is there more to that, you know, a quarterly volatility in subscription and support, which is an annuity-based revenue product? The volatility comes from the revenue recognition principles as per ASC 606 and the similar IFRS 15 kind of standards. Which is why we started producing the ARR metric, which ARR I mean, we've given a definition which I'm sure you would look at, but to put it very simplistically, it is more like a ACV, annual contract value, which is a term all of us are familiar with. That volatility is more related to the revenue recognition principle. ARR is more like ACV in a just to put it very simplistically. Thank you so much. Thank you. Thank you. Before the next question, I'd like to remind our participants to limit their questions to one per participant. The next question is from the line of Ravi Menon from Macquarie. Please go ahead. Thank you. Just then, you know, the margins seem to have come in below, and I understand that's due to the R&D, you know, sudden ramp down that happened in March. Ravi, may I request you to be a bit loud, please? Your voice is not very clear. Yes. I was saying that, you know, R&D margins have come in below expectations, and probably that's behind why the margin guidance is, you know, doesn't seem to factor in our ambition to get back to pre-COVID margins. You know, do you see a path to that, you know, over the next few quarters? Should we think about this margin guidance as conservative and, you know, probably, bring in any further ramp downs or unexpected cancellations? Ravi, thanks for that question because I think I would like to reiterate, as we have been discussing in the last several quarters, our aspirational range of EBIT continues to be 19%-20%. Let's not, the guidance that we have given, tone down that medium-term expectation and aspiration that we have. When we give guidance, we are obviously expected to be realistic and given the environment that we are going through, especially in the first half of this year or whatever, we have factored all that in, into the guidance. Over the medium term, our aspiration continues to be that 19%-20% band. There is no walking away from that. We have to get back to that. It is only a question of when, not whether. Thanks, Prateek. You know, you spoke about the R&D margin recovery being a bit gradual. Should we think about this as, you know, the pipeline is, not converting into revenue as quickly, so redeploying of the people is not easy. Is that how we should think about the R&D margins and growth? Yeah, I mean, if you look at the revenue drop in R&D this quarter is almost flowing into the margins almost entirely. Some $19 million-$20 million drop in revenue is almost visible in the bottom line as well. Obviously when customers ramp down, there are certain costs that we continue to carry. We have various ways to redeploy and attrition backfill and all of that. We have some levers, but it may not be very quick because some of the skills are unique and things like that. There are location intricacies involved in this. This will need to recover more gradually. Thank you very much. Best of luck. Thank you. Next question is on the line of Sudheer Guntupalli from Kotak Mahindra Asset Management. Please go ahead. Hi, CVK. On the IT services piece, one of your competitors recently raised an alarm on unprecedented, unexpected and broad-based rundowns and cancellations, which impacted the March quarter. Post that, the industry perception which got built was that it's a blanket IT services industry-wide trend. Some companies may see the impact early on, and some may see later on, maybe in the June quarter. Clearly, your March quarter results do not reflect any such trend. Two questions on this. First, apart from a general sense of caution, which is quite well-known, are you seeing any macro-led shocking change in terms of the client behavior versus September and December quarters? Second, are you worried that if not in March, we may have to see some of this shift in the subsequent quarters over and above the normal seasonal weakness we usually see in June? Yeah. Sudheer, while I don't want to comment on any specific providers in the industry, I think the biggest indicator of how the spend pattern is going to play out is normally dependent on the client budgets. In Q1, most clients have visibility to what their budgets are, and that's why I mean, you would have seen a little muted growth in Q1, because whatever plans that kind of got rolled out, customers were very quickly trying to kind of readjust their spend to be in alignment with their budgets. I mean, a lot of our planning is informed by whatever visibility that we have from our clients on the specific programs, and that's what we have factored in. I do think most of the. I mean, most of whatever gain has been factored in in their client IT budgets. If they had to inform us of some program for which they don't have funding, they would have definitely done it in the first quarter because that saves them more money throughout the year. I think we've done a pretty good analysis, especially in our tech and telecom verticals. I mean, we think the budgets have been defined, most likely that will continue. I think the financial services, between banking, capital markets and insurance, we feel very, very confident of the trajectory in both insurance and capital markets. Banking could be a little muted based on the spend patterns and the understanding that we have. That's what we see, and I want to just be limited to our commentary at this point rather than providing an industry outlook at this time. Sure. Thanks, CVK. Just one more follow-up since you since you mentioned about budgets. If you look at the budget trends that your customers would have