HCLTech’s leadership struck a balance between caution and confidence during its Q4 FY25 earnings call, outlining a 2-5% YoY revenue growth guidance for FY26 against a backdrop of macroeconomic headwinds, including tariff uncertainties and subdued discretionary spending. The company’s focus on AI-driven efficiency gains, localized hiring, and strategic bets in high-growth verticals like telecom and public sector emerged as key themes.
FY26 Guidance: Conservative Yet Strategic
CEO C Vijayakumar acknowledged the “uncertainty in the global economy” but emphasized HCLTech’s resilience, citing $9.4 billion in FY25 bookings (including a record 75% YoY growth in engineering services) as a buffer. The guidance range factors in two scenarios:
- Lower end (2%): Accounts for potential deterioration in discretionary spending and tariff impacts.
- Upper end (5%): Assumes stable demand and timely closure of large deals, particularly in engineering and AI-enabled services.
“While there is conservatism in the lower end of our guidance, we see strong opportunities in AI-led efficiency deals,” said C Vijayakumar. He noted that 98% of renewals included incremental business, with clients prioritizing cost takeouts and productivity gains from GenAI.
Macro Risks: Tariffs and Geopolitics
The leadership flagged tariffs and “de-globalization” as near-term risks, particularly for manufacturing and consumer verticals. However, C Vijayakumar positioned this as a dual-edged sword, “Enterprises will accelerate AI adoption to enhance efficiencies… Generative AI has two facets: pricing pressures during renewals, but also new revenue opportunities.”
CFO Shiv Walia added that the company’s 18–19% EBIT margin guidance reflects stable profitability, backed by operational rigor and a 37.9% return on invested capital (ROIC).
HR Strategy: Localization and AI Upskilling
CPO Ramachandran Sundararajan highlighted 106,000 employees upskilled in AI (double the FY25 target) and plans to hire “significantly more freshers in FY26” (2,000–3,000 per quarter). Attrition stabilized at 13%, aided by retention programs.
Notably, HCLTech is minimizing reliance on H1B visas (under 20% of workforce) amid U.S. policy shifts. “Our hiring is already localized. We’ll continue this trajectory,” said Ram.
India Market and GCC Strategy
While India revenues declined YoY due to software seasonality, Vijayakumar called it a “big focus area”, particularly for public sector and digital transformation projects. On the growing GCC (Global Capability Center) trend, he clarified, “We don’t need a separate GCC unit. Our existing delivery model integrates these capabilities.”
The Road Ahead
HCLTech’s FY26 playbook hinges on:
- AI commercialization: Scaling flagship platforms like AI Force (deployed in 35 clients, targeting 100 in FY26).
- Vertical focus: Telecom (43.4% growth in FY25) and public sector (new U.S. subsidiary).
- Margin defense: Leveraging productivity gains to offset pricing pressures.
“Beyond the uncertain short-term, strong growth opportunities will emerge,” concluded Vijayakumar . For now, the company’s guidance reflects a pragmatic optimism, navigating macro storms while betting on AI to anchor long-term growth.
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