hcl technologies ltd Management discussions

FY23 Business Highlights

Supercharged Business Performance

HCLTech continues to build momentum, surpassing its performance targets and achieving robust growth across all key metrics during the previous fiscal year.

We saw strong top line and bottom line earnings growth. Our consolidated revenue crossed a significant milestone of rf100,000 crores in FY23, by recording rf101,456 crores, an impressive 18.5% increase over FY22. We registered a 10% growth in net income in FY23. A four-year revenue compound annual growth rate (CAGR) of 10.9% reflects our sustained success over time.

Unlocking Potential and Supercharging Outcomes

During the past fiscal year, HCLTech undertook a major brand transformation to capture the companys momentum, energy and acceleration. Central to this process was the definition of a statement of our purpose: To bring together the best of technology and our people to supercharge progress. The new brand identity and logo, underpinned by the distinct positioning of Supercharging Progress, is our pledge to deliver business outcomes quickly and efficiently, embracing the qualities of pragmatism and resiliency. This promise extends beyond our clients to encompass our people, the communities we serve, our shareholders and the planet as a whole.

Putting Our Purpose into Action - Our Strategic Objectives

The following medium-term strategic objectives show how HCLTech intends to fulfill its purpose of supercharging progress:

• Leadership through differentiated services and products

• Employer of choice in professional services across all key geographies

• Preferred Digital partner for Global 2000 enterprises in chosen markets

• Weave ESG (Environmental, Social and Governance) goals into business strategy

• Deliver top quartile TSR (Total Shareholder Return) over the medium term

We expand on the meaning of each of these objectives and our plans for carrying them out in the sections below.

Growing Services and Product Leadership

Driven by our thematic focus areas of Digital, Engineering, Cloud and AI as well as our industry-leading technology services and software portfolio, we continue to innovate and create sustainable differentiators that accelerate business transformation. As the only service provider

rated as a Leader in all six Gartner Magic Quadrant reports related to IT services globally, HCLTech has clearly established itself as a leader in the industry, differentiating and creating a unique advantage for itself in the market. The ever-changing technology landscape continues to provide exciting opportunities for growth as we double down on our commitment to innovation and excellence to meet evolving needs of our clients.

HCLTech is using sports alliances to showcase its commitment to deliver business success and transformative experiences. Our partnership with the New York Giants, Jets and MetLife Stadium will demonstrate how our expertise in digital, engineering and cloud can enhance the fan experience, fostering deeper connections and driving digital transformation both inside and outside the stadium. Our strategic alliance with Scuderia Ferrari shows what we can do to enhance high-performance, precision technology for the worlds most technologically advanced sport.

Driving Business Growth through People

Our global presence in 60 countries with over 225,000 employees from 161 nationalities provides a strong foundation for growth. We have a nearshore presence in 20 countries, where nearly four out of five employees are locals. We plan to double our headcount in these areas within the next three years. Recent expansion into new locations like Hungary, Costa Rica and Morocco further infuses our operations with local talent and sets us up for exciting growth potential.

During the year, we were honored as the Top Employer in 25 countries and were ranked No. 1 in 18 of them.

We received multiple awards for our diversity, equity and inclusion practices. Our commitment to growth, diversity and excellence is reflected in our steadily improving gender diversity, which grew to 29.2% this fiscal year.

Driving Transformational Gains for Clients

HCLTech seeks to be the preferred digital partner for Global 2000 enterprises. Our success is attributed to our unwavering commitment to outstanding client engagement, reflected in our top quartile overall customer satisfaction (CSAT) rating. One of the worlds largest software product organizations recognized us with a noteworthy award for a program we led that made its products accessibility-compliant and, more important, capable of providing a delightful experience to all users. We also helped transform a leading U.S.-based home

furnishings retailer by partnering with it on a multiyear digital transformation journey. These successful collaborations are typical of the sort of relationships we forge with our clients.

As a top 10 global technology services company, were excited to continue driving transformational gains and changing the game. We continue to harness the power of technology and our people to supercharge progress for our clients—driving outcomes at speed and scale.

We remain committed to driving progress and delivering exceptional value in all our engagements. During FY23, HCLTech added three $100 million+ clients, taking the total number of $100 million+ clients to 19. The top 20 clients contribute 27.8% of the companys revenue.

Promoting Sustainability and Supporting Communities Globally

We embed sustainability into everything we do through a proactive strategy based on three guiding principles: Act, Pact and Impact. The success of this approach is reflected in our achievements such as replenishing 26 times more water than we consume, reducing per capita Scope 1 and 2 greenhouse gas emissions by 70%, achieving an "AA" rating in the MSCI ESG Rating, winning the Cisco Global Digital Sustainability Challenge for the EMEA region and being named one of the best-performing companies in our industry and region in Sustainalytics 2023 ESG rankings.

