HCLTech counts on M&As to add 1.5% to revenue: CEO & MD C Vijayakumar

IT companies are looking to diversify and look beyond traditional revenue segments, as growth has remained damp over the last few years

HCLTech expects its recent large acquisitions to contribute about 1.5 per cent to revenue in 2026-27 (FY27), Chief Executive Officer and Managing Director C Vijayakumar said, as the company looks to build newer revenue streams in a subdued macroeconomic environment.

 

India’s third-largest information technology (IT) services provider spent nearly $400 million last month to acquire two companies — the telecommunications (telecom) solutions business of Hewlett Packard Enterprise (HPE) and Jaspersoft, a unit of Cloud Software Group — to strengthen its capabilities in 5G network transformation and data and artificial intelligence (AI), respectively.

 

“The acquisitions will be completed in the fourth quarter or the first quarter of the next financial year (FY27), and we believe they will contribute about 1.5 per cent to revenue in the next financial year,” Vijayakumar said in an interaction with Business Standard on Tuesday.

 

IT companies are increasingly looking to diversify beyond traditional revenue segments, as growth has remained muted over the past few years, resulting in low single-digit growth across the sector.

 

Tata Consultancy Services is diversifying into data centres, while Infosys and others are focusing on cybersecurity as a vertical or expanding into geographies such as Australia.

 

Spending in traditional or legacy areas has remained stable and has not deteriorated, Vijayakumar said. “Some industries are seeing much stronger traction, and while spending will eventually return across the board, we are actively identifying new growth avenues.”

 

These newer areas include industry-specific AI solutions, AI engineering, agentic AI, physical AI, AI factories, and proprietary intellectual property — collectively classified by the company as advanced AI. Revenue from this segment stood at $148 million in the third quarter ended December 31, with $50 million added over the past three months. This excludes classical AI, machine learning, and robotic process automation.

 

The HPE deal will help HCLTech strengthen its engineering and AI-led network offerings for global communications service providers. The telecom segment, which contributed 12 per cent to revenue, was the fastest-growing vertical, expanding 11.7 per cent year-on-year. Meanwhile, the acquisition of Jaspersoft will enable Actian, HCLSoftware’s data division, to address rising demand for metadata management, data cataloguing, and data governance solutions.

 

“HCLTech’s strategic focus on regional market penetration and customer-specific adaptations points to a longer-term commitment to digital transformation that is not solely dependent on explosive top-line growth,” said D D Mishra, a Gartner analyst.

 

Banking, financial services and insurance (BFSI) will remain another key growth lever, with spending recovering in the US, the company’s largest market. Vijayakumar said the vertical is expected to drive growth in the coming months as financial technology businesses continue to expand. BFSI grew 11.4 per cent in constant currency compared with a year earlier.

 

“The highest annual contract value of bookings in the past four years, growth traction across business segments, and improving profitability position HCLTech well to deliver strong earnings growth in FY27,” BNP Paribas said in a note.