HCL Technologies Ltd closed the previous fiscal year (FY26) with its fastest revenue growth in three years, but flagged a slower outlook for the current fiscal year amid an uncertain demand environment.
The country’s third-largest information technology (IT) services company clocked 5.95% year-on-year (y-o-y) growth in consolidated revenue to $14.66 billion, beating a Bloomberg estimate of $14.1 billion by 45 analysts.
However, net profit fell 4.05% y-o-y to $1.96 billion, compared to a rise of 7.6% in FY25.
Despite the encouraging top line performance, the Noida-headquartered company appeared cautious about the current fiscal year, guiding for revenue growth of 1-4% in constant currency terms, broadly in line with its current constant currency growth of 3.9%. Constant currency does not account for currency fluctuations.
At a post-earnings press conference on Tuesday, chief executive C. Vijayakumar noted that the business environment remained fluid, making it difficult to form a definitive view of how the next 12 months would unfold.
“We are seeing second-order effects play out—rising energy prices and supply chain disruptions are weighing on the growth outlook in Europe, with risks of inflation and industrial slowdown becoming more pronounced at the same time,” Vijayakumar said. “North America continues to show relative resilience with no broad based macroeconomic challenges at this stage.”
The company gets a little more than half of its revenue from US-based clients. About a fourth comes from European clients. Much of its overall revenue growth in FY26 was fuelled by financial institutions, which make up a little more than a fifth of its total revenue.
HCLTech’s performance was in contrast to two of its big five peers. Tata Consultancy Services (TCS) and Wipro saw their revenues dip 0.54% and 0.32% on a yearly basis in FY26, respectively, to $30.08 billion and $10.48 billion.
While Wipro’s management highlighted geopolitical and trade uncertainties, TCS’s management expected long-term deal engagement and strong client commitments despite these macroeconomic challenges.
Vijayakumar said HCLTech’s business fundamentals remained strong, but the company is facing two client-specific challenges in the Americas, which will create a headwind of approximately 50 basis points to growth in FY27. A hundred basis points is 1%.
“These clients are navigating their own business pressures in the current macro environment, and have scaled back their IT and business operation spending,” he added.
External factors such as the West Asia conflict and the rise of automation tools could further weigh on demand for Indian IT outsourcers, as large global clients prioritise core spending and trim discretionary technology budgets.
The company’s guidance for FY27 is also lower than its initial outlook for FY26. In April last year, it had guided for full-year revenue growth of 2–5% in constant currency terms. The management attributed the softer outlook to two clients holding back tech spends and to AI-led deflation, which it expected to be up to 3% per year.
Analysts were not impressed, with Sushovon Nayak, lead IT analyst at Anand Rathi Institutional Equities, calling the numbers underwhelming.
“The guidance is cut and some of the tech clients have cut spending, which will impact overall growth,” Nayak said. “HCLSoftware has also weighed down on growth. In our view, the company will also be looking at more acquisitions now.”
Notably, revenue from the company’s software product business declined 2.8% y-o-y to $1.39 billion.
HCLTech, which became the first IT services company to list out revenue from AI in October, reported annualised advanced AI revenue of $620 million. The company classifies ‘Advanced AI’ as revenue from agentic AI, AI factories and physical AI.
Another area of concern was the company’s operating margin, which at 17.9% was 110 basis points lower compared to FY25. Most of its decline in profitability came from a restructuring plan it embarked on last year.
The company expects lower profitability going forward. Its management guided for operating margins between 17.5% and 18.5% for the full-year, lower than the 18-19% expectations issued at the start of the last year.
HCLTech shares jumped 0.92% on the BSE to ₹1,441.55 on Tuesday. The results were announced after market hours.
The company increased its headcount by 3,761 to end last year with 227,181 employees. Much like its peers, the management shied away from giving a hiring target, insisting on looking at hiring on a quarterly basis.
