However Hexaware Applied sciences’ February 19 itemizing was like a celebration. The second the 33-year-old, Mumbai headquartered firm’s inventory began buying and selling on the bourses, the celebratory temper at the bell-ringing ceremony was unmistakable.
Not like the typical quiet company gatherings, Hexaware’s management, workers, and investors made it a grand affair—extra like a millennial after-party than a solemn itemizing occasion.
And why not? For an organization that has reworked itself over the final decade, persistently delivering double digit income progress, returning to the public markets after delisting in 2020 was a milestone that symbolized its evolution from a lower-tier IT agency to a fast-growing contender aiming for the huge league.
Nevertheless, simply weeks after the euphoria, the actuality of market scrutiny hit exhausting. $1.43 billion Hexaware’s first post-IPO quarterly outcomes (the firm follows a January-December monetary yr) on 7 March did not impress investors, and the inventory took a beating. The inventory declined 6.75% to hit an intra-day low of ₹764 on the NSE. On 19 March, Hexaware closed at ₹736 on the BSE, down 3.09% from its earlier shut.
However CEO R. Srikrishna is unfazed. “Our numbers had been excellent. I do know the market didn’t prefer it, but it surely’s going to take a while to coach it on our cyclicality,” he stated.
The corporate posted 18.5% y-o-y progress in income, with Ebitda ( surging 48% and PAT (revenue after tax) capturing up 65% (in comparison with This autumn, 2023). “It’s exhausting to have a greater set of numbers than this,” added Srikrishna, popularly referred to as Keech, a nickname he acquired in class back in the early Nineteen Eighties, from a Tamil movie character with the similar title.
Whereas Keech has a sanguine view, the market was disillusioned as a result of Hexaware’s sequential income progress in fixed forex phrases was simply 0.2% y-o-y, elevating considerations over near-term demand. Furthermore, the administration commentary on the difficult macro setting raised considerations about the progress outlook, resulting in the inventory taking a beating.
“The macros acquired considerably worse in the final two weeks (as a result of inward-looking US insurance policies). However our efficiency will likely be resilient to that,” stated Keech.
That optimism is as a result of the firm doesn’t have publicity to tariff-impacted sectors akin to metals, oil, cars, meals and agriculture. “Nevertheless it (tariffs) impacts shopper sentiment, which might imply delays as clients alter to a few of the new tariff preparations,” stated the Hexaware CEO.
Keech is assured that Hexaware will keep resilient and ship in 2025 as effectively. The corporate will get 73.4% of its enterprise from the US market, 22% from Europe and the relaxation from the Asia Pacific area.
Hexaware has one $100 million consumer and over 125 accounts producing $1-5 million in income.
Whereas seasonality impacts This autumn and Q1 efficiency, the firm’s stronghold in BFSI, healthcare, and the accelerating momentum in the expertise sector place it effectively for sustained progress,” stated Praveen Bhadada, CEO & founding father of Neovay International, an advisory agency.
Hitting its stride
Hexaware was based by entrepreneur Atul Nishar back in 1992 as Aptech Data Methods. At the time the firm targeted on laptop graphics and animation coaching. Later it expanded to a broader providers spectrum that included enterprise software integration and software administration for world shoppers. Nishar was chairman of IT physique Nasscom in 2000.
In 1997, the firm modified its title to Aptech and was rechristened once more as Hexaware Applied sciences in 2002, simply after going public in 2001. In 2003 Nishar bought the laptop coaching enterprise to Chennai-based schooling software program firm SSI.
An outdated horse, Hexaware has seen the rise of IT sourcing, the Y2K alternative and extra. But, not like Indian IT majors TCS, Infosys, HCL and Wipro, which rode the world IT outsourcing growth of the Nineties and 2000s, it remained a comparatively area of interest participant.
It wasn’t till 2013, when Baring Asia Non-public Fairness (now referred to as EQT Non-public Capital Asia) acquired a majority stake, that the firm began scripting a brand new progress story. That yr, Nishar exited the firm he based however remained as a director till November 2021.
The choice to delist in 2020 was taken by Baring as a part of its exit technique. Hexaware re-listed final month.
When Keech, who was employed from HCL, took over as CEO in 2014, Hexaware was a $380 million firm. By 2024, it had grown almost 4x to $1.43 billion in income.
