The New Essential The confluence of technology and human ingenuity Annual Report 2021 Contents Corporate Overview Accelerated Growth – $10B & Beyond 4 Message from the Founder 6 Message from the Chairperson 8 Letter from the CEO 10 Board of Directors 13 Perspectives from the CFO 14 Perspectives from the CHRO 15 Financial Highlights 16 Leadership Team 18 A Broad Global Reach 20 A Landmark Year 24 Sustainability 26 Empathy and Collaboration 28 Resilience for a Better Future 30 Business Highlights Cloud Smart 37 HCL Ecosystems 38 IT & Business Services 40 Engineering and R&D Services 46 Products and Platforms 48 Management Discussion and Analysis (MDA) 50 Directors’ Report 98 Corporate Governance Report 154 CEO and CFO Certificates 188 Business Responsibility Report 189 Financial Performance Standalone Financial Statements 207 Consolidated Financial Statements 268 Statement under Section 129 339 1 240200282_HCL_ARA2021_AW_21_07_20_Front Section_IFC_23.indd 1 20/07/2021 18:35 We reflect on colleagues lost to COVID-19 2 If this page were a room, we would be standing silently together to honor the members of our HCL family who lost their lives to COVID-19. As we grieve their passing, our thoughts and prayers are with their families, colleagues, friends, and everyone they touched with their presence. Though gone, our former colleagues live on in the legacy they leave behind. The gap in our lives and our company cannot be filled. But their example of excellence and commitment will continue to inspire us. Each of them played a role in HCL’s success. The dedication they brought to work each day will motivate us. We will be driven by what they stood for and endeavor to continue their good work. In their memory and guided by their spirit, we pledge to maintain our determined efforts to safeguard the health and wellness of everyone at HCL. 3 Accelerated Growth – $10B and Beyond Shareholder return* FY21 (April 2020 – March 2021) Highest 150% 138% shareholder HCLTECH return 115% delivered in FY21 NIFTY IT among Large Cap Sector Index Technology Companies 76% NIFTY100 Market Index *Basis indexed share price increase 0% Apr 2020 Mar 2021 Fastest- Total revenue growth in % over five years growing large technology company 63.2% 28.5% 15.2% over five years HCL Average of top Indian Average of other top Technologies heritage providers global service providers Among the hours invested in 6.64M employee upskilling World’s Best employees trained Employers 47,000 in digital skills Empowering ideapreneurs to innovate, collaborate and #30 #1 countries where HCL is a top employer stay resilient globally out of India 11 4 HCL Annual Report 2021 $10.17B 168K+ 50 157 Revenue ideapreneurs Countries Nationalities Revenue mix A differentiated IT and Business For the resilient 70.8% and integrated Services (ITBS) digital enterprise portfolio Engineering and To engineer Enabling outcomes 15.6% R&D Services (ERS) “The Next” for clients across major industries Products and Focused on innovation and 13.6% Platforms (P&P) client value Revenue mix by industry 21.9% 17.9% 17.4% 13.9% 10.8% 10.2% 7.9% Financial Manufacturing Technology Lifesciences Public Retail Telecom, Media, Services and Services and Healthcare Services and CPG Publishing and Entertainment 25.6% CAGR Sustaining our industry- for Mode 2 over four years leading momentum Mode 1-2-3 strategy AGILITY, EXPERIENCE AND INSIGHTS The growth blueprint for a Mode PRODUCT INNOVATIONS sustainable, scalable and resilient digital enterprise Mode 2 Mode Accelerating 1 new services 3 Existing Building new and core services reimagining mature products and platforms EFFICIENCY AND RELIABILITY Digital enterprise Accelerated Growth – $10B and Beyond 5 Shiv Nadar Founder and Chief Strategy Officer At HCL, we have always believed that technology and people working together can generate positive change that will advance the world to the next stage. 6 HCL Annual Report 2021 240200282_HCL_ARA2021_AW_26_07_20_Front Section_IFC_23.indd 6 26/07/2021 13:24 Roshni Nadar Malhotra Chairperson HCL has always been the partner-of-choice for leading enterprises to augment human ingenuity with next-gen technology solutions – “The New Essential”. 8 HCL Annual Report 2021 240200282_HCL_ARA2021_AW_26_07_20_Front Section_IFC_23.indd 8 26/07/2021 13:24 Letter from the CEO During a year of crisis and upheaval, HCL not only served its clients and safeguarded its employees but also delivered record results. Dear Stakeholders, 2020 was an unusual year which tested human ingenuity and resilience like no other span in recent memory. It will also perhaps go down in history as a period which reframed a lot of what we thought were “essentials” (whether it be freedom of movement, nature of livelihoods or even the frequency of primal human connections) in the face of a pandemic that has no equivalent precedence. “The New Essential” is a thought that emerged as we tried to navigate this journey with our employee and customer family spread across nearly every industry