HCLTech outlines FY26 growth path amid visa strategy pivot
HCL Technologies (HCLTech) delivered its latest quarterly results and signaled a deliberate shift to reduce reliance on H-1B visas as it advances its AI-powered growth agenda. The company reaffirmed its FY26 guidance of 3%–5% revenue growth in constant currency (CC), with services revenue expected to rise 4%–5% and an EBIT margin target of 17%–18%. Management framed the quarter as a validation of its strategy to broaden client value through advanced AI solutions and a more disciplined mix of services.
AI at the core: Advanced AI crosses the $100 million quarterly threshold
Executive comments highlighted the rapid traction of HCLTech’s AI offerings. The company reported that its Advanced AI business exceeded $100 million in quarterly revenue, underscoring rising client demand for AI-enabled services. Digital revenue rose 15% year-on-year and now comprises 42% of the company’s services revenue, illustrating a broad-based shift toward high-value digital and AI-enabled engagements.
Leadership perspective on execution and growth
CEO and Managing Director C. Vijayakumar stated that the quarter marked a strong performance on multiple fronts: healthy demand for AI-powered solutions, execution discipline, and robust AI-driven revenue momentum. He noted that revenue grew 2.4% sequentially in constant currency with a notable margin recovery to 17.5% and that new bookings surpassed $2.5 billion for the first time without relying on mega-deals. The company added 3,489 employees, pushing the total headcount to 226,640, a sign of ongoing scaling alongside AI-driven efficiency gains.
Operational metrics and market guidance
HCLTech reported EBIT of Rs 5,503 crore for the quarter, up 11.3% QoQ, with a margin of 17.25% compared with 16.3% QoQ. The LTM attrition rate stood at 12.6%, showing a marginal improvement from the prior year, while the total workforce rose to over 226,000. On the deal front, TCV (total contract value) reached $2,569 million, up 41.8% QoQ and 15.8% YoY, signaling continued deal momentum even as the firm remains cautious on discretionary projects.
Dividend and capital returns
In a move signaling confidence in cash generation, HCLTech declared an interim dividend of Rs 12 per equity share for the financial year 2025–26, with the record date set for October 17, 2025 and the payout slated for October 28, 2025. This marks the third interim dividend in the current financial year, highlighting a shareholder-friendly capital allocation stance while the company maintains investment in new capabilities and hiring.
Visa environment, policy backdrop, and long-term outlook
Industry analysts have highlighted that visa policy dynamics, particularly around H-1B, could influence earnings trajectories over the medium term. Some analyses warned of potential earnings impacts if visa issuance remains tight, though the near-term view from HCLTech remains constructive. Elara Securities and other equity houses expect the FY26 revenue guidance to hold, with margins supported by operating leverage and continued AI-driven demand in BFSI and Hi-tech verticals. The company’s focus on reducing reliance on mega-deals aligns with a broader shift toward stable, recurring AI-enabled engagements that can sustain growth through macro uncertainty.
What to watch in Q2 FY26 and beyond
Market watchers will monitor several key indicators: the trajectory of Services revenue growth within the 4%–5% CC band, the evolution of EBIT margins toward the 17%–18% target, and the pace of TCV wins as AI adoption accelerates. Investors will also look for further progress on roadmaps for OpenAI-based partnerships and other AI ecosystems, which the management has said are central to lifting productivity and client outcomes across BFSI, Hi-tech, and other verticals. With the interim dividend providing near-term returns and the hiring pace sustaining long-term capabilities, HCLTech appears positioned to navigate the current IT demand cycle while expanding its AI-enabled service suite.
Bottom line
HCLTech is presenting a calibrated plan that leans into AI-led growth, improved margins, and prudent capital allocation, while signaling a strategic shift away from H-1B visa dependence. If the company sustains its 3%–5% CC growth and 17%–18% EBIT margin, backed by continued AI demand and disciplined execution, it could bolster its position as a leading tech services partner amid industry volatility.
