Q4 results: HCLTech rewrites playbook for FY26 with tariffs in play

Firm expects revenue growth to be in the range of 2 to 5%

HCLTech on Tuesday cautioned that no sector would remain immune to the impact of the tariffs, one of the starkest warnings yet from an Indian information technology (IT) services provider as the sector braces for a lengthy turmoil that has subdued its immediate growth prospects.

 

This has led India’s third-largest software company by market capitalisation to temper its revenue guidance for this year, where it expects growth to be in the range of 2 per cent to 5 per cent on a constant currency basis. That is lower than the guidance it provided over the past few years, but still higher than its larger rival, Infosys, which expects to grow between 0 per cent and 3 per cent.

 

“While there has been no specific impact so far, this will play out much faster in the consumer and manufacturing sectors. No vertical will be left behind,” Chief Executive Officer (CEO) and Managing Director C Vijayakumar said at a news conference on Tuesday.

 

For the fourth quarter (Q4), HCL’s revenue was up 6.1 per cent compared to a year earlier, reaching ₹30,246 crore. On a constant currency basis, which excludes the impact of currency volatility, revenue was up 2.9 per cent. Net income rose 8.1 per cent to ₹4,307 crore but was down 6.2 per cent on a sequential basis. For the full year, revenue was up 4.7 per cent in constant currency and 6.5 per cent to ₹1.17 trillion. 

 

Total contract value was $2.9 billion during Q4 and $9.2 billion for the full year. The CEO said the top end of the guidance accounts for the fact that deal closures will be as expected, while the lower end considers macroeconomic uncertainty. Manufacturing, retail, and consumer packaged goods businesses contributed 19 per cent and 9.8 per cent to the company’s top line for the financial year ending March 31. While retail grew at 10.7 per cent on a constant currency basis, manufacturing was sluggish with 0.9 per cent growth. Life sciences and healthcare businesses, which declined 3.8 per cent, will continue to be soft due to client-specific challenges.

 

Vijayakumar said that discretionary spending will continue to remain subdued, and once the tariffs are implemented, it will spill over to all verticals. “It is important to observe what is ongoing right now.”

 

However, such an uncertain environment is also expected to open up opportunities as clients look to reduce costs to the last dollar and improve efficiencies. Business Standard reported on Tuesday how IT companies have been using artificial intelligence (AI) and generative AI (GenAI) to lower costs in projects so that some of those savings can be reinvested in business transformation projects.

 

“We will continue to focus on using GenAI to drive efficiency in all aspects of business. And we believe that while there is uncertainty and deterioration in discretionary spending, AI-led efficiency is the biggest theme to show the art of the possible and have more wallet share of the total spend,” added Vijayakumar.

 

The company has seen 95 per cent of its incremental business due to AI-led efficiencies.

 

The company added 2,665 people during Q4, bringing its total headcount to 223,000, down by 4,061 employees compared to last year. Its attrition rate marginally increased to 13.4 per cent from 13.2 per cent sequentially. HCL said that while it hired 25,000 freshers in the last financial year, it will evaluate hiring numbers every quarter going forward, considering the uncertainty.

 

“In the current climate, it is prudent to make the plans quarterly, and we will hire about 2,000 to 3,000 every quarter,” Chief People Officer Ramachandran Sundararajan said.