AI Remains Key to HCLTech in FY26, But Weak Software Services Drags Profit

HCLTech exited FY26 with visible signs of slowing momentum, including sequential declines in revenue, margins, and profit in the March quarter.

The IT services company reported an 11.2% year-on-year rise in full-year revenue to ₹1,30,144 crore ($14.66 billion). 

“FY26 began against a backdrop of uncertainty… discretionary spending softened in the traditional segments… and client behaviour reflected a continuous focus on cost optimisation, along with accelerated adoption of AI-driven productivity,” CEO C Vijayakumar said during a press conference. 

Net income for the full year was largely flat at ₹17,361 crore ($1.96 billion), down 0.2% YoY, while EBIT (signifying core profitability) rose 4.6% to ₹22,397 crore ($2.53 billion), with margins at 17.2%.

Artificial intelligence remained a key growth driver. 

“Importantly, the momentum around AI remains strong. With nearly every deal incorporating AI or Gen AI component…” the CEO said, adding that “advanced AI annualised revenue reached $620 million.”

Deal momentum stayed strong, with total contract value (TCV) of new wins at $9.32 billion for FY26. 

However, the March quarter reflected pressure on growth and execution. “Our revenue for the quarter was at $3.7 billion, a decline of 3.3% quarter-on-quarter…,” the CEO noted.

In Q4, the company earned ₹33,981 crore in revenue, up 12.3% YoY but only 0.3% sequentially, while constant currency revenue declined 3.3% QoQ and dollar revenue fell 2.9% sequentially.

It flagged demand-side challenges impacting performance. 

“We saw a delay in procurement decisions in the month of March that resulted in revenue coming below our expectations,” the CEO said, adding that “services performance this quarter came in at the lower end of our expectations.”

The software segment remained a drag, with HCLSoftware revenue declining 14.1% YoY in constant currency in Q4 and 4.1% for the full year.

Profitability weakened during the quarter, with EBIT declining 10.6% QoQ to ₹5,620 crore ($601 million) and margins compressing to 16.5%. Net profit fell 6.4% sequentially to ₹4,488 crore ($480 million).

The company also pointed to a broader pullback in discretionary spending. “This was primarily driven due to reduction in discretionary spending… we saw select lines scale back discretionary investments…,” Vijayakumar said.

Despite near-term softness, the pipeline remains strong. “Our pipeline remains robust… with AI increasingly integral to nearly all deal conversations,” he added.

Still, the outlook remains cautious. “The business environment remains highly fluid, making it difficult to form a definite view…” the CEO said, noting that “we do have two client specific challenges… that will create a headwind of approximately 50 basis points to growth in FY27.”

For FY27, HCLTech guided for revenue growth of 1–4% in constant currency, signalling a measured outlook amid macro uncertainty and evolving client spending patterns.

Total headcount was 227,181, as of March 31, 2026. The company added 11,744 freshers for FY26, with 1,712 freshers added during Q4 alone.