HCL Technologies reports $3 billion bookings as AI-led demand fuels strong deal momentum

HCL Technologies sees strong deal momentum as AI-led demand drives $3 billion bookings

HCL Technologies reported a robust demand environment, underpinned by strong AI-led discretionary spending and large deal wins, even as global technology clients remain selective on spending. Management said the company's pipeline remains healthy, margins are stabilising, and AI-linked services are emerging as a key growth driver for the coming quarters. Speaking to ET Now, C Vijayakumar, CEO and MD of HCL Technologies, said the company delivered "exceptional" total contract value (TCV) bookings of $3 billion in the December quarter, including one mega deal and multiple large contracts. Vijayakumar noted that discretionary technology spending has shifted away from traditional areas towards AI-enabling and AI-adjacent services, which HCL Tech has been actively targeting. "We are seeing strong traction in advanced AI areas that are closely linked to the broader capex cycle in the global technology industry," he said, adding that this trend supported both Q2 and Q3 growth. The company disclosed advanced AI revenue of $146 million for the quarter, marking a 20% sequential growth, and translating into a $600 million annualised run rate. Management clarified that advanced AI revenues include specialised services such as AI data centre build-outs, custom silicon for edge inferencing, robotics, and physical AI, rather than embedded AI used across routine service delivery. HCL Tech reported an EBIT margin of 18.6% for the quarter, while reiterating its full-year margin guidance of 17-18%. According to Shiv Walia, CFO of HCL Technologies, the quarter benefited from seasonally strong performance in the software business, which posted nearly 35% EBIT margins, despite being only about 10% of overall revenue. Walia said rupee depreciation added around 40 basis points to margins, while wage hikes impacted margins by nearly 80 basis points. In addition, the company absorbed a one-time charge of $109 million related to the implementation of new labour codes. "The labour code impact is a one-time cost. Going forward, the annual margin impact should be limited to about 10-20 basis points," Walia said. Restructuring costs for FY26 are expected to be around 50 basis points for the full year, with management aiming to complete the exercise by Q4 and enter the next financial year with a "clean slate". Addressing concerns over aggressive pricing in cost takeout deals, Vijayakumar said HCL Tech remains selective. "There may be pockets of aggressive pricing, but seasoned technology buyers understand the need for long-term, value-based partnerships," he said, adding that the company is prepared to walk away from deals that do not meet profitability thresholds. Management expects margins to move back towards the 18-19% range in FY27, once one-time restructuring and labour-related costs subside. HCL Tech said 97-98% of its business is international, making overseas demand the key driver of overall growth. The US continues to show strong momentum, while Europe remains relatively soft. The "rest of the world" portfolio and India operations posted healthy year-on-year growth. By vertical, technology services grew 14% year-on-year, driven by demand for custom silicon and AI inferencing solutions across retail, industrial, and manufacturing sectors. BFSI grew 8% year-on-year, remaining one of the company's fastest-growing verticals despite seasonal softness in the December quarter. ER&D services also posted over 3% sequential growth and double-digit annual growth. Of the $3 billion in quarterly bookings, about 63% came from digital applications and engineering & R&D services, with strong traction across retail, CPG, financial services, telecom, and manufacturing. Employee headcount rose by over 6,000 year-on-year, though remained flat sequentially. Vijayakumar said future hiring will closely track revenue growth, with AI-led productivity allowing the company to deliver 4-5% growth without proportional increases in workforce size. On concerns around AI-driven revenue deflation, management said the strategy focuses on expanding addressable markets and building entirely new revenue streams, supported by large global capex investments in software and hardware infrastructure. "We are confident that AI-led efficiency gains will be offset by broader market expansion and new services," Vijayakumar said.