Hexaware has scaled up considerably in the final decade, albeit on a small base. It is nonetheless 20x smaller than chief TCS and 8x smaller than HCLTech, which is additionally a part of the prime 4 IT providers corporations.
Hexaware is nonetheless 20x smaller than chief TCS and 8x smaller than HCLTech.
The transformation was systematic. The corporate expanded its supply footprint from being largely India-centric to including centres in the Philippines, Argentina, and Japanese Europe. Hexaware diversified its portfolio, focusing on three core providers: software program engineering, expertise operations, and AI/knowledge analytics. This helped it transfer up the worth chain, safe bigger offers and extra strategic partnerships.
In the final decade, which noticed non-public fairness and Keech coming in, Hexaware has persistently delivered double digit progress.
PE: The expansion enabler
Not like a few of its friends, which grew organically, Hexaware’s progress was pushed by its non-public fairness backing. Baring Asia performed a pivotal function in its turnaround, offering the strategic course and focus wanted for accelerated progress.
In 2021, US-based Carlyle Group acquired Hexaware from Baring, additional strengthening its world ambitions.
In keeping with Gaurav Vasu, CEO of UnearthInsight, a Bengaluru-based analyst agency, non-public fairness backing provides companies like Hexaware an edge in monetary self-discipline and M&A methods. “PE-backed companies are likely to develop quicker and use acquisitions extra successfully. They observe a structured playbook, which has labored effectively for Hexaware,” he famous.
Coforge, one other small agency that began in the Nineties and delivered a breakout efficiency solely lately, was backed by Baring Asia. It was earlier generally known as NIIT Applied sciences.
Not like a few of its friends, which grew organically, Hexaware’s progress was pushed by its non-public fairness backing.
Nevertheless, Keech differs on the function of PE. “The change was not simply due to the possession change. It’s due to the management staff, which recognized alternatives and steered Hexaware on the progress path.”
Keech attributes Hexaware’s success to a elementary shift in technique. “We had been greatest recognized for implementing PeopleSoft back then. At this time, that’s simply 2% of our revenues. We’ve fully reworked by way of management, capabilities, and consumer focus,” he stated. PeopleSoft gives a collection of functions in HR, buyer relationship administration, provide chain administration, and so on.
In the decade previous to Keech’s becoming a member of, the business grew 6x whereas Hexaware grew lower than 3x. “The premise in the business back then was that smaller corporations would proceed to develop slower and that they will’t compete with the bigger gamers. We flipped that. We modified progress charges in a number of years,” stated Keech.
The change was not simply due to the possession change. It is due to the management staff, which recognized alternatives and steered Hexaware on the progress path
– R. Srikrishna
The corporate’s healthcare and life sciences vertical has seen a CAGR (compounded annual progress charge) of twenty-two% in the final 5 years, BFSI, with a spotlight extra on insurance coverage, grew at a CAGR of 20% and so did manufacturing and hi-tech.
In 2024, monetary providers was the largest vertical, with a 29.1% share of the enterprise. Healthcare & insurance coverage was the second largest, accounting for 21.1% of the income, adopted by the high-tech {and professional} providers vertical, with an 18.3% share.
Hexaware desires to greater than double its enterprise to $3 billion in the coming years. “To me, the timeline is going to be between 2028 and 2030. In the case of the latter, it should require a CAGR of 13-14% and the former, 20%,” stated Keech.
To get to the aim by 2028 would require strategic acquisitions as effectively. Potential M&A targets embody corporations specializing in safety, knowledge analytics, product engineering, cloud options (particularly Microsoft Material, a knowledge analytics platform) and people providing supply capabilities in Latin America and Japanese Europe. Hexaware has additionally doubled down on hyperscale partnerships with (massive cloud providers suppliers) AWS, Azure, and Google Cloud, which may also help drive income progress.
Nevertheless, Neovay International’s Bhadada identified that Hexaware might want to enhance its efficient billing charges and worker realization. “Income per worker stays decrease than its friends. Growing offshore enterprise could be a essential lever for value effectivity and margin growth,” he stated.
