Hexaware wins $177 million contract from US client

Mid-sized information technology (IT) services firm Hexaware Technologies announced on Monday that it has signed a five-year, $177 million IT service contract with an existing client in the United States.

As much as $100 million is new business from the existing client while about $77 million worth of existing projects have been extended. The company did not disclose the identity of the client but said that the project was won in a multi-vendor scenario, thus increasing Hexaware’s wallet share with the client.

The project involves infrastructure management and business process outsourcing, according to Atul Nishar, Hexaware’s chairman. Revenue from the deal will start kicking in from the third and fourth quarters of the current fiscal year, but fiscal 2012 will see significantly more inflows. The company follows the January-December financial year.

Despite winning the contract in a competitive bid, Hexaware has not compromised pricing and thus margins, according to the company management.

The new project will support the current profit margins or will help improve it as the project ramp-up occurs. As on 31 March, Hexaware had a net profit margin of 16.9%.

Shares of the company listed on Bombay Stock Exchange (BSE) gained 5% to close at Rs75.75 on Monday, outperforming the 0.30% gain in broader market and 0.81% fall in BSE’s sectoral index of technology stocks.

“Under this contract, Hexaware is expected to ramp up the team up to a peak size of 600+ personnel,” Rajiv Pant, president and head of Hexaware’s North American operations said. “It is envisaged that Hexaware will offer the IT and BPO services from 15 locations spread globally.”

Hexaware’s chief executive PR Chandrasekar said that it is the fifth large deal signing by the company in the last 12 months and is a validation of Hexaware’s strategy and execution.
The Mumbai-based firm that employs 6,650 engineers had revenues of $231million (Rs1,055 crore) in the year to December 31, 2010, and profits of $23 million (Rs107.6 crore).

Hexaware has 180 clients — predominantly in the banking and financial services industry — with at least two of them contributing annual revenues in excess of $20 million.