defined in the first quarter and sort of contrast it with what the trends would have been a year ago, are they significantly different or it's just a bit of a moderation? What exactly you are seeing? I think it's moderating for sure. In some segments, there is more moderation, especially where inflation impact is very high. The moderation is significant. That's also the reason you are seeing a lot of big deals in the pipeline. We have many half a billion dollars plus deals in the pipeline across many, many verticals, financial services, telecom. Actually the sectors where we see more pressure is where we are seeing large deals. Understood. Understood. All the best. Thank you. Thank you. Next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah, hi. Good evening, everyone. CVK, two questions. One is, we seem to be seeing a very different trend in your results compared to those who have reported so far. U.S. appears to be very strong while Europe seems to be weak. What's driving that differential? That is one. The second is, I remember in the last quarter you basically said that, you know, the way discretionary spends will move is anybody's guess. What are your thoughts on that now, and do you think that that should sort of turn at some point? Just wanted your thoughts on both. Finally, on the margins, earlier I think, when you did mention, Prateek, that it is not a question of whether it'll happen but when it'll happen. For this year, is it more driven by the cost takeout and large deals? Is that why there's a relatively more, maybe a little more cautious versus what we thought maybe last quarter? These are the three questions. Thank you. Maybe I'll take the first two, and Prateek will take the third question. I think why Europe is weaker than U.S., I think I did call out last quarter and even in the previous quarter, the booking has been more stronger in the U.S. than Europe, and some of the decision-making has been slower in Europe. I did call out that that will start reflecting in revenue slowdown in Europe, and that's what you're seeing. I think it will take another quarter. I think we still have a good pipeline. I don't have, like, a lot of near-term confidence on some huge bookings in Europe, maybe the second quarter we are likely to see something. U.S. continues to remain very strong. Different trends compared to other industry players. I don't want to comment, as I said, I'm looking at my pipeline, my clients, the programs, which we are working on. Are they going to continue on those programs during this year? We have a good good feel of pro-projects which are ramping down, and some of that is already at least part of that is in the JFM numbers. Discretionary spend, yes. Last quarter, I definitely, we had a lot of lack of clarity on where things will move. As we started working through this quarter, looking at our top 50 clients and all the key programs, there are some ramp downs have been there. Some comfort that other programs will continue has also been there. Added to that is the large deals that we won in the last two quarters. I think some of this is all playing into our slightly better growth outlook for the coming year. Yeah, Nitin, on your third question, the simple answer is yes. Yes, we are banking on cost takeout projects and large deals, some of that is also reflected in the margin guidance that we have given. That's very helpful. Thank you so much. Thank you. Thank you. Next question is on the line of Gaurav Rateria from Morgan Stanley. Please go ahead. Hi. Thank you for taking my question. Couple of questions. Firstly, if you could deconstruct for us the outlook within financial services in U.S. versus Europe, are there different trends? Secondly, you mentioned about market share gain. Have you seen any benefit from vendor consolidation opportunities, and is it specific to any one or two key verticals? Last question, you also mentioned about run the business being very resilient versus discretionary spending. Any color on what part of our business is, like, more akin to run the business versus discretionary? Thank you. We have our Head of Financial Services, Srinivasan Seshadri, on the call. Srini, would you want to respond to this? You know, I think, as CVK mentioned already, the financial services results have on the back of good execution that we've done over the last two quarters. He also mentioned that things went as per plan. We've already had significant successes in North America in financial services, and Europe is also showing good signs right now. The pipeline, despite what the macroeconomics might be, is showing good signs. North America is definitely leading financial services. Europe probably is trailing, but we still see good signs from there as well. Yeah. You talked about market share gain. Yes, definitely, at least even in this quarter. Verticals. Sorry. What verticals? Yeah, yeah. You know, which verticals we have gained market share, at least two good call-outs. Financial services, definitely we are gaining market share, based on the two large wins that we have announced. Even in this quarter, I mean, at least three wins have been in financial services, actually in three different geographies, so it's more broad-based. Also in one of the large capital markets players, we have, we are consolidating another provider, who's at least 1/3 of our presence. That's again, a very large consolidation in financial services. The second vertical where we are gaining some market share from a wins perspective, it's still not reflecting in revenue, is retail CPG, where we had some wins, so now it's going to start reflecting in revenue during this year. Tech and telecom, I think both, I mean, we are already in the midst of a number of consolidation