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Informist, Tuesday, Apr. 21, 2026

 

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--HCL Tech: Seeing tremendous traction in AI factory deal 
--CONTEXT: HCL Tech management's comments in post-earnings analyst concall 
--HCL Tech: Doubling down on select areas for AI, see good traction there 
--HCL Tech:Lower end of FY27 guidance bakes in prospect of continued softness 
--HCL Tech: Long-term trajectory for software business intact 
--HCL Tech: Mega deal ramp-up on track despite pressures seen in Q4

 

By Anand JC and Gunjan Rajput

 

MUMBAI/NEW DELHI – Around 40% of the information technology industry today is at risk of being disrupted by artificial intelligence and could shrink at a compounded annual growth rate of 3-5% for a few years, HCL Technologies Ltd.'s management told analysts in a post-earnings conference call Tuesday. "This spend is what I would call as AI-disrupted and is in traditional areas like application development support, traditional infrastructure operations, customer support, etc.," a top official said, adding that the company is investing in advanced AI offerings to tap into increased spending by clients in the coming time. 

 

"There is a 55% of the industry that can take advantage of AI-like data, cybersecurity, cloud, and grow healthy at about 10% plus and grow its share of enterprise spend marginally. We would call this as AI-amplified or AI-augmented services," the official said. HCL Tech is adopting an AI strategy which is customised to align to the differential growth rates of various growth categories, which it feels will help the company grow ahead of the market. 

 

For the March quarter, HCL Tech earned a revenue of $155 million from advanced AI, up 6.1% on quarter in constant currency terms. For 2025-26 (Apr-Mar), this figure stood at $620 million. The company filed 38 patents across advanced AI technologies in FY26. 

 

HCL Tech reported a consolidated net profit of INR 44.88 billion for the March quarter on revenues of INR 339.81 billion. The company missed analysts' estimates on both counts, primarily because of softness in discretionary spending and delayed decision making.

 

"While our business remains strong, two client-specific challenges in America would have close to 50 basis points growth headwind in FY27. These customers are going through business challenges which are not related specifically to the macroeconomic conditions and have decided to scale down their IT budget significantly," the company told analysts.

     

The ongoing war in West Asia led to some deferral in decision-making by the clients, causing softness in revenue growth. "Some of the delays in the US government (approvals) also caused this (revenue softness). We expected it to get done before March, but they didn't get done," the company said. "There were also a couple of other situations where some client-stakeholder changes and all that overall led to little more scrutiny and little more review of the deals...," the company said, adding that despite the recent developments, its long-term trajectory for the software business remains intact.

 

Additionally, despite the pressures felt in the March quarter and being felt in the June quarter, the company said that the ramp-up of mega deals is on track. "That growth will offset the headwinds from the two client challenges that we talked about," HCL Tech said. 

 

The company walked away from some deals, which could've potentially increased their deal wins by $1 billion, primarily because "they did not make sense". "It's only prudent to be a little bit more careful about this and spend the energy and organisational bandwidth more on reinventing for the future and enhancing our AI positioning and delivering more value to our clients using AI instead of really fighting some of the traditional deals where it's, of course, hypercompetitive," the company said.

 

HCL Tech has guided for an EBIT margin of 17.5-18.5% for FY27. At the higher end of the guidance, the company expects to see a moderate pickup in discretionary spending and a couple of large deals materialising in Apr-Sept. "At the lower end, this (guidance) assumes a continued soft discretionary spend environment, and the two clients that I referenced ramp down beyond the planned ramp downs," the company said. HCL Tech's guidance does not include two acquisitions as they are not closed yet because of delays in approvals by the US government caused by the shutdown.

 

In FY26, HCL Tech bagged an 'AI Factory' deal of over $100 million for the design, implementation, and support of an AI data centre and a next-gen AI data centre for a large technology company. Currently, it is seeing good traction on the deal. "We're already now into two major clients for this, and we hope to get to another three or four more in this coming year," the company said. Similarly, it is also working on deals for semiconductor engineering. "These are the areas which we are doubling down, and we see great traction," the company added.

 

The company disclosed its March quarter earnings after the market closed. Tuesday, its shares closed 0.9% higher at INR 1,441.20 on the National Stock Exchange.  End

 

US$1 = INR 93.50

 

Edited by Deepshikha Bhardwaj

 

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