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

HCL Technologies Delivers Record Bookings Amid AI Transformation

HCL Technologies reported exceptional total contract value bookings of $3 billion in the December quarter, marking a significant milestone as AI-led demand reshapes the technology services landscape 1

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. The strong deal momentum included one mega deal and multiple large contracts, with approximately 63% of bookings coming from digital applications and engineering services across retail, financial services, telecom, and manufacturing sectors. C Vijayakumar, CEO and MD of HCL Technologies, told ET Now that the company is witnessing a fundamental shift in discretionary spending away from traditional technology areas toward AI-enabling and AI-adjacent services 1

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Advanced AI Revenue Reaches $600 Million Annualized Run Rate

The company's advanced AI revenue hit $146 million for the quarter, representing a 20% sequential growth and translating into a $600 million annualized run rate 1

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. Vijayakumar emphasized that "AI is now embedded across every major engagement," signaling how deeply the technology has penetrated the company's service delivery model 2

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. Management clarified that advanced AI revenue includes specialized services such as AI data center build-outs, custom silicon for edge inferencing, robotics, and physical AI, rather than embedded AI used across routine operations. The advanced AI business grew 19.9% in Q3FY26, led by what the company describes as a "strong uptick in agentic physical AI and AI factory programmes" 2

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AI Factories and Edge Inferencing Drive New Revenue Streams

HCL Technologies is capitalizing on surging demand for what it calls "Day-1" AI services, which focus on the foundational physical layer required to deploy AI at scale 2

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. AI factories—essentially AI data centers and the professional services around their design, implementation, operations, and managed services—have emerged as a major opportunity. The company has launched OEM-aligned joint offerings for AI factories with Dell, Cisco, NVIDIA, AWS, and Microsoft Azure, and executed a large-scale engagement with a top 10 global tech company to design and run AI factory infrastructure 2

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. Custom silicon for edge inferencing represents another critical growth driver, as enterprises seek commercially viable ways to deploy AI across products and industrial systems. "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 out of the AI spend," Vijayakumar explained 2

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Strategic Partnerships and Semiconductor Engineering Expansion

HCL Technologies has strengthened its position in semiconductor engineering and telecom through strategic acquisitions and partnerships. The company launched a physical AI lab with NVIDIA in Santa Clara, with NVIDIA CEO Jensen Huang naming HCL Technologies a key physical AI and robotics partner during his CES 2026 keynote address 2

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. The acquisition of HPE's telco solutions business positions the company as a comprehensive system integrator with a robust telecom IP portfolio, unlocking access to significant telecom engineering spend and generating new relationships across global communication service providers 2

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. Additionally, HCL Technologies is expanding its data intelligence capabilities through acquisitions of Jaspersoft, Wobby, and Zeenea, creating a unified end-to-end data and analytics platform for metadata management, data catalogues, and AI-powered natural language analytics 2

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Margins Stabilize Despite One-Time Costs and Wage Hikes

HCL Technologies reported an EBIT margin of 18.6% for the quarter while reiterating its full-year margin guidance of 17-18% 1

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. CFO Shiv Walia noted that the quarter benefited from seasonally strong performance in the software business, which posted nearly 35% EBIT margins despite representing only about 10% of overall revenue. Rupee depreciation added approximately 40 basis points to margins, while wage hikes impacted margins by nearly 80 basis points 1

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. The company absorbed a one-time charge of $109 million related to the implementation of new labour codes, with the margin impact expected to be limited to 10-20 basis points annually going forward. 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 FY27 with a "clean slate." Management expects margins to move back toward the 18-19% range in FY27 once one-time restructuring and labour-related costs subside 1

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Market Expansion Strategy Addresses AI-Driven Revenue Concerns

Addressing concerns around AI-driven revenue deflation, management emphasized that its strategy focuses on expanding addressable markets and building entirely new revenue streams, supported by large global capex investments in software and hardware infrastructure 1

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. "We are confident that AI-led efficiency gains will be offset by broader market expansion and new services," Vijayakumar stated. The company also signaled a stronger push into the domestic Indian market, viewing India as a high-growth market for high-value AI and digital transformation projects distinct from its traditional global delivery model 2

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. With 97-98% of its business international, overseas demand remains the key growth driver, with the US showing strong momentum while Europe remains relatively soft. By vertical, technology services grew 14% year-on-year, driven by demand for custom silicon and AI inferencing solutions, while BFSI grew 8% year-on-year 1

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. Employee headcount rose by over 6,000 year-on-year, though remained flat sequentially, with future hiring expected to closely track revenue growth as AI-led productivity allows the company to deliver 4-5% growth without proportional workforce increases.