HCLTech Signals a Cautious Yet Confident Path Forward
In a live update on its quarterly performance, HCL Technologies (HCLTech) outlined a measured shift away from heavy H-1B visa reliance while emphasizing the accelerating traction of its AI-powered solutions. With a clear FY26 framework, the Indian IT services bellwether reiterated its guidance for 3%–5% revenue growth in constant currency (CC), anchored by a 4%–5% services revenue rise and a robust 17%–18% EBIT margin. The company also highlighted a coming wave of AI-driven demand, underscored by milestone AI revenue and a notable sequential margin expansion.
Key FY26 Guidance and AI Momentum
HCLTech’s guidance for the 2025–26 fiscal year centers on:
– Overall revenue growth: 3.0%–5.0% YoY in CC
– Services revenue growth: 4.0%–5.0% YoY in CC
– EBIT margin: 17.0%–18.0%
Digital revenue continued to outpace the rest of the portfolio, growing 15% YoY and now representing 42% of services revenue. The management pointed to an Advanced AI business that crossed the $100 million quarterly revenue mark, a signal that AI-adoption is translating into meaningful scale. CEO C. Vijayakumar described the quarter as a standout, noting strong demand for AI-powered solutions and a healthy recruitment drive to support growth.
Operational Highlights and Market Reactions
Other quarterly highlights included a 2.4% sequential CC revenue uptick and a 17.5% operating margin, with LTM attrition easing to 12.6% and total headcount at 226,640 after adding 3,489 people. Notably, TCV (new deal wins) rose to $2,569 million, up 41.8% QoQ and 15.8% YoY, signaling a broadening deal pipeline even as the tech sector contends with macroheadwinds.
Chairperson Roshni Nadar Malhotra stressed continued investment in new technologies and global talent upskilling as key drivers of sustainable growth, even in uncertain markets. The company also approved an interim dividend of Rs 12 per share for FY26, reflecting confidence in cash generation and shareholder value alongside growth initiatives.
Analyst Perspectives and Sector Context
Analysts have framed HCLTech’s near-term trajectory as balanced, with expectations of modest CC growth in the second quarter and a continuation of margin expansion aided by operating leverage and AI-driven productivity gains. Some market observers caution about ongoing macro uncertainty and policy shifts, including visa norms, which could influence talent sourcing and operating costs. However, the consensus remains that AI adoption and AI-enabled services will be a differentiator within the IT services landscape.
Sector commentators noted that the US visa environment could meaningfully affect long-run talent planning. Yet several firms also argue that a shift toward nearshoring and diversified sourcing may offset near-term pressures, with HCLTech positioned to benefit from its emphasis on AI, cloud, and ER&D services. In this context, HCLTech’s plan to reduce reliance on H-1B visas could align with broader offshore-offshoring trends and cost optimization strategies.
What Investors Should Watch Next
Key indicators for investors in the coming quarters include: deal TCV momentum, sequential and YoY growth in services and overall revenue, and the trajectory of the AI-led revenue stream as it scales beyond the >$100 million quarterly mark. Margin progression will also be monitored, with expectations of continued improvement through efficiency gains and favorable currency effects. Earnings calls and management commentary will be essential for parsing the impact of H-1B visa policy changes and AI investments on both revenue growth and profitability.
Bottom Line
HCLTech’s quarterly updates emphasize a strategic pivot toward AI-driven growth while preserving a stable, achievable FY26 guidance framework. If AI demand sustains its current pace and the company manages visa-related cost dynamics effectively, HCLTech could see a continued expansion in margins and a resilient revenue trajectory in an IT services market that remains under pressure from macroeconomic headwinds.