HCLTech is committed to supporting communities globally and has developed a proactive corporate social responsibility (CSR) strategy. The HCL Foundation delivers our CSR agenda in India and has made significant strides toward its purpose of driving meaningful social change, positively impacting more than five million lives while harvesting 32 billion liters of water for reuse in communities. We are also supporting different social initiatives worldwide, through our global CSR councils, including extensive support to people displaced by the war in Ukraine, partnerships with Girl Up, Feeding America and One Tree Planted in the U.S., the Princes Trust in the U.K., Apprentis dAuteuil in France and the McGrath Foundation in Australia.

Driving Shareholder Value through Growth, Profitability and Efficiency

HCLTech is steadfastly committed to delivering top quartile total shareholder return (TSR) by focusing on sustained organic growth, better profitability, higher return ratios and efficient capital use. We aim to improve our margins to pre-COVID-19 levels over the medium term.

We are also dedicated to improving our overall return on invested capital (ROIC). We continue to execute on the well-defined capital allocation of a minimum payout of 75% of net income cumulatively during FY22-FY26. With our decade-long, consistent track record of delivering top quartile TSR among our peer group, we are confident in our ability to continue generating value for our shareholders in the years to come.

State of the Market

Technology continues to transform the way we live, work and play. Yesterdays desktop computers have given way to pocket-sized smartphone powerhouses. Today, artificial intelligence (AI)-powered solutions automate tasks and create high-quality content, saving businesses time and resources.

Augmented reality (AR) and virtual reality (VR) create immersive experiences tailored to individual needs. Internet of things (loT) monitors critical eguipment in real time, allowing us to fix issues remotely before they become problems. 5G networks deliver faster speeds and

ultra-low latency, enabling effective communication and collaboration from anywhere. These technological advancements are transforming industries and creating new opportunities for investors to capitalize on the tech industrys ability to meet changing needs. We are excited about what lies ahead.

Client Imperatives

As clients adapt to the ever-evolving technology landscape, we see five key themes emerging as imperatives for clients as they seek out strategic partners to help them achieve their goals:

Driving Innovation

Enterprises are driving innovation by adopting technologies like artificial intelligence (especially GenAI), machine learning, automation, smart connectivity, blockchain and more. Theyre exploring new markets and business models to stay ahead of the curve. Capitalizing on the tech industrys growth potential and cutting- edge solutions is crucial to meet ever-changing market needs. Clients need partners with technical expertise and domain-centric solutions that can scale and offer flexibility to achieve their goals.

Reimagining Experience

Businesses are focusing on Total Experience (TX), which includes Customer Experience (CX), Employee Experience (EX) and Operational Experience (OX). Technologies such as GenAI, loT, 5G and digital age elements like ecosystem and gamification drive efficiency and create seamless experience. Clients value domain and vertical knowledge highly as they search for the right technology partners to help them navigate complexity and make informed decisions.

Advancing Sustainability

Sustainability is more than a buzzword. It is a crucial business consideration that impacts long-term success. Technology is a key enabler of sustainability agendas, from value-chain transformation to reducing carbon footprints. Clients seek technology partners with expertise in execution of sustainability strategies like integrating ESG practices into supply chains and implementing smart energy solutions.

Optimizing Spend

Optimizing spend is a continuous journey toward creating value for all stakeholders. Clients focus on innovative business models, explore cost optimization tools and shift to asset-light models to increase efficiency and reduce costs. They seek technology partners with business model flexibility, technical expertise in cost optimization and end-to-end offerings.

Building Resilience

Building business resilience is a top priority for clients amidst constant disruption and uncertainty today. To achieve this, clients adopt agile methodologies, invest in innovation labs and prioritize technological resilience in areas such as cybersecurity and IT systems. They seek technology partners who can provide expertise and solutions in these areas and form strategic partnerships and alliances to stay relevant and innovative.

Cloud Transformation is a Multi-Year Journey

Embracing cloud as a part of continuous modernization is essential in the digital era. Capturing real value from cloud transformation is a massive market driver and one of the most significant areas of technology spending across all industries. With hybrid and multicloud strategies gaining popularity, the adoption rate of public cloud services is expected to multiply, presenting more opportunities for innovation and growth.

Talent Market Trends

Today, most companies are aggressively innovating with respect to their global people practices. Demand for consulting and industry and technical skills like cybersecurity and digital engineering remains strong. Technology companies recognize that talent retention is critical. Employees want career opportunities on their terms and job experiences that enrich their professional and personal development. HCLTech has strengthened its employee value proposition in line with the market trends and business demands.

Market Opportunities

The economic landscape is stabilizing gradually, with favorable market opportunities for technology on the horizon. While inflation continues to erode consumer purchasing power and drive their spending down, overall enterprise IT spending is expected to remain healthy.

