HCLTech Shows Confidence in Generative AI with 12 Exclusive Deals in the Quarter
Much on the lines of Indian IT firms that reported subdued Q4 FY25 results in the last fortnight, HCLTech, too, posted modest earnings while showing confidence in generative AI. In Q4 FY25, the revenue in rupee terms rose 1.2% to ₹30,246 crore from ₹29,890 crore. And in USD terms, the company posted a revenue of $3.4 billion, down 1.0% QoQ. For the full financial year, the revenue stood at ₹117,055 Crores, up 6.5%. Accounting in USD, the revenue was $13.8 billion, representing a 4.3% increase compared to the same period last year. Operating performance weakened, with EBIT dropping to ₹5,442 crore from ₹5,821 crore. The EBIT margin contracted to 18.1% from 19.5%. Meanwhile, net profit also declined 6.3% to ₹4,300 crore from ₹4,591 crore for the fourth quarter. In Q4, HCLTech focused on exclusive AI and generative AI deals, securing 12 new agreements, including those involving agentic AI and automation processes. This announcement differs from other IT firms that shied away from mentioning AI-specific deals. However, all the tech companies acknowledged that AI is part of every deal conversation. HCLTech CEO C Vijaykumar stated that Q4 FY25 saw the highest number of deals after the September 2023 quarter. This quarter, HCLTech closed $3 billion in net new bookings, bringing the year-to-date total to $9.26 billion. It’s a 5% decline compared to last year. “Our engineering and R&D services business led the charter with a record-high 75% growth in bookings in FY25,” Vijaykumar said, attributing this performance to the successful execution of HCLTech’s integrated go-to-market strategy. He also emphasised that generative AI will remain a core focus for enterprises across all industries, despite broader macroeconomic uncertainties and pressure on discretionary spending. “Their focus on using generative AI to drive high efficiency in every aspect of their business is becoming central to all conversations,” Vijaykumar said. On the topic of pricing pressure in the age of AI, he acknowledged that efficiencies delivered through AI would naturally lead to some level of pricing deflation. “When you’re able to deliver at a much more efficient operating level, we do share some of those benefits with our customers,” he explained. “But in every renewal and client conversation, we’re also able to ask for a higher wallet share as we proactively provide generative AI-driven benefits.” For FY26, HCLTech expects overall revenue growth in the range of 2–5% in constant currency (CC) terms. Services revenue is also projected to grow between 2–5% in CC terms. The company has guided for an EBIT margin of 18–19% for the fiscal. “In FY25, we clocked the consolidated revenue of $13.84 billion, an increase of 4.7% attributed to both our services business and the software business,” said Vijaykumar. He added that the pipeline spans IT and business services, engineering services, and HCLSoftware, and that AI and generative AI are now integral components of almost every deal. “Both Americas and Europe showed considerable pipeline growth during the quarter,” he noted. “We’ve made significant strides in AI and GenAI, impacting both client-facing solutions and internal operations.” The company’s four flagship AI offerings—AI Force, AI Foundry, AI Labs, and AI Engineering—have seen substantial adoption and scaling during FY25. Notably, AI Labs alone has delivered 500 GenAI engagements for 400 clients. The company’s attrition rate increased to 13%, up from 12.4% in Q4 of last year. The overall headcount stood at 223,420, with the tech firm adding 7,829 freshers in the fiscal year. Speaking further about AI, Vijaykumar said that both customers and the firm are internally running several AI use cases to build solutions around them. “The approach is: invest in skills development, invest in labs, build use cases, and on the back of it, create POCs that we can take to customers. That’s been our approach, and it’s working well so far,” he said. “Don’t worry about the investments now—look at the ROIs we can get on the back of it. That has been our approach. It takes time, but we’re seeing success.” Focus on generative AI Speaking at an industry event in Mumbai in February, Vijayakumar emphasised that AI’s disruption in IT services is unlike previous technological shifts such as cloud computing and digital transformation. “The changes AI is assuring are very different, and we need to be more proactive to categorise our revenues to create completely new businesses,” he said. Generative AI is expected to accelerate software development by automating coding and reducing project timelines. Vijayakumar pointed to a financial services firm where AI-driven efficiencies reduced the timeline of a $1 billion technology transformation program from five years to three-and-a-half years. He emphasised that, with declining costs of AI training, India must invest in economically viable ways to develop its own models. “I strongly believe that the business model is ripe for disruption. What we saw in the last 30 years was a fairly linear scaling of revenues and people. I think time is already up for that (business model),” he added. Meanwhile, in its Q3 FY25 results in January, HCLTech secured $2.1 billion in total contract value (TCV), with many deals embedding AI solutions. The CEO said that it is advancing its generative AI strategy and aims to integrate AI services into 100 clients by FY26. “Generative AI is getting more and more real. The cost of using an LLM or conversational model has dropped by over 85% since early 2023, making more use cases viable,” Vijayakumar noted in the Q3 earnings call. Compared to Q1 and Q2, the company’s Q3 results demonstrate a growing integration of AI into its business operations.
CEO C Vijaykumar didn’t disclose any specific vertical where generative AI deals were awarded, but said that it is part of almost all deals.
CEO C Vijaykumar didn’t disclose any specific vertical where generative AI deals were awarded, but said that it is part of almost all deals.
["Generative AI", "HCL Technology"]
["Go", "GenAI", "agentic AI", "AI", "cloud computing", "digital transformation", "Git", "Aim", "generative AI", "HCL Technology", "Generative AI", "R"]
["AI", "generative AI", "GenAI", "agentic AI", "Aim", "cloud computing", "R", "Go", "Git", "digital transformation"]
Mohit writes about AI in simple, explainable, and often funny words. He's especially passionate about chatting with those building AI for Bharat, with the occasional detour into AGI.