and country across the globe that was impacted. We realized that the only way to successfully make this journey was through a combination of the best in digital technology and the best of the human spirit. Being a global technology provider placed us right at the heart of ground zero where we were called upon to not only help our customers Act and Adapt to the changed circumstances but also to Advance despite the challenges posed by this unusual year. Our employees have done a heroic job on the front lines. It is because of their unstinted commitment that despite the pandemic- induced headwinds at the start of the fiscal, we finished FY21 on a very strong note. C Vijayakumar Chief Executive Officer 10 HCL Annual Report 2021 The fiscal saw us surpass many of our previous Our employees have done a heroic job on financial achievements. We crossed the $10 Billion the front lines. It is because of their unstinted (࠯ 75,379 Crores) revenue milestone and exited the year with a growth of 6.7% Year-on-Year (YoY), commitment that despite the pandemic- and outstanding EBIT (Earnings Before Interest induced headwinds at the start of the fiscal, and Taxes) performance. We also registered an we finished FY21 on a very strong note. all-time-high pipeline and the highest ever net new deal booking of $7.3 Billion in FY21 (this does not include renewals or rate card deals that we have Tailwinds in our favor signed, which were also significant throughout the Driven by this robust all-round performance, we are year). And what’s most promising is that these deals very confident of retaining our growth momentum in span across verticals and geographies and represent near and midterm. At the heart of this optimism is the Fortune/Global 500 companies where there is acknowledgment of some significant tailwinds which significant headroom for growth. we are witnessing in favor of our strengths over and above our existing momentum in all our chosen This record-breaking booking and broad-based segments and markets: pipeline augurs very well for our growth in near-term and is predominantly driven by our Mode 2 services. Unprecedented digital proliferation – experts believe the This momentum attests our belief that our Mode 2 COVID-19 pandemic has put into motion one of the most and Mode 1 service revenue would be equal in the intense periods of digital proliferation in modern history. medium term. That is also the aspirational goal that Every sector – from healthcare to education, retail, we are working towards. transport to financial services – is being “techi-fied” and modernized through digital technologies to survive and During the fiscal year, Mode 1 of our businesses thrive in the emerging new economic order. We are, remained steady despite weathering the greater however, still at an early stage of this multi-year impact of the pandemic-related headwinds. transformation. Currently our industry constitutes In Mode 2 and Mode 3 we posted a handsome 5 percent of the GDP of the U.S.A, for example, and it double-digit YoY performance predominantly led will expand to 10 percent in a decade with similar by digital transformation acceleration. Our Mode 3 acceleration expected across the globe. segment stands validated by better-than-expected business case performance. We see a lot of new Heightened activity in the cloud space – estimates point opportunities to grow this business. to a $300 Billion services opportunity in the cloud space. To address this swiftly expanding opportunity we launched Under the canopy of these spectacular numbers, we #HCLCloudSmart, an overarching offering, that helps also emerged as highest-ranked India headquartered enterprises accelerate and maximize business value company in Forbes’ “World’s Best Employers” global from cloud in alignment with industry needs, specific list and were ranked 30 overall, and received the organizational goals and unique client situations. One of highest governance quality score of 1st decile from the key enablers of this offering is our strong partnerships Institutional Shareholder Services (ISS). Additionally, with leading cloud hyperscalers. We were amongst one we were recognized as “Company of the Year” by of the first large Global System Integrators (GSI) in the India’s leading business newspaper, Business Standard, world to design dedicated ecosystem business units for in recognition of our stellar financial performance each cloud hyperscaler, some as far back as two years ago. coupled with a strong focus on innovation, capability building and strong business ethics. Enhanced traction in digital engineering services and platforms – driven by Industry 4.0, Hyperscale I am also proud to share that the challenging Platforms, Data Engineering, PLM, and 5G/Edge, we are circumstances of the year did not deter HCLites from witnessing a steadily rising demand in HiTech, Telecom, giving any less than the best support to our clients Manufacturing, and related industries for full-scale Digital despite all the odds.