The IT services and software segments are projected to grow at 6.1% and 11.9%, respectively, over the next five years. While cost corrections and softening demand remain concerns-and there may be uncertainties in the near term-the technology industry is well-positioned for long-term growth with many opportunities for clients to innovate and thrive.

The technology market is rapidly evolving and the very definition of technology is expanding. Today, software, services and engineering need to work in tandem to deliver results for clients. This presents exciting opportunities for growth and innovation. Our diverse portfolio and scale position us well to take advantage of these trends and leverage our unique strengths to meet the evolving needs of our clients and supercharge progress for them in this dynamic market.

Our Business

HCLTech is committed to supercharging progress, delivering pioneering services and products that positively impact our clients, employees, communities and the planet. Our aim is to be the digital partner of choice for Global 2000 enterprises, while attracting top talent and delivering exceptional value. Were deeply committed to inclusive growth and sustainability in the communities where we operate. In this section, we present an overview of our expertise, business segments, ecosystem approach and strategic partnerships that enable us to provide end-to-end solutions for our clients.

Our Areas of Expertise

HCLTech leverages its expertise to provide solutions that address clients traditional, transformational and future needs. Our Digital offerings deliver end-to-end solutions that boost business resilience, enhance operational efficiency and deepen client engagement. With HCLTechs Engineering and R&D Services (ERS), clients can improve time to profit, speed up product development and maximize return on innovation. Our CloudSMART services and offerings optimize cloud usage to accelerate innovation and agility at scale. HCLTechs AI expertise, especially GenAI capabilities, evolving in line with emerging market trends, is starting to enable enterprises to unleash another round of significant benefits, be it in reimagining client experience or enhancing employee productivity. Our HCLSoftware division develops, markets and supports software for digital transformation, data, analytics and insights, AI and automation, and enterprise security.

Ecosystem, Alliances and Partnerships

Todays business world is ecosystem-driven.

Our ecosystem orchestrator approach has enabled us to be ahead of the curve and help our clients accelerate time to market, reduce total cost of ownership, minimize risk and supercharge progress. By leveraging our expertise and access to top clients, we help our ecosystem partners expand their market reach and drive business growth, contributing to the growth and sustainability of the industry as a whole.

Our Strategic Alliance Ecosystem partners with leading technology firms to create new, differentiated intellectual properties and solutions that accelerate our clients digital, engineering and cloud journeys. Our Industry Ecosystem gives us access to industry forums and foundations to stay updated on the latest trends and challenges and to share our thought leadership. Our Startup Ecosystem leverages the creativity and innovation of startups to generate products and offerings that benefit our clients.

We partner with leading technology providers like Microsoft, Google, AWS, SAP, DELL, IBM and IBM Redhat, Cisco, Salesforce, Adobe, Intel and others to deliver innovative solutions to our clients. Together with our partners, in FY23 we launched new initiatives, coengineered and co-developed solutions and created new training programs for our associates, resulting in multiple deal wins, new client offerings and analyst recognitions.

CloudSMART: Supercharging Cloud Transformation

HCLTechs CloudSMART approach helps clients navigate their cloud transformation journey with clarity and confidence. CloudSMART leverages ecosystem partnerships and cutting-edge technology solutions to provide independent consulting that enables businesses to create long-term plans to drive transformation at an accelerated pace and scale. With its suite of offerings and services, CloudSMART makes it easy for clients to pivot to the cloud, leveraging the latest validated architectures, standardized services and factory-based execution.

GenAI: Catalyzing Transformation

GenAI is poised to disrupt businesses with the potential to positively impact various domains including but not limited to IT services, software, silicon IC design and manufacturing, and IT operations. It centers around a deep collaboration between humans and machine algorithms. With a philosophy of creating, infusing, embedding and integrating AI from silicon to infrastructure, apps, data and business processes, HCLTech, with its engineering heritage, has been involved in co-creating AI technology stacks for the past two decades. At HCLTech, we are accelerating our work through a multi-pronged approach to unlock the potential of GenAI for our clients to derive utmost benefit. We are infusing GenAI in our solutions, providing services, working with ecosystem partners to drive innovation and offerings, and co-innovating with our clients. We are also in the early stages of evaluating and implementing GenAI in our own business operations to improve employee experience and drive efficiency.

Business Segments

HCLTech is structured as three business segments—IT and Business Services (ITBS), Engineering and R&D Services (ERS) and Products and Platforms (HCLSoftware)—that collectively address its clients traditional, transformational and future needs. Overall, our services and product business grew in constant currency YoY at 15.8% and 1.8% (excluding divested business), respectively, in FY23.

