Thank you very much. We will now begin the question-and-answer session.

Sir, my question was mainly on the overall IT Services segment excluding the ER&D. So, from the ER&D segment, of course, we have seen a good ramp up in this quarter included the ASAP acquisition results and, of course, we were recovering from the bottom ing out in the last two quarters. In the IT Services segment, just wanted to understand apart from, of course, the strong deal wins that we have seen, what is the overall status on the discretionary spend in the existing deals, are we seeing continuous ramp downs as some of our peers are kind of basically suggesting that the discretionary part of these existing deals is being put on hold. Is that the considering traction, are we seeing an acceleration or deceleration in that process vis-à-vis in the last few months or last couple of quarters and what is the outlook on that, when do you think this could maybe start tapering off in near or near-to-medium term future?

Vibhor, thank you for that question. I think it's none of those things that you kind of mentioned. And this is pretty visible from our notes to the accounts, our assets revenu e has actually gone down by $25-odd million which at a Company base is 75 basis points. So, yes, it is 0.9% reported, b ut if you sort of add that back then the number would be very different. And more importantly I think the guidance that we've given for Q1 and Q2 - it is what it is, but in the CQGR terms for the balance half of the year, there are three numbers. So, I'll just sort of stick to the Services number. It does translate to about 3 % to 4% between organic/inorganic. So, even if you take just the organic, I think the number is 2.6% to close to 4%. So, we are confident of delivering that. That is the revised guidance we have given. Like CVK covered in his opening remarks 3% to 4% is a very good growth at any point in time, especially in these kinds of macroeconomic scenarios.

Sir, I think we are absolutely right that I think CQGR that we are targeting for the second half is definitely very strong, but my question was more to understand the overall demand environment that we are kind of facing. Of course, our deal flow has been quite strong. But overall are we seeing the client conversations around more holding back or cutting discretionary spen ds as CVK mentioned in the opening remarks or the situation is stabilizing. Just basically trying to understand the direction in which the discretionary spends is moving at this point of time.

Vibhor, the discretionary spend continues to be there and obviously a good part of the booking that we have done contains some of the discretionary spend. But I think the spend is a little lower than what we would normally see and that reflects i n some kind of reprioritization or optimization, and that's what you see. And we still think discretionary spends is not anywhere closer to what it used to be. So, that's what I would say on the discretionary spend at this time. But our pipeline continues to remain very strong. Obviously, it is not at the highest because we've got a tremendous booking last quarter, but it's probably maybe 10% below our peak. So, which is also a very strong position that we are in, and we have a number of deals in the final stages. We will continue to deliver str ong bookings in the rest of this year, which will all feed into the next year. And just one more element I want to keep in mind is when w e talk about booking , we do not include rate card deals where the ramp-ups are relatively slow . We only consider them as booking after the ramp up has happened. So, all the bookings that we have are firmed TCVs with the committed transition t imeline and execution timeline in all net-new because renewals are excluded from these numbers.

We have a next question from the line of Sudheer Guntupalli from Kotak Mahindra AMC. Please go ahead.

Both for HCL and the industry w e are seeing record high deal wins, but for the reasons well known it is not immediately translating into revenue growth trend. So, the question here is given the strong order backlog pipeline and the fact that some of these mega deals a re ramping up towards the latter half of FY’24, is it fair to assume FY’25 could be potentially a COVID period kind of high growth ye ar if the macro stays stable henceforth, ju st looking for your directional qualitative assessment, I appreciate that you don't give FY’25 guidance yet?

Sudheer the overall environment is quite volatile . S o, if you see, I mean every 2 months, 3 months, the overall commentary is also changing. So, I would hesitate to take a view on FY’25. But, of course, given where we are and the growth that we anticipate in Q3 and Q4, we will have a strong exit there is no doubt about that. But, of course, how FY’25 pans out will depend on, of course, the deal wins in these two quarters. But again, the client spending, which is largely the discretionary spend of which I think it’s very early to even get a sense. A nd I doubt even if we will get a sense of what the discretionary spending, client budgets will look like even in the calendar Q1 next year. So, I think we'll have to take it one step at a time and it's very difficult to do a long-range planning in these circumstances.

Thank you. We have our next question from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.

So, the first question is just to understand if things really worsened on flow business towards end of the quarter which is leading to the guidance cut and like what really have you factored in, in the flow business in your second half, is that one of the reasons for driving a strong CQGR that you mentioned about or is it largely driven from purely from your or der book converting into revenues?

