Questions across 10 calls

C. Vijayakumar

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HCL Technologies Limited

HCL Technologies Limited CC-Apr26.pdf · 2026-04-21

Thank you, Abhishek. Let me answer one by one. Starting with the deflation number, 3% to 5% that I shared is mostly based on the industry mix of services. And for the specific question on how it changes with respect to the model effectiveness, I think most of the enhancement in models are really driving more and more velocity and efficiency in the SDLC lifecycle. I think that piece could go through a little higher deflation based on the model outcomes. In rest of the areas, it is Agentic, it is human -in-the-loop, and even the latest model on Anthropic's Mythos, ability to run production environment fixes without human -in-the-loop is very limited. And this has been acknowledged even in their own release n otes. It depends on the service mix. For us, we called out 2% to 3% and I think that holds true even now. In terms of new services, I think that's a great question. We have obviously called out 5 key areas, which is Physical AI, AI Factory, Custom Silicon Engineering for Inferencing, AI -led Marketing Services, and IP and Platforms. Of course, IP and platforms are integral to a lot of service transformation. It has a very small component of IP embedded into it. AI Factory is where we are seeing tremendous traction. One of the large deals that we called out this quarter is a $100 million+ AI factory deal for design, implementation and support of a next-gen AI data center for a large Technology company. So, I think we are seeing good traction. We are already now into two major clients for this, and we hope to get to another three or four more in this coming year. Similarly, Semiconductor Engineering, we also announced a new deal this quarter on Physical AI, which is really some ASIC development work on advanced nodes, which is also the cutting -edge work, and these are the areas which we are doubling down and we see great traction. Coming to the guidance, what it takes in, I don't want to kind of say that geopolitics is driving this. I would want to be more specific. Of course, there has been some impact in March, which is what is reflected in our significantly lower revenue in Q4. A nd as I said, two large Telecom clients have cut down on the discretionary spent for this calendar year. I see that continuing till end of the year. A couple of SAP programs got discontinued. That will also have an impact. We are seeing some softness in Europe, and the US seems to be quite robust except for this specific client situation that I called out. For FY’27, we see a half a percent reduction due to two clients and their own business challenges. We continue to have a very high wallet share, but their own business pressures have reduced significant spend and that is what is driving the overall guidance.

Two Telecom clients and the two other clients are completely different. The two other clients where there is a half -a-percent decrease in FY'27 guidance, one is a large Manufacturing client, other one is a Retail client. So there is no overlap in these clients. Now, what gives us confidence? This is restricted. As I said, in the lower end of our guidance, we are baking in that the softness continues. That is what we have baked in at the lower end of our guidance. And I think, given it is a well -known fact that 2% to 3% deflation happens, I think barring this, getting to 2% to 5% is a reasonable growth in the given environment and in so much of uncertainty. I think it is good and this of course does not include any acquisitions and they will get closed sometime during the year and we will call it out separately.

HCL Technologies Limited CC-Jan26.pdf · 2026-01-12

Thank you, Abhishek. So let me take the first couple of questions, then I'll hand it over to Shiv. On the AI conversations last year to this year, definitely, there is a lot more holistic conversation on how AI would change the entire organization. I think last year, we were still talking significantly about point solutions and trying to prove that AI can deliver some meaningful value. But then after that, the conversations changed to how clients should be focusing on some of the foundational elements like data and cloud migration. But this conversation has matured to an extent that clients realize that to get holistic benefit, they need to completely reimagine their business processes. Once that realization is there, then the deployment of AI also slows down a little bit because clients want to take a holistic approach. However, the biggest area where we are seeing good outcomes and good client interest is- delivering an accelerating software development, data life cycle management. That area is undisputedly the sweet spot for Generative AI to be most helpful for a lot of organizations. The other broader enterprise adoption for business processes is going to revolve around significant process transformation. So, to that extent, it is a little bit muted. Now, where clients are talking about more and which service line. If you really see the enterprise adoption , revenue and spend from that perspective, it is still not very high. It's still very, very small. The real acceleration in what we are seeing is not necessarily in deploying AI within enterprises, but really “Day -1” services, which are foundational for enabling AI, like a lot of work in our engineering services. Like I mentioned about custom silicon for edge inferencing It is a big area w ith a lot of companies across multiple industry verticals. This is not restricted to semiconductor industry. Everybody who's got products and solutions, if they needed to use the regular GPU architecture for edge inferencing, it's going to be unviable. So, they're looking at custom chips to be a big spend area to get the best ROI out of the AI spend. And similarly, for a lot of technology companies, the AI factory, which is largely the AI data centres, the professional services around design, implementation, operations, support managed services. We talked about a large client who's a Top 10 technology company. They continue to expand as their capex spend is expanding. We have acquired another Top 10 technology company for the same AI Factory services. Those are the areas, which are “Day -1” of AI, where we are seeing very good traction, especially for Advanced AI services. And for the question on the restructuring?