IT and Business Services

The ITBS segment enables global enterprises to drive business transformation in an agile and sustainable manner, enhancing customer and employee experiences. It is the most significant contributor to HCLTechs overall revenue mix. In FY23, we posted strong revenue growth of 15.6% YoY in constant currency and an EBIT margin of 16.6% driven by solid growth across all service lines. ITBS comprises:

• Digital Business Services

• Digital Foundation Services

• Digital Process Operations

• EdTech Business Services

Digital Business Services

HCLTechs Digital Business Services (DBS) enables organizations to adopt new technology architectures, challenge existing ways of working and use data and analytics to achieve operational excellence and fundamental business transformation.

Our industry-specific technology solutions help clients transform their value chains through three focus areas:

• Consulting services focus on delivering experience and technology strategy and design to create innovative solutions that address the needs of our clients. We also offer business process re-design and optimization, empowering clients to reimagine their enterprise value chains. We facilitate effective change management within the enterprise through our agile delivery transformation approach, which includes operating model change and organizational flexibility.

• Application modernization services help customers redesign and modernize their applications and platforms via composable architectures, microservice services and cloud-based application consumption.

• Data and analytics services facilitate the modernization and creation of data platforms and the building of scalable data architecture that feature robust data governance and the ability to extract actionable insights through machine learning and artificial intelligence.

HCLTechs Digital Business Services achieved strong growth in FY23. This year, our ESG-related offerings gained wide acceptance. For example, we launched an industryleading ESG platform for a large F100 aerospace company and a smart energy solution for a European client. In addition, we onboarded 10 new partners and strengthened

relationships with our existing partners including Snowflake, Adobe, Tibco, Alteryx and Salesforce.

Digital Foundation Services

HCLTechs Digital Foundation Services (DFS) forms the backbone of digital transformation journeys, offering core infrastructure services and next-generation digital solutions. DFS is the largest segment for IT services spending globally.

Our proven ability to execute at scale is why we are a trusted advisor and partner for 40% of G100 companies, helping them manage and transform their large and complex environments.

DFS offerings cover five areas:

• Digital Workplace services help clients build a personalized, adaptive and resilient workplace for their employees.

• NextGen Networks services help clients transform their enterprise networks into lean, agile and experiencecentric networks.

• Hybrid and Multicloud services, from mainframe services to cloud-native deployment, help clients modernize their infrastructure.

• Cybersecurity & Governance, Risk & Compliance (GRC)

services help clients identify, understand and manage security risks and compliance across the entire security life cycle.

• Unified Service Management & Intelligent Operations

services deliver efficiency and greater supplier management synergy, facilitating the assessment of the

right service integration and management model for customers.

Digital Process Operations

Digital Process Operations (DPO) helps clients adapt to the digital age by combining our domain expertise, engineering capabilities and software stack. Our technology-led digital operations model reimagines operations across three digital stacks: digital workforce, digital technology and digital process. DPOs focus on transformational deals allowed us to serve over 100 clients, including many Global 2000 (G2000) and equivalent organizations. We are expanding our automation, AI and machine learning capabilities to continue providing comprehensive solutions to our clients.

EdTech Business Services

EdTech Business Services is a new addition to the ITBS segment, focusing on providing enterprise solutions for talent acquisition and mobility. We help clients set up technology and talent academies. Our Career Shaper Learning and Assessment Platforms offer immersive labs for coding, data science and engineering as well as Workware labs for cloud and cybersecurity simulations.

We also provide Capstones-domain-infused real scenario projects—for experiential learning, and our Futurum™ platform for universities powers tech labs for future engineering and technology learning.

In its first year, EdTech Business Services garnered significant interest from many G2000 and equivalent companies and established strong partnerships with key players in diverse industries. These include a German multinational engineering and technology company, a

leading U.S.-based gaming corporation, a Dutch information services company operating in over 150 countries and a large global staffing organization.

Overall enterprise IT spending is expected to remain healthy, which bodes well for each part of ITBS. As digital transformation remains paramount for enterprises, we are well-positioned to capture significant market share and continue to deliver strong results for our clients and shareholders. Digital Business services outlook is positive as we continue to see strong growth in value chain transformation, modernization and cost efficiencies through consolidation and cloud solutions. We anticipate strong demand for Digital Foundation Services, particularly in cloud, employee experience and cybersecurity. EdTech Business Services segment is well-positioned to benefit from the increasing demand for job-ready professionals who can adapt to new technologies in the workplace.

Engineering and R&D Services (ERS)

Our Engineering and R&D Services (ERS) spans the entire spectrum of digital engineering solutions across new product development, network engineering including network-as-a-service, collaboration services, software product engineering, data engineering, connected experiences and platform-as-a-service. We provide comprehensive solutions to help our clients develop digital, sustainable and next-generation products and platforms. HCLTechs Engineering and R&D Services (ERS) segment

delivered a strong performance in FY23, with revenue growth of 16.8% YoY in constant currency and an EBIT margin of 20.2%.