Yeah, I don't think there was anything which happened in the end of the quarter which made us change the guidance. Of course, Q1 was weak which makes the Q2 subsequent part of the year challenging. We expected a little more growth in Q2. We would have ideally loved our 2%-plus Services growth, which obviously was impacted due to some more strain on the discretionary side. Now coming to the second half, there are three components which really make up the second half of this year's. First is, of course, the large deal ramp -up which we expect to go -live on 1st of November, which is absolutely o n track. I think this will contribu te to significant growth in Q3 as well as Q4. The second aspect is Q3 is a strong q uarter for our Software business. You will see a spike in revenues and that definitely adds, and the third component is the ongoing busin ess, which is a combination of deals that are under transition, which will go into steady state and some amount of discretionary spend. And I think one more aspect which gives us confidence is, even if you see the Q2, our couple of deals really clocked in revenue only in September. So, that will also give us some kickers in Q3.

Thank you. We move on to our next question from the line of Surendra Goel from Citi Group. Please go ahead.

So, CVK just one question on the guidance again. You delivered a decent 2Q and are guiding to a strong 3Q and 4Q and yet the upper end of the guidance is revised down by 300 basis points. So, just wanted to understand what changed between July when you had retained the guidance and today when you have lowered the guidance at the upper end by 300 basis points. And secondly, what gives you the confidence that this guidance is going to hold?

Weak Q1 primarily contributed to this, and we did have a little bit more optimism on some of the things that was expected to happen in Q2. So, weak Q1 and even though maybe our Q2 performance met market expectations probably, it was a little below our own expectations. So, just adding up mathematically the ask rate becomes quite high for Q3 and Q4 and we did a realistic estimate of all that is possible a nd then, of course, as the first half is over, second half you will obviously narrow down the range. So that narrowing down the range probably upper end has become lower by 3%. But the facts a re what it is Q1 and Q2, but our Q3, Q4 will be very strong. Our Services organic growth to achieve the guidance will be between 2.6 % and 3.8% and a good part of it will be contributed by the large deal ramp up and of course including ASAP it will be between 3.3 % to 4.5%. So, I think with these numbers we feel reas onably confident, they are safe numbers for us to go after.

Thank you. We have a next question from the line of Ravi Menon from Macquarie. Please go ahead.

CVK on Software side we've seen year-on-year growth of 3.6%, but still the margins are down slightly, wanted to understand is this because some sale s investments or is there anything else because on the R&D front I don't see much of an increase in spending?

I'm not sure whether you're looking at year -on-year or sequentially . Sequentially, it is the weakest quarter in the year for Software historically and also in this quarter. So, sequentially it is but natural. As far as the year-on-year is concerned t hat also was a tad weaker, but that's largely on the back of initiatives that we are driving, which should hopefully continue to give us the 3.6% kind of growth and even beyond.

Can we say that the margins for Software could expand with continued growth that we are at a steady state of expense?

Our guidance is obvi ously at a Company level EBIT guidance, don't necessarily want to lock myself up with the segment wise margin guidance, but it would be in the similar range as what we delivered last year is all I'll say.

I think when Ravi one significant comforting factor this quarter all our assumptions on how we will deploy freshers, how will we optimize on our managed services engagements. All of that actually we had started sometime in March itself, all of them delivered results. So, I think our long term as we have been talking about 19% to 20%. I think it feels much more realistic based on the accomplishments of the quarter. So , I think that that's what you should really look for while this year is 18% to 19%, but we do hope to continue all our initiatives with the significant focus to improving our margins. That's one of the strategic objectives that we continue to drive.

Thank you. We have a next question from the line of Sandeep Shah from Equirus Securities. Please go ahead.

The first question is generally in Q3 with seasonal strength in the Products & Platform business the margin also takes a big lift. This time we will have a Verizon cost deal ramp up related to same, so do you expect still despite that the margin will have an upward bias on a Q-on-Q in 3Q. And Prateek just based on my estimate, it looks like there is implied guidance downgrade in the Products & Platform from earlier upper end of 3.6% to now 1.5%. Is it true if you can give us what is the implied Products & Platform growth guidance for this year?

So, Sandeep, let me take your second question first. We are not really giving you a P &P guidance. We are giving Company guidance and Services guidance. But if you do ba ck calculation, it will be around the same percentage increase which they showed last year. I'll leave it there. So, it's like the previous question was on margins, your question is on Software growth. I would expect the same kind of growth, the same kind of margins. I don't want to get more specific than that. The simple answer to your first question is - yes and I don't know why this question keeps arising about Verizon, but it's a huge deal. It's giving us good revenue and we are going to deliver the 18% to 19% with that. So, I don't think there's any reason to sort of look a gift horse in the mouth.