Hexaware has 32,000 workers for $1.4 billion income, whereas Coforge had $1.6 billion for a 33,000 headcount and Persistent Methods 23,000 workers for $1.1 billion income. Duties round AI might assist enhance billing charges and income per worker.
AI and automation
With AI reshaping enterprise IT, Hexaware is betting huge on GenAI-driven options. The corporate has built-in AI into its core platforms, RapidX, Tensai, and Amaze. Tensai, an automation platform, as an illustration, now consists of greater than a dozen AI-powered modules that improve tech outsourcing.
RapidX is really constructed on GenAI and used for cloud, enterprise course of automation and knowledge administration. In Amaze, a cloud transformation platform, there are some parts that use GenAI. “Each software program improvement undertaking we do will now have an AI element,” Keech stated. “As a substitute of promoting AI as standalone tasks, we’re embedding it into our core providers.”
This platformization is serving to Hexaware bolt on AI throughout providers. “AI isn’t about doing proof-of-concept tasks. It’s about embedding AI into on a regular basis enterprise features. That’s the place we see a sustained income affect,” Keech added. For instance, utilizing conversational AI, Hexaware helped considered one of its banking clients lower contact centre prices by 25%. In one other occasion, Hexaware helped a meals supply app get a 136% surge in visitors after utilizing personalised AI engagement.
Taking on the huge boys
Regardless of its breakout progress, Hexaware nonetheless operates in the shadow of giants like TCS, Infosys, and Wipro. However Keech argues that the competitors isn’t simply from the likes of Coforge and Persistent. As a substitute, he stated , Hexaware recurrently competes with massive IT corporations for main consumer accounts.
“Most massive world clients work with 5 companions—normally three massive IT companies, one mid-tier challenger like us, and a distinct segment participant,” Keech stated. “Meaning our day-to-day competitors is with the huge gamers.” Typically, world corporations use a number of tech providers distributors to entry specialist abilities and mitigate the dangers of relying on just one vendor.
This is each a chance and a problem. Hexaware’s diversification technique has helped—it derives income from BFSI, healthcare, in addition to mid-sized journey and transportation and high-tech shoppers fairly than over-relying on one or two segments.
The highest 10-20 shoppers have remained with Hexaware for 12-15 years.
Keech himself is deeply concerned in gross sales. “He’ll take a flight at a second’s discover to fulfill shoppers and shut offers. To his credit score he has additionally created a flat construction, which brings a way of belonging amongst workers. This was additionally very seen at the re-listing ceremony,” stated an business watcher, who didn’t wish to be named.
Ramkumar Ramamoorthy, accomplice at Catalincs, a progress advisory agency and former CMD of Cognizant India, added that the CEO’s “hands-on management fashion has been key to Hexaware’s transformation. Keech is amongst the greatest sales-oriented CEOs in the business”.
This client-centric tradition has translated into robust buyer stickiness. The highest 10-20 shoppers have remained with Hexaware for 12-15 years. “That’s a rarity for mid-tier IT companies. In actual fact, it’s an indicator of a well-run firm,” stated Ramkumar.
What subsequent?
Whereas Hexaware has defied expectations over the previous decade, its subsequent part of progress gained’t be straightforward. The management staff that has reworked it from an also-ran right into a power to reckon with might not be round in later years. It additionally faces higher scrutiny after changing into a public listed firm as soon as once more.
Vasu added, “The pressures of public scrutiny and retaining expertise will likely be crucial. Hexaware should discover its subsequent set of candy spots, whether or not in AI, new verticals, or strategic acquisitions.”
Whereas it has the wind in its sails, the geopolitical setting and inward-looking insurance policies in its greatest market, the US, is not going to be straightforward to navigate.
Additionally, it has restricted capability to participate in bigger offers in comparison with business giants akin to TCS or HCL due to income and different filters. Most massive gamers in the present day function on each continent, whereas Hexaware is closely dependent on the US and Europe for over 90% of its enterprise.
Hexaware should discover its subsequent set of candy spots, whether or not in AI, new verticals, or strategic acquisitions
– Gaurav Vasu
For now, Hexaware stays considered one of the fastest-growing small IT providers companies. Whether or not it could possibly maintain this progress trajectory and attain its $3 billion goal will rely on the firm’s capability to execute daring methods whereas navigating the complicated world IT panorama.
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