HCLTech ERS portfolio includes:

• Product engineering services bring the engineering rigor to build scalable, complex and new products and systems, spanning the whole gamut of product life cycle management from conceptualization to design and development, support and sustenance and governance of processes such as release management and test automation.

• Digital engineering services help clients reimagine their businesses for the digital era, covering all areas of digital transformation, including cloud and data engineering, digital platforms, ecommerce, 5G services, AI and silicon platform services, spec-to-part services and more.

• Operational technologies play a crucial role in ensuring manufacturing resilience and enabling faster and more efficient responses to supply chain issues and changing market demands by modernizing infrastructure and processes.

We have been recognized as the No. 1 player in Everest Groups 2022 PEAK Matrixr Provider of the Year Awards for Engineering Services. We are the only service provider ranked amongs the top two in both Digital and Overall Engineering Services in Zinnov Zones Engineering R&D Services 2022 study.

HCLTechs ERS segment won several large deals for product, platform and end-to-end engineering services, and demand was high for digital engineering services. Notable deals include extending the engagement with a U.S.-based Fortune 100 technology services company for product engineering services, being chosen as a strategic partner for platform engineering services by a U.K.- based market leader and being selected by a U.S.-based multinational provider of workforce management and human resource management services as its strategic partner.

The demand for engineering services continues to be moderate in the near term. Digital engineering themes such as platform engineering, data engineering, 5G and connectivity, industry-next and sustainability are expected to continue attracting enterprise investments.

As geopolitical tensions, supply chain constraints and talent shortages continue to impact global enterprises, many are reevaluating their product design, manufacturing and servicing strategies. Investments in new technologies remain important but the focus has shifted toward scaling digital engineering programs and fully realizing their potential to drive top line growth across functional areas.

HCLSoftware

HCLSoftware is a leading provider of innovative technology and domain-specific solutions within niche segments that help drive customer efficiency and innovation. HCLSoftware achieved remarkable success in FY23, posting a revenue growth of 1.8% (excluding divested business) in constant currency and maintaining a healthy EBIT margin of 25.1% YoY. HCLSoftwares impressive performance is evident from its 6,800+ global customers, which include 65+ Fortune 100, more than 220 Fortune 500 companies and 235+ Global 500 enterprises.

HCLSoftware offers 75+ software products, including well-known brands like HCL BigFix, HCL Domino, HCL Unica and HCL Commerce, and works closely with 770+ business partners to create impact across enterprises in 130+ countries. HCLSoftware addresses business opportunities across four key markets, which are growing at a double-digit CAGR with an addressable market of approximately $100 billion.

1. Digital Transformation: HCLSoftware provides technology solutions that transform experiences for all stakeholders, supporting more than $210 billion of online business per annum and delivering marketing messages to one-third of the worlds population. HCL Commerce, HCL Unica and HCL Volt MX are some solutions for this purpose.

2. Data, Analytics and Insights: HCLSoftware offers a trusted, flexible, easy-to-use data platform for better business management and analysis. The companys Actian Avalanche, Actian Ingres and Actian Zen are key offerings that provide 5X faster data warehouse on cloud and operate at a 50% lower TCO (total cost of ownership) than its nearest competitor.

3. AI and Intelligent Automation - HCLSoftware helps clients transform and simplify IT and business operations and achieve autonomous IT operations using offerings like DRYiCE, Secure DevOps and Automation Power Suite. This portfolio supports over one million servers on AIOps and over two million monthly conversational AI interactions across its customer base.

4. Enterprise Security - HCLSoftwares portfolio includes HCL BigFix and HCL AppScan, which protect the software that enterprises build or buy by securing from application to endpoint. The portfolio secures over 100 million endpoints daily, providing customers with peace of mind that their assets are secure.

Moving forward, we will continue to evolve our mix and offerings in each of these segments to better align with evolving spending patterns and the rapid growth of the digital market. Our commitment to innovation and excellence remains steadfast as we confidently pursue our purpose of driving positive change and creating a better future.

Business Strategy

Strategy, at its heart, helps an organization make choices and, more importantly, trade-offs. An effective strategy aligns stakeholders-clients, partners, employees, society and shareholders-to win together. This shared focus creates immense leverage for innovation and growth, because a countless number of decisions that happen every day across all parts of a business-product, customers, technology capabilities and more-reinforce one another. It is critical to have a clearly communicated strategy to make the right choices. Over four decades, HCLTech has built an organizational culture of empowerment and innovation. To unleash the creative potential of our people, our strategic definitions are not fancy, rather simple and clear.

Our simple, clear strategy unlocks the passion and spark in each employee, promoting empowerment, entrepreneurial leadership and bold actions that lead to successful execution and strong performance.

We set forth a small set of priorities that are vital to our success and empower our people to use their creative spark to execute them passionately. Organizational

leaders have that responsibility to translate strategy into guidelines that are simple and flexible enough to execute. Aligned to this approach we have identified five medium- term strategic objectives, mentioned earlier in the report.