Thank you. We'll move on to our next question fr om the line of Nitin Padmanabhan from Investec. Please go ahead.

Just wanted some color on the cost s. So, I think this quarter the fall in a lot of cost items s eem very sharp, almost like there's an intentional cut on these cost s, so travel for instance, is down almost 30% sequentially and 13% year-on-year. Similarly, we have seen that in training and a lot of other things. I was just wondering what is the context to this? Is there anything specific? Was it macro or was it just about or something has reall y changed here in terms of the way we are doing things?

So, Nitin, let me simplify it for you, I mean, last year Q1 was 17 % and so was it this year. The Q2 last year was 18 % and it is 18.5% this year. You ca n ascribe a large part of that 50 basis points is to the deferral of increments that we did last quarter . That's one way to look at it. So, that sort of puts it in context, if you like. Coming to your specific question, yes, of course, there has been very deliberate action on a number of fronts, and it is visible in the detailed cost page that we have given. The biggest cut is obviously in third party subcontractors, which is part of the overall outsourced cost bucket that is 70 basis points. Travel had gone up in the June quarter to some extent and has been cut down to reasonable levels and I would like to maintain it near these levels, maybe not exactly these levels. So, that's given us almost another 50-basis point. Actually, the training that you mentioned, we have not cut training. It's just that we are hirin g less people. So, it's the recruitment part which has been reduced because we have hired so many freshers. Ram also explained at the press conference, and they are all ready and eager to get into projects and deliver. So, we have just not backfilled all of the attrition that continues to happen. Some of it has been sort of not backfilled because we have these freshers coming in. So, those are the kind of reasons. Obviously, there is a 18 % to 19% guidance that we ha d given, and we want to be well wit hin that range.

And just to kind of put it in perspective our training costs have only increased this quarter. It's only b ecause the recruitment costs have been reduced and that also is kind of s ome of the recruitment that you do there is a lagging impact and that's why you see the impact now. In fact, mostly the recruitment reduced even last quarter. So, it's related to people joining and things like that and also our cost of Hardware and Software reduced 0.5% that also helps.

Just one question in terms of wage hikes, what's the timing for your wage hikes and what is the impact that you see in terms of margins coming in from wage hikes?

I will request Ram to respond to that.

So, the salary increases which usually happen in the July month, will now happen in the October month. That's the one deferral that we spoke about last time effective October. Prateek, you want to talk about what's the impact.

So, it will be around 60 basis points to 65 basis points thereabouts and there will be a small impact in the March quarter as well, which will be another maybe 25 basis points, 30 basis points.

Thank you. We have our next question from the line of Chirag Kachhadiya from Ashika Institutional Equities. Please go ahead.

I just want to know that what gives us confidence that the H2 would be better compared to H1 and your outlook and expectation with FY25 in terms of growth revival or recovery?

So, no comments on FY25, it's really a long-term kind of FY25 view in the current environment. And as I mentioned, the second half recovery, as I explained it in a very granular fashion and for one of the earlier questions, but to kind of summarize it. There are three components, of course, one is the large deal going live on 1st of November that will give us good growth in Q3 and on top of that there will be good growth in Q4. The second aspect is the Software seasonality. There will be a spike in revenue in Software in Q3. And the third aspect is the continuing revenue, the full quarter impact of whatever happened in September and some amount of flow through revenue from the new bookings that we have done. So, these are the three elements which make up the forecast for Q3 and Q4.

Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to Mr. C. Vijayakumar for closing comments. Thank you and over to you, sir.

So, in closing, we delivered a very good quarter in all dimensions. We continue to remain very confident of the pipeline and its conversion, we expect to deliver strong bookings in the rest of this year. And given the all the good work that we have done, we've tremendously improved our margins. We remain very focused on improving our margins and most importantly for us quality of revenue is a very, very impor tant metric which we have been m aniacally focused on because that is what is going to give us sustained growth in the long run, and we remain very committed to the quality of revenue as well as capital efficiency. Our internal operational rigor has helped us improve our DSO significantly in the last quarter. And I think it's not just a one-time impact, it's a result of significant amount of work that has happened in the past few months to improve our processes. So, we are very committed to capital efficient growth, improving our return metrics, all of that. And so, we expect to see strong growth in the second half, and we committed to deliver 5 % to 6% growth for the full financial year. So, with that, thank you for all your support and w ishing you a happy festive season and enjoy as much cricket as you can and have a good evening. Thank you.

Thank you.

Thank you, sir. On behalf of HCL Technologies Limited, that concludes the conference call. Thank you for joining us and you may now disconnect your lines.