opportunities. Some of them consolidation from a number of small vendors into one large vendor. Here again, it's not just vendor consolidation, it's also about how can we bring some of the newer automation levers in providing much better cost structures for the client. It is really a good challenge some of our clients have kind of given us, and we are working through some of them and we are seeing some encouraging results. At telecom, in all the large players, there is definitely big opportunities which we are participating in. We do believe we will gain some market share in telecom in this year. Four verticals, FS, retail CPG, tech and telecom is where we expect to gain market share during this year. Third question was RTB versus discretionary. RTB is strong because. Which modes? I think we have RTB spend across all four service offerings, uh, uh, whether it is infrastructure, uh, lot of applications also. Uh, in fact, uh, see, a lot of customers have expanded their digital landscape. And today they're looking at how can they, uh, optimize their digital landscape. Like, some of them have, uh, two hundred plus SaaS providers providing a lot of niche vertical solutions. Uh, so can that be rationalized? So it's very similar to what you will see in a, in a traditional landscape. We are seeing that in digital landscape as well. Similarly, uh, what are the ways to optimize the cloud consumption spend and the operating costs around that? I think this means sometimes it's a small fine-tuning program, quite often it's about making some significant changes in the applications to see how the consumption can be more optimized. This means there is a one-time program. Sometimes we are even signing up ongoing FinOps, where financial operations of the cloud spend, which is contracted as a% of the cloud consumption, to kind of provide some good revenue visibility. Those type of opportunities are there. These are all, even though it's cloud consumption, we still treat that as run the business kind of spend where we have a play in it. Similarly, in the engineering services, the product sustenance, product professional services, all of them, we treat them as RTB, and we see some good opportunity there as well. Thank you for the detailed answer. If I can squeeze in one more. Okay. The deferral in discretionary spend that you mentioned, which happened probably towards the end of the quarter in March, is this something which is still continuing, and kind of likely to have the impact in June quarter as well? Thank you. Yeah. I think largely that is in ER&D. You will see that, in tech and telecom is where we had this challenge. We think, in some clients the pain is behind us. There is a little bit more in a couple of clients. We expect that to stabilize, during this quarter based on all the, you know, ramp-ups and execution that's happening. Some of this is also related to offshoring. While we continue to have people onshore delivering services, we have a commitment to kind of transition this to offshore, and some of the higher-end work does take some time, so that also has some impact on this. Thank you. I think one more. Thank you. Next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Hi. Thank you for the opportunity. Just wanted to probe you further with regards to that ER&D weakness that you've seen. When you've highlighted that, high tech and telecom essentially have accounted for bulk of the decline in the current quarter, how should we be thinking about other segments within ER&D? I have Vijay Guntur, who is the president of our engineering R&D services. I will ask him to provide a little more detail. Hi, Manik. The spend in technology and telecom, these are the two areas where we've seen some softening of that spend, mostly discretionary spend that we have seen softening in. That's in specific accounts and areas. Some of it has been expected, and we factored it, most of that, I would say. There will be a little more continuing in that in specific accounts this quarter. Which are the other verticals? No other verticals, I don't think there is a big discretionary spend that we see coming in and getting worse softness. We think those are reasonably good. Sure. Thank you for the opportunity. Thank you. Thank you. Ladies and gentlemen, due to paucity of time, that will be our last question for today. I now hand the conference over to Mr. C. Vijayakumar for closing comments. Thank you, and over to you, sir. Thank you for joining the call. In FY 2023, we delivered the industry-leading services growth with the lowest dilution in EBIT margin. A number of our people metrics has come in much superior to our industry peers. In FY 2024, it's our aspiration to drive towards delivering industry-leading growth. In the current macro environment and also if the macro environment improves, we want to be prepared to make sure we are able to capture all the opportunities and deliver a superior organic growth with an improving margin profile. And we want to do all of this by being efficient in how we use capital, focused on organic growth, improving margin trajectory, right sizing of cost structures, continuous focus on all the three levers that we have. At least two major levers, which is around, continuing, adoption of pressures and improving utilization and kind of streamlining the pyramid. We, we will continue to work on all this. We remain pretty confident of our outlook for FY 2024. Thank you for your support. I'm looking forward to connecting with all of you in the subsequent, quarters. Thank you for joining us today. Thank you very much. Thank you very much. Ladies and gentlemen, on behalf of HCL Technologies Limited, that concludes today's call. Thank you all for joining us. You may now disconnect your lines.