We support the achievement of these strategic objectives using the following cornerstones:

Leverage HCLTechs Established Culture of Empowerment and Innovation

Our culture is both optimistic and realistic, which helps us maintain balance between ambitious goals and impeccable execution. Our simple, clear strategy unlocks the passion and spark in each employee, promoting empowerment, entrepreneurial leadership and bold actions that lead to successful execution and strong performance. We also encourage our employees to innovate and suggest ideas to seize novel opportunities, mitigate unexpected risks and adapt to local conditions, a process we call Ideapreneurship. Our culture of execution and innovation guided by strategy is our recipe for supercharged progress.

Talent is at the Center of Every Decision

As we serve some of the worlds best-known businesses, we enable our people at all levels to enhance their skills,

gain a distinct advantage and supercharge their potential. We know that helping our clients stay on top starts by putting our people first. Our business model, operating structures, hiring and talent strategy are aligned to the personal and professional aspirations of our people. Our employee value proposition, Find your Spark, is built on four tenets:

• Embracing next-gen work environment and culture

• Creating enriching job experiences

• Delivering employment our people can trust in

• Elevating employee experience: inspiring DEI, driving CSR and championing ESG engagement

Enablement to Drive Execution

Strategic objectives must be easy to communicate and achievable in discrete modules. In support of these goals, HCLTech breaks down strategic objectives into specific and multiple strategic initiatives that chart a clear path forward to success. To enable these strategic initiatives, there are a multitude of enablement frameworks in place, be it for knowledge management, collaboration or change management. During the financial year, we established a business enablement team to ensure cross-functional collaboration and issue resolution.

Beyond Benchmarking

Benchmarking is not a goal in itself but a means to achieving a strategic objective. HCLTech respects its competitors and best-in-class companies globally. Through benchmarking, we seek to discover best practices and achievements that are worth adopting. This is done on various aspects of our business with key priorities like stakeholder satisfaction, analyst recognitions, ecosystem competencies, financial performance and return metrics. We avoid relying on benchmarking for competitive convergence or to celebrate our achievements but to push us further to achieve our medium-term strategic objectives.

Embrace Next Generation Opportunities While Gaining from Current Generation

In order to spot disruptions early, be prepared for them and respond effectively, HCLTech has a structured approach of scanning thousands of market signals, identifying strategic risks and converting them into opportunities. This approach has helped us in being a pioneer in the remote infrastructure services industry, being the first services company to create a scalable and profitable products business and in building our breakthrough early career TechBee program for hiring students right after high school. Today, we are looking at opportunities emerging out of GenAI, sustainability and global supply chain realignment for future growth. While constantly looking out for such new signals in the

market, we also look for profitable long-term growth opportunities in our existing businesses. This has been visible in continuing strong traction for our traditional services, while achieving industry-leading growth in digital propositions.

Align the Larger Ecosystem to Strategic Objectives

In addition to aligning everyone internally and getting the message out to managers and employees, we are focused on communicating our strategic objectives to key external stakeholders, including investors, clients, partners, potential employees and the community. This approach helps align our ecosystem of key external stakeholders by communicating precisely where we want to go. It also attracts clients, shareholders, talented people, organizations and communities willing to join us on our long-term journey.

Peter Druckers epithet "culture eats strategy for breakfast" is often mentioned to reinforce the importance of culture. At HCLTech, through the intelligent integration of both, we are truly able to supercharge progress and deliver impeccable results.

Medium-Term Strategic Objectives

Leadership through differentiated services and products

Employer of Choice in professional services across all key geographies

Preferred Digital Partner for Global 2000 enterprises in chosen markets

Weave ESG goals into business strategy

Deliver top quartile TSR over the medium term

Strategic Objective 1:

Leadership through Differentiated Services and Products

A successful technology business must create relevant and differentiated services and products to address enterprise client needs. The key ingredients are talent and innovation.

Companies that do not prioritize innovation or fail to build relevant portfolios aligned to client needs, usually plunge into oblivion.

When HCLTech produces outstanding services and products, the best people are attracted, for they know they will be involved in innovating with the latest technology to create services and products that make a positive impact. We feed this cycle through a culture of innovation based on ideas like Ideapreneurship.

HCLTechs service and product leadership helps create applications and systems that address key needs in society, such as sustainability, which can have a huge impact in making the world a better place. Making such a difference attracts both talent and clients.

In this section, we explain how HCLTech is accomplishing the strategic objective to expand its leadership through differentiated services and products.

A Global Leader in Services and Products

HCLTech embodies the DNA of the HCL Group, which was founded in 1976 and has been a pioneer in technology innovation in India. HCLTechs unique blend of capabilities and its success in building resilient enterprises firmly positions us as one of the most reliable partners in the technology services sector.