HCLTech Q3FY26 - AI Now Part Of Every Major Engagement, CEO Says

HCLTech on Monday released its Q3FY26 results and used the accompanying earnings call to underline how AI, data centre infrastructure, telecom engineering and custom silicon are now central to its growth strategy. Addressing analysts, Chief Executive Officer (CEO) C. Vijayakumar said "AI is now embedded across every major engagement", adding that the company is positioning itself for an "AI-accelerated world" by expanding across physical AI, AI factories, agentic platforms and semiconductor engineering. Notably, HCLTech's new bookings reached the $3 billion mark approximately. At the same time, the company highlighted growing demand for what it described as "Day-1" AI services, including the design, build and operation of large-scale AI data centres and edge infrastructure that are foundational for enabling AI. Vijayakumar also pointed to rising interest in custom chips for edge inferencing, as enterprises look to make AI deployment commercially viable across products and industrial systems. Meanwhile, Vijayakumar stated that HCLTech is deepening its position in telecom engineering following the acquisition of Telco Solutions Business from Hewlett Packard Enterprise (HPE). Furthermore, HCLTech is expanding its software and data intelligence portfolio through recent acquisitions. In addition, Vijayakumar signalled a stronger focus on India as a domestic growth market for high-value digital and AI-led transformation, distinct from its traditional global delivery model. HCLTech told investors that AI is now shaping its engineering, infrastructure and semiconductor roadmap, with advanced AI emerging as a key growth driver during the quarter. Vijayakumar said the company's advanced AI business grew 19.9% in Q3FY26, led by a "strong uptick in agentic physical AI and AI factory programmes". He said HCLTech is seeing rising demand for what it calls Day-1 services, which focus on the physical layer required to deploy AI at scale. These include AI data centres, compute infrastructure and edge systems. "The AI factory, which is largely the AI data centres, the professional services around design, implementation, operations, support managed services", has emerged as a major opportunity, Vijayakumar said. At the same time, the company highlighted custom silicon as a growing area of spend for enterprises deploying AI at the edge. "Everybody who's got products and solutions, if they needed to use the regular GPU architecture for edge inferencing, it's going to be unviable. "So, they're looking at custom chips to be a big spend area to get the best ROI (return on investment) out of the AI spend," Vijayakumar said. According to HCLTech, this demand is coming from companies across multiple industries, and not just the semiconductor sector. Meanwhile, HCLTech's CEO said that the company has launched OEM-aligned joint offerings for AI factories with the likes of Dell, Cisco, NVIDIA, AWS, and Microsoft Azure. It has also executed a large-scale engagement with a "top 10 global tech company" to design and run AI factory infrastructure. In addition, the company launched a physical AI lab with NVIDIA in Santa Clara, saying that NVIDIA's CEO Jensen Huang named HCLTech a key physical AI and robotics partner during his CES 2026 keynote address. During the quarter, the company acquired HPE's telco solutions business, strengthening a portfolio built after the acquisition of HPE's Communications Technology Group in 2024. "With this deal, we are now well positioned as a system integrator with comprehensive telecom IP portfolio, unlocking access to significant telecom engineering spend", Vijayakumar remarked, adding that the business is already generating new relationships across global communication service providers. Alongside telecom, HCLTech said it is expanding its software and data intelligence portfolio through recent acquisitions. The company announced the acquisition of Jaspersoft and Wobby during Q3FY26, following its earlier acquisition of Zeenea. Vijayakumar said that combining software company Actian's enterprise data management capabilities with Jaspersoft's analytics and Wobby's semantic layer will create "a unified end-to-end data and analytics platform" to address demand for metadata management, data catalogues and data governance. He added that the integration will enable "AI-powered natural language analytics on a unified, governed platform". Meanwhile, the company signalled a stronger push into the domestic Indian market. "India represents a high-growth market with substantial opportunities to deliver high-value, cutting-edge work, specifically in the context of India-centric domestic opportunities distinct from the GCC (Global Capacity Centre) model", Vijayakumar remarked. This shows that the company now views India as a major domestic market for high-value AI and digital transformation projects, rather than merely a back-office outsourcing or delivery centre. HCL posted positive financial results for Q3FY26, with revenue rising sharply but net profit declining year-on-year (YoY). The IT services firm's consolidated revenue for the quarter ended December 31, 2025, stood at Rs 33,872 crore, up 13.3 % YoY and 6.0 % quarter-on-quarter (QoQ): reflecting continued demand for its services even. Notably, Advanced AI Revenue stood at $146 million, up 19.9% QoQ. However, despite strong top-line growth, HCLTech's consolidated net profit fell 11.2 % YoY to Rs 4,076 crore, compared with Rs 4,591 crore in the same quarter of the previous year. The profit margin was also lower due to a Rs 956 crore compliance cost-linked increase in employee benefits in Q3FY26 due to the new labour codes. Moreover, HCLTech's board declared an interim dividend of Rs 12 per share for the quarter.