Slower growth, steady attrition and rising AI revenue define HCLTech’s FY26 performance

HCLTech closed FY26 with moderate growth, stable workforce trends and a sharp uptick in AI-driven revenue, reflecting a year shaped by cautious client spending and a shifting demand environment.

According to the company’s investor release, revenue rose 11.2% year-on-year to ₹130,144 crore, while constant currency growth stood at 3.9%, underscoring a slowdown in underlying momentum despite headline expansion .

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Growth slows as demand environment remains uncertain

The company pointed to a soft demand backdrop, with leadership highlighting lower discretionary spending and delayed decision-making by clients as key pressures.

“HCLTech delivered superior revenue growth of 3.9% in constant currency… in a year marked by an uncertain demand environment,” the company said, adding that performance in the fourth quarter fell below expectations due to softness in certain business segments.

Quarterly trends reinforced this caution. Constant currency revenue declined 3.3% sequentially in Q4, even as it grew 2.4% year-on-year, indicating uneven recovery across segments.

Despite this, deal momentum remained intact, with total contract value (TCV) of new deal wins at $9.3 billion for the year, suggesting that long-term demand pipelines continue to build even as execution cycles stretch.

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AI emerges as a clear growth driver

A standout theme in FY26 was the acceleration of AI-led business. HCLTech reported annualised advanced AI revenue of $620 million, with Q4 alone contributing $155 million, up sequentially.

Leadership said the company’s AI-led service offerings are gaining traction, positioning AI as a central pillar of future growth. The company also highlighted multiple AI-focused deals across sectors, including governance frameworks, semiconductor design and AI-enabled infrastructure.

“As the global economy pivots to the AI era, we are evolving our portfolio and empowering our people,” the company said, signalling continued investment in AI capabilities.

The shift is also visible in deal structures, where engagements increasingly combine automation, data, cloud and AI, reshaping both service delivery and workforce skill requirements.

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Workforce expands, but hiring remains measured

HCLTech’s workforce stood at 227,181 employees at the end of FY26, with a net addition of 3,761 employees during the year.

Hiring was skewed towards early-career talent, with the company adding 11,744 freshers, indicating a continued focus on building a cost-efficient talent pyramid.

At the same time, quarterly net additions remained modest at 802 employees in Q4, suggesting a more cautious hiring stance amid demand uncertainty.

Attrition remained stable at 12.5%, marginally lower than the previous year, signalling a stabilisation in workforce churn after the volatility seen in recent years.

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Margins under pressure despite revenue growth

Profitability metrics showed signs of pressure. EBIT margin came in at 17.2% for FY26, lower than historical levels, even as absolute EBIT rose 4.6% to ₹22,397 crore.

Net income was largely flat at ₹17,361 crore, down marginally by 0.2%, highlighting the impact of cost pressures and restructuring charges.

Employee costs remained a dominant factor, accounting for 57% of total revenue, unchanged year-on-year, reinforcing the structural importance of workforce costs in the IT services model.

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Services steady, software business weakens

The company’s core services business continued to grow, with services revenue rising 4.8% in constant currency, while the software segment declined 4.1%, reflecting uneven performance across portfolios.

Engineering and R&D services emerged as a relatively stronger segment, while the software business faced sharper declines, particularly in the fourth quarter.

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Outlook points to cautious FY27

Looking ahead, HCLTech expects revenue growth of 1% to 4% in constant currency for FY27, signalling a continued cautious outlook.

The company said its priority will be to position itself for long-term AI-driven opportunities, even as near-term growth remains constrained by macroeconomic uncertainty and client spending behaviour.

The combination of slower growth, stable attrition and rising AI-led demand suggests a transitional phase for the company and the broader IT services sector, where efficiency, automation and capability building are likely to define the next phase of expansion.