HCLTech’s Q2 Update: Cutting H-1B Dependence to Accelerate AI-led Growth
IT services giant HCL Technologies (HCLTech) is taking concrete steps to reduce its reliance on H-1B visa allocations while expanding its AI-enabled services. The company reaffirmed its FY26 guidance, signaling a mixed, yet confident, outlook as AI-driven demand translates into higher services revenue and healthy margins. The quarterly results underscore AI as a key growth engine, with digital transformations and automated capabilities fueling client engagements across BFSI and Hi-tech sectors.
FY26 Guidance Maintained amid AI Momentum
For FY26, HCLTech maintained its revenue growth guidance at 3%–5% year-on-year in constant currency (CC). It projects services revenue growth of 4%–5% in CC and expects the EBIT margin to land in the 17%–18% band. This balanced outlook reflects the company’s strategy to scale AI offerings while managing costs and leveraging operating leverage as revenue ramps up.
AI and Digital: Key Growth Drivers
HCLTech highlighted the strength of its Advanced AI segment, which crossed the $100 million mark in quarterly revenue. Digital revenue rose 15% YoY and now accounts for 42% of the company’s services revenue. CEO C. Vijayakumar said the quarter was a standout across multiple metrics, noting strong demand for AI-powered solutions and an advance in new bookings that surpassed $2.5 billion.
Headcount and Productivity Gains
The company added 3,489 people to its global workforce in the quarter, with total headcount reaching 226,640. Revenue per employee rose 1.8% YoY, illustrating productivity gains tied to AI-enabled engagements. HCLTech also emphasized margin recovery, reporting a sequential EBIT margin improvement to 17.25% from 16.3% in the previous quarter.
Operational Highlights and Market Reactions
Key financials for Q2 show EBIT at Rs 5,503 crore, up 11.3% QoQ, and a net profit of Rs 4,236 crore, essentially flat YoY. The quarter saw TCV bookings of $2,569 million, up 41.8% QoQ and 15.8% YoY, signaling a robust demand environment for large-scale deals even as the broader IT sector faces macro headwinds.
Dividends and Shareholder Returns
HCLTech announced an interim dividend of Rs 12 per equity share for FY2025-26, with the record date set for October 17, 2025, and payout on October 28, 2025. This marks the third interim dividend of the year, underscoring the company’s commitment to returning value while investing in future growth areas.
Visa Policy Context and Strategic Implications
Analysts note that HCLTech’s strategy to cut reliance on H-1B visas could help mitigate regulatory and policy risks in the US. With H-1B-related costs and visa issuance patterns under scrutiny, the company’s pivot toward a more diversified talent model aligns with longer-term offshoring and nearshoring trends. While some equities research houses maintain cautious near-term forecasts given global policy dynamics, the consensus remains constructive on AI-led scalability.
What Analysts Expect Next
Brokerage firm projections suggest Q2 sequential growth of around 3% CC, aided by BFSI and Hi-tech verticals and a broad-based recovery across engineering and cloud services. The consensus is for margin expansion driven by operating leverage, currency benefits, and disciplined cost management. AI adoption and a strengthened pipeline are expected to bolster revenue visibility through FY26 and beyond.
Bottom Line for Investors
HCLTech’s Q2 results reinforce the narrative that AI is becoming a central revenue accelerator for large IT services players. By sustaining its FY26 growth guidance and pushing forward with incremental AI-led wins, HCLTech aims to deliver improved profitability while navigating visa policy headwinds. Investors will watch for further details on the pace of AI-driven deal closures and any incremental steps to diversify the talent pool in the coming quarters.