No, there is no contribution from the mega deal this quarter. It will start ramping up in the current quarter. And retail is really coming from a number of wins. In a couple of large clients, where we have won business in the previous quarters, they are getting into execution.

HCL Technologies Limited CC-Sep25.pdf · 2025-10-13

Thank you, Abhishek, for a lot of interesting questions and first is Advanced AI. It's got a number of different ways of billing. For example, a lot of inference silicon build work are more fixed price projects which we take with clients and deliver. It has got a lot of scaling and reusable components. That's number one. And for example, for the AI Factory, the implementation could be even time and material, but there is a run piece which is based on per rack. Then there are a lot of custom AI solutions that we are building for our clients, which is continuing to be contracted in the traditional ways. Most of them in some kind of a fixed price model, because we also leverage some solution accelerator there. But there could be a number of time and material also. On top of it, there is an IP element. Like, for example, AI Force is being used in the SDLC transformation. The AI Force has got a licensing price list, and that's what we are considering as Advanced AI revenue. All the services that are being delivered is not considered in this category. There are a couple of small products in HCL Software. They are also being sold as IPs. So, right now, the IP component is small. Now, going into your next question, on what do we expect our IP trajectory to evolve. We believe this industry will have to evolve from being a pure labor - based service provider to people plus IP and platform -based service provider. When you have the platform as a third -party platform, there is very little leverage, very little stickiness that we can build. And we can really deliver very good quality vertical IP solutions, which can be replicated across customers. So, that is why we are investing. However, the investment that is required to create that intelligence layer, that's not something we are taking on ourselves. We are leveraging the intelligence layer created by OpenAI and Llama and other tech companies. We are creating IPs, which make this intelligent layer a lot more usable, scalable and relevant for the enterprise. This is the sweet spot we are focused on, and everything goes through a rigorous exercise. We are open to invest. We don't have a full picture on how much investment this will need , but this is required for the long -term vibrancy of the business and is a very good investment to make. We have already identified a few products. AI Force is, what I would strongly call , the killer app, which is really making a lot of big deals happen. We are competing head-on with all the big players who have a lot of AI mindshare. We have been able to showcase the technical depth of the product. Especially when the client evaluates by getting their hands dirty, we come out winners. So, it's a strong proposition. It's a big strategic initiative for us. We will not hesitate to make the right investments to make this a big success. I don't have a revenue number as to what our IP will be, but for sure, it is going to consistently increase in our services portfolio.

And the list of IPs is already called out in our Investor Release for your reference.

HCL Technologies Limited CC-Jun25.pdf · 2025-07-14

Yes, I think we are very clear. We are not setting , structurally, the margin bar lower. I think it will continue to be 19%-20%. In the next 3 quarters, obviously for all the reasons that we explained, there is going to be certain headwinds. So, this year, we will be between 17% and 18%.

Yes, as I called out, we are looking at a strong demand in Financial Services and Tech and Services verticals. And this quarter, of course, the growth in Tech vertical also, it is very broad based, but definitely the 6% kind of sequential growth is driven by one large deal where we had on-boarded the entire team in March, exactly o n 6th of March. And of course, this is a very cutting-edge solution on contact center transformation using Conversational AI and this will require this talent base to be deployed, and we had some good success in the 1st quarter, but the ramp up has been gr adual. We think it will ramp up fully in the 2nd quarter and in the 3rd quarter, we should be fully optimally performing on this team. Outside that, structurally , the tech vertical continues to give us a lot of confidence, so FS and Tech, definitely strong, we see some concerns in other verticals like Auto in Manufacturing, Retail, CPG and Life Sciences, there is pressure, but rest of the verticals looks okay to me.