HCLTech has been a forerunner in ERS and infrastructure services. Overthe last few years, we have also ascended to leadership positions in the digital, cloud and software domains. Leading industry analyst firms including Gartner, Forrester, IDC, Everest, Avasant, HFS, Zinnov and others recognize our continuous strategic evolution and deep- rooted strength in technology. Year-over-year, they have rated HCLTech as a leader in a range of specialized capability areas across service lines and industries. For example:

• HCLTech is the only service provider to be rated as a Leader in all six Gartner Magic Quadrant reports related to IT services.

• HCLTech is the No. 1 player in Engineering and R&D Services and the only service provider among the top two in traditional and digital engineering, recognized by Zinnov.

• HCLTech is a well-respected cloud migration and managed services partner. HCLTech is ranked as a Leader in HFS Horizons Cloud Native Transformation Services, 2022; a Leader in 2022 Gartnerr Magic Quadrant™ for Public Cloud IT Transformation Services, Worldwide.

• HCLTech has strong momentum in digital services domains such as data management and analytics, app modernization and cloud transformation. HCLTech is positioned as a Leader in the Gartnerr Magic Quadrant™ for Custom Software Development Services, Worldwide and a Leader in Avasant Digital CX Services 2022-23.

• HCLTech started Indias first large-scale enterprise software business, which was profitable from day one.

HCL Commerce has been named as a Customers Choice by Gartner in the digital commerce category.

IDC MarketScape has recognized HCL BigFix as Leader across multiple segments of UEM (Unified Endpoint Management). HCLSoftware was named Challenger in the 2023 Gartner Magic Quadrant evaluation for Digital Experience Platform (DXP) and received the highest scores in the business to employee (BtoE) category of Critical Capabilities Report.

Sustaining Services and Product Leadership

The ability to differentiate through continuous innovation is the best way to create sustainable competitive advantage for technology firms. To sustain and protect our services and product leadership, we always seek to push the envelope by building new solutions and centers of excellence (CoEs), refreshing our software offerings, acquiring niche capabilities and investing in industry solutions, labs and partnerships. Here are the specific tactics we are employing to expand our leadership position:

Positioning cloud at the core of our service offerings:

HCLTech is expanding relationships with hyperscalers and other key cloud technology providers to be the leading hybrid cloud consultant and managed service provider.

To support medium-term growth, HCLTech is looking beyond cloud migration to create industry solutions with vertically tailored capabilities. We have a growing portfolio of cloud services, underpinned by intelligent automation and a comprehensive partner ecosystem. These capabilities cover the entire cloud spectrum - from platform engineering to cloud native deployment to mainframe services - and can be adapted to address our clients specific requirements, maximize business value and facilitate a superior digital experience.

GenAI to drive next wave of growth: HCLTech understands the pivotal role emerging technologies like GenAI will play in unlocking value for its clients. We have been an early adopter of GenAI (for example, Teams Premium, Co-Pilot, etc.) to augment productivity of our developers and enhance our platforms and solutions. HCLTech sees GenAI as a promising and evolving field that has unlocked new services opportunities across four key domains for its clients:

• Prompt Engineering: Testing and refining prompts to optimize them for specific tasks

• Data Engineering: Creation and capture of GenAI-driven engineering insights

• Integration and Orchestration of Intelligent Apps:

Orchestration across NLP, GenAI systems, knowledge systems for text, image, video and audio

• Responsible AI: An AI system that enables privacy and security besides other attributes like inclusion, fairness, accountability, reliability etc.

Moreover, HCLTech is closely working with all the major hyperscalers on their GenAI stack supporting various efforts through its GenAI Labs. HCLTechs GenAI Labs support teams in building solutions and services across

various roles and domains including system engineering, process operations and support.

Expanding and evolving the partner ecosystem to enable growth: HCLTech accelerates creation of complete solutions for its customers by adding capabilities and ecosystem partners. Our partner ecosystem is carefully curated and tailored to meet the needs of specific industries. We also partner with the ecosystem developed through venture capital funds and private equity (PE) firms to ensure we connect with the latest technological developments as well as help their portfolio companies to scale up.

To sustain and protect our services and product Leadership, we always seek to push the envelope by building new solutions and centers of excellence (CoEs), refreshing our software offerings, acquiring niche capabiLities and investing in industry solutions, labs and partnerships.

Expanding services leadership: HCLTechs services leadership is rooted in how we help clients in driving outcomes at speed and scale by applying our expertise, experience and innovation ecosystem. While retaining our market share in traditional services, HCLTech continues to focus on growth opportunities in digital and next-gen services by launching new offerings and growing them organically and inorganically to effectively cater to client needs better. Along with investments in talent, innovation labs, new delivery location and world-class partnerships, we bring together the expertise and client-centric mindset to build capabilities and offerings to help clients reach their goals. HCLTech makes acquisitions to enhance its offerings. For example, Starschema was acquired to enhance its digital engineering capability and strengthen our presence in Central and Eastern Europe.

