HCLTech shares drop 11% as weak outlook offsets AI gains

NEW DELHI & BENGALURU: Shares of HCLTech fell nearly 11% on BSE on Wednesday after the company issued a softer-than-expected outlook following a muted March quarter performance.

Responding to concerns around a 2–3% annual deflation driven by AI, CEO C Vijayakumar said the company has largely offset the impact of deflation in its traditional services business, even as automation continues to compress deal sizes.
“We’ve already offset more than two-thirds of that deflation through new services,” he said, pointing to FY27 services revenue guidance of 1.5–4.5%, with a midpoint of around 3%. In FY26, the company reported overall growth of 4.8%, with organic growth at 3.8%.

March-quarter revenue declined 3.3% sequentially in constant currency but rose 2.4% year on year; in dollar terms, it stood at $3.6 billion, down 2.9% sequentially and up 5.3% year on year.

For FY26, HCLTech reported 3.9% constant currency growth and 6% dollar growth to $14.6 billion, with Vijayakumar citing tariff volatility and weak discretionary spending as key headwinds.

The company has been investing heavily in what it calls “advanced AI” services, which have reached an annualised revenue run rate of $620 million, alongside areas such as cloud, cybersecurity and data modernisation.

While a portion of HCLTech’s legacy business remains exposed to AI-driven disruption, the broader strategy reflects a structural transition underway in the IT services sector. Vijayakumar pointed to continued strength in financial services and technology verticals as areas supporting near-term growth.

On the operational front, the company downplayed concerns around recent layoffs, including about 120 employees in Orlando, calling it a routine adjustment linked to a specific client ramp-down. “We have over 20,000 employees in the US, and this was a planned change. It’s not indicative of broader trends,” he said.

HCLTech also clarified that its current guidance does not factor in the acquisition of a telecom business unit from Hewlett Packard Enterprise, as regulatory approvals are still pending.

Even as restructuring continues across the sector, Vijayakumar said the company’s approach remains targeted rather than structural.

“We also had some acquisitions, particularly in the auto segment, that didn’t play out as expected, which required restructuring. This is something we evaluate case by case each year; there’s no one-sizefits-all answer.”
While AI-native firms are increasingly seen as both competitors and collaborators, Vijayakumar emphasised the role of IT services companies in enterprise adoption.

“While we’re not quantifying investments or payback periods, deploying frontier AI models at scale in enterprises requires deep contextual understanding. That’s where service providers like us play a key role. We collaborate with AI companies to deliver value to clients.”
Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.