HCL Technologies Limited CC-Mar25.pdf · 2025-04-22

Yes, Ravi, thank you for your question. If you remember last quarter, we had called out that there was one large program which got completed in the Retail CPG segment. And we did call out that that will have an impact in Q4. And that impact is probably playing out in the US business. And even I called out the specific number during the last quarter. That's the only reason. Across the board we saw the quarter proceed as we had envisaged. There weren’t any major surprises during this three months.

Yes, I think that deal deferral was not directly related to the tariff. It was based on general environment. The client decided not to go forward on that. And we did not see any cancellation or any specific rundown during the last three months. And our guidan ce, the lower end, we believe the environment will deteriorate from where we are. And that's what the 2% represents. And obviously the midpoint also we assume that the environment will deteriorate, but it assumes that a couple of large deals, which were in the pipeline, we are likely to close in Q1. That’s the assumption for the midpoint. And at the higher end, we believe the environment could remain the same and we will do well in Q1 based on the pipeline and the deals which are expected to be closed.

HCL Technologies Limited CC-Dec24.pdf · 2025-01-13

For Services, the organic Q4 ask rate which was (-1.32%) to (+0.6%) to reach the lower end and higher end of the guidance. We have seen an improvement in the demand ; small deals are getting converted quicker and larger deals are taking time. That is why you see the TCV has not changed materially, but ACV has. While we feel good and confident of the pace of recovery, Q4 outlook accounts for a couple of things ; one is successful delivery of a large transformation program which is coming to an end in Q3 , there is a planned reduction in the mega deal which was expected and ramp up in some of the discretionary deals also will take some time because some of the conversions happen towards the end of the year. Now ramp up and getting into revenue only partially will get realized. So, the underlying momentum remains quite strong, but some of these factor’s kind of make Q4 a little soft.

See, we've called out the pickup in discretionary spend if you really look you have seen a broad-based nature of our growth in Q2 and Q3. And we talked about Q4 as well, I think, excluding these two factors which would be visible in retail CPG and the telecom vertical, we expect good growth in other verticals. Our annual guidance is released in April when we close the earlier fiscal, so numerical answer or even a directional answer, you probably will have to wait. I think the Q1 softness tha t you saw last year was also specifically due to one large deal getting into the second year. I think that element will not be there, or it will only be there marginally in Q1. Other than that, I think it should be a regular BAU kind of a quarter. Beyond t hat, the pipeline is good, and we think we will deliver a good booking in the next couple of quarters. Beyond that, I don't want to give you any direction on FY26.

HCL Technologies Limited CC-Sep24.pdf · 2024-10-14

Abhishek, the ask rate for Q3 and Q4 is between 0% and 2%. So, it’s a fairly good kind of a growth ask-rate at a higher end. While we see the optimism that ’s coming out of the improving demand environment across multiple verticals, we are also a little bit more cognizant of the broader macroeconomic environment and the geopolitical context and some of the things that you’ve talked about in aerospace and things like that. So, we are a little bit cognizant and if you see the CY‘22 in November, December when the optimism was there, it suddenly turned . So, to that extent, we are cautious. We are feeling good about the coming quarter, and we will update you if there ’s any change in our outlook when we talk to you at the end of Q3. And I would not want to comment on any client- specific situations. Obviously. there is an impact in a few clients due to various client - specific issues, but we have dealt with it this quarter and all of that is baked into our 3.5% to 5% guidance.

Only one DPO deal which is significantly pre -announced where we are very well into implementing a lot of automation led by the previous version of AI Force, so which really helped us pass back the productivity . In fact, almost two-thirds of what we needed to achieve is already in place . So, there is one-third which we need to work towards. Of course there is an expectation on GenAI -led productivity, but it is also not a switch that you can turn on and generate productivity will be achieved. If customers commitment to implement the AI Force platform and really become a sponsor for the platform within the enterprise helping us navigate different stakeholders, which will really be the start of the process of getting the benefits from A I Force. From then on, it is a journey . And I think our models with clients are fairly transparent and they’re quite realistic and customers are also unwilling to even buy an unrealistic value proposition with the hope that something magic will happen. So , I think it ’s a very pragmatic approach we feel comfortable with what we are doing.