Developing vertical capabilities to address client needs:

Service providers have much more credibility and success when they have deep domain knowledge on a clients industry. Such vertical expertise helps HCLTech identify, structure and implement new strategies for optimized digital value chains and better customer experiences. HCLTechs vertical knowledge is amplified by deep skills in experience design, industry capability definition, agile delivery transformation and organizational agility. HCLTech makes acquisitions when needed to enhance its vertical capabilities.

One such acquisition was Confinale AG, a digital banking and wealth management consulting specialist and an Avaloq Premium Implementation Partner, based in Zurich, Switzerland. Building upon HCLTechs expanded global partnership with Avaloq and leveraging this acquisition, Avaloq Business Unit (ABU) has been set up, delivering an expanded end-to-end portfolio, ranging from Avaloq platform advisory to implementation and postimplementation services, which strengthens HCLTechs position as a global leader in digital wealth and asset management.

Building niche product leadership: HCLSoftware is building a niche leadership identity for its software products. Vertically-focused technology investments and industry thought leadership have led to widespread adoption of its products and solutions within niche segments. A central product innovation capability supports all portfolios-including digital transformation, data, analytics and insights, AI and intelligent automation, and enterprise security-and seeks to maintain and expand HCLTechs niche leadership. Some of the ways by which HCLSoftware is leveraging GenAI capabilities are:

• Driving through usage of GenAI transformation of human-led and automation-assisted approach to automation-led and human-assisted approach across workload automation, operational intelligence, selfhealing systems and self-service workflows.

• In partnership with hyperscalers, HCLSoftware is using GenAI and creating products that use pair programmer for code generation, test case generation to drive product velocity.

• HCLSoftware is also embedding its products like HCL PromptO, which provides automated prompt engineering, model chaining, code generation, LLMs optimization and document summarization, into its portfolio across digital transformation, AI and intelligent cloud and data, analytics and insights, including the four cloud vision (Business Cloud, AppDev Cloud, Automation Cloud and Data Cloud) and business strategy.

Perfecting service delivery: Great ideas and goals only become valuable to clients if they are brought to life through execution. HCLTechs mastery of technology is leveraged by its robust service delivery framework and effective talent management that have been developed and honed over many years and are embedded in our culture. HCLTech is able to execute projects in its clients home countries as well as nearshore locations like Mexico and New Vistas locations in smaller cities in India, the U.S. and Europe. This broad menu of choices for how to design delivery of projects spread across many geographics speeds execution, stems attrition and brings more stability to operations and more value to clients.

Identifying and investing in next-gen offerings: HCLTech invests heavily in research using a variety of labs, frameworks, platforms and technologies and then seeks to capture that knowledge so that it can be reused in multiple engagements. We invest in creating labs, industry use cases, minimal viable product and proof of value

experiments for customers using disruptive technologies such as AI/ML-enabled automation, quantum, 5G, confidential computing, sovereign cloud and open source.

Our Enterprise Technology Office (ETO) tracks, identifies and analyzes the emerging technologies and cutting-edge innovations that have potential to transform enterprises. The goal is to ensure HCLTech never falls prey to the "innovators dilemma" by ignoring the disruptive impact of new technologies that can have a surprisingly large impact. By analyzing these trends and others, we can identify when emerging technology becomes relevant and actionable to help build differentiated products and services for our clients. ETOs current research focus includes AI, cloud, quantum computing, low code/no code, immersive experiences, 5G, humanoid robot collaboration and blockchain.

Cultivating innovation through Ideapreneurship: HCLTech is a globally recognized leader in the industry, but weve never forgotten our startup mindset. We always approach our work with an idea-first attitude, because each one of our accomplishments, no matter how big or small, can be traced back to a single spark of an idea. Its that spark, or the inner drive, that sets our people apart from our competitors. It enables us to pull off game-changing feats and better our world in the process. We help our clients stay on top by putting our people first.

We have many enabling platforms to create and sustain this people-centric culture. The practice of Ideapreneurship is one of the main pillars of our internal idea-driven mindset. Ideapreneurship has become a selfsustaining, self-inspired, innovation engine that drives HCLTech forward and prepares us as an organization of the future. Ideapreneurship is enabled by the Value Creation Portal, a grassroots innovation platform that brings together and organizes the diverse perspectives and experiences of our team. Over 28,000 unique employees leveraged Value Creation Portal in FY23, generating, reviewing and approving 15,000+ ideas and implementing 7,600+ ideas that delivered customer signed-off value worth $1.4 billion.

As part of our dedication to innovation, we work internally to build and maintain organizational muscle, coordinate large ecosystems, expand vertical domain knowledge, embrace new technology, acquire companies and aggressively identify threats and opportunities related to our services and products.