HCL Technologies Limited CC-Jun24.pdf · 2024-07-12

Yes. Thank you, Vibhor. Let me address the Financial Services question. Apart from the one item that we had called out last quarter, the progress played out exactly as we had expected . As you know, Q2 will have a little more impact because of the state street divestiture . After that, we expect FS to show some growth because a couple of big wins that we had in the quarter were in financial services, which would start contributing to incremental revenues in Q3 and Q4 . Still the large outlook in financial services seems to be cost efficiency kind of driven programs, but a lot of them are not just straightforward cost efficiency, but it is led by level of modernization and tech transformation. That's what we are seeing in financial services. We're not seeing the general discretionary spend really picking up. It remains somewhat similar to what we saw in the last quarter. In Manufacturing, we have talked about the two elements of the Q1 outlook, one was of course offshoring of a large program, the second one was a traditional year -on-year productivity that kicks in in April. This is a little more concentrated in the Manufacturing vertical. So, that was one reason. Second, we saw in fact a significant weakness in the Automotive segment, contrary to all the expectations, because we see a lot of stress with the automotive firms in Europe and that has contributed to the second element. The third, which is it's mostly a BAU thing - our asset revenue has declined some 10-odd million and pretty much all of that seems to have happened in the Manufacturing vertical. Now, moving forward, as I mentioned, we see good growth in Manufacturing in the second quarter. So, we should continue to see good traction in Manufacturing henceforth.

That's right.

HCL Technologies Limited CC-Dec23.pdf · 2024-01-12

There is no impact of the ASAP integration in the top 20 clients.

Yes. Basically, we had a very, very strong booking last quarter. Outside the mega deal also it was a strong booking. And some of them were vendor consolidation opportunities in existing clients. If you recall, we had called out a large deal in financial services in the U.S. where we are significantly expanding due to vendor consolidation. We have been selected as the primary champion vendor, so that's definitely driving growth. And we are also seeing growth in some of the large tech clients who also contribute to the top 20. While in smaller clients, there are some challenges. In some of the big tech, we see some increase. There have been some clients where decline also happened. But I think overall, our top category is growing slightly better than the company services growth rate.

HCL Technologies Limited CC-Sep23.pdf · 2023-10-12

Vibhor, the discretionary spend continues to be there and obviously a good part of the booking that we have done contains some of the discretionary spend. But I think the spend is a little lower than what we would normally see and that reflects i n some kind of reprioritization or optimization, and that's what you see. And we still think discretionary spends is not anywhere closer to what it used to be. So, that's what I would say on the discretionary spend at this time. But our pipeline continues to remain very strong. Obviously, it is not at the highest because we've got a tremendous booking last quarter, but it's probably maybe 10% below our peak. So, which is also a very strong position that we are in, and we have a number of deals in the final stages. We will continue to deliver str ong bookings in the rest of this year, which will all feed into the next year. And just one more element I want to keep in mind is when w e talk about booking , we do not include rate card deals where the ramp-ups are relatively slow . We only consider them as booking after the ramp up has happened. So, all the bookings that we have are firmed TCVs with the committed transition t imeline and execution timeline in all net-new because renewals are excluded from these numbers.

Sudheer the overall environment is quite volatile . S o, if you see, I mean every 2 months, 3 months, the overall commentary is also changing. So, I would hesitate to take a view on FY’25. But, of course, given where we are and the growth that we anticipate in Q3 and Q4, we will have a strong exit there is no doubt about that. But, of course, how FY’25 pans out will depend on, of course, the deal wins in these two quarters. But again, the client spending, which is largely the discretionary spend of which I think it’s very early to even get a sense. A nd I doubt even if we will get a sense of what the discretionary spending, client budgets will look like even in the calendar Q1 next year. So, I think we'll have to take it one step at a time and it's very difficult to do a long-range planning in these circumstances.