CEO C. Vijayakumar spells out why HCLTech is one of the few IT majors putting a number on GenAI revenue

HCLTech's management on Monday said its business from advanced AI technologies totalled $146 million during the third quarter, a respectable 46% sequential growth. HCLTech CEO C. Vijayakumar on Tuesday shed light on the company's AI plans and said he would continue to share Gen AI revenue, as it provides stakeholders with a ringside view of the ways in which the company is making itself future-ready. Edited excerpts.

Would you continue to quantify or describe your advanced AI revenue, thereby helping outsiders establish a kind of guidepost on how the company is making itself future-ready?

We are very focused, and we've called out physical AI, AI Factory all the IP that we are building and proposing as a part of our solutions, and some agentic work, conversational AI, these are the things we have classified, and we believe we will continue to report this because it really helps provide a very good view of what are the newer areas that we are addressing.

Of course, it is mandatory to transform all existing services using AI, and that cannot be considered AI revenue. That's really almost mandatory, and it's the prerequisite for us to continue servicing our clients.

You were perhaps among the first Indian IT CEOs to mention that AI could have an impact on deal renewables and deal bidding. We are now in January 2026, and if we had to ask, what have been some of the key takeaways on how AI-related technologies have impacted deal structuring?

Yes, we did call out that during deal renewals, there could be (AI-led) deflation. But I think what we have seen is that we have taken an approach that we need to be proactively adopting generative AI and be comfortable passing on some of the savings to our clients, so that they are also more motivated, so that they are energized to see how they can expand the wallet share with us.

That proactive approach is what we followed, and we have generally seen in most renewals. Of course, there has been some productivity that we deliver due to AI, and that has increased from what it was in the past to what it is now. But because of our proactive approach, we've been able to win more wallet share with the same clients. So that's been largely the trend in the last maybe four or five quarters.

You revised the upper and lower ends of your IT services guidance even though your company's upper end guidance was brought down slightly. Does this mean that the software products business is growing at a slower pace for the full year? If this is correct, what is behind the slower growth of the products business and is Gen AI impact more amplified on the products business?

Services are growing faster than the products business. So the product business has multiple portfolios. There is a very strong growing data portfolio, which is really benefiting from generative AI and some tuck-ins that we have done through new startups like Wobby and Zeenea in the past. All of them are definitely helping the data portfolio grow very strongly. And, last quarter was very strong.

But two quarters ago, we had some challenges. Some of the product revenue had come down, and that is primarily because we have two kinds of revenue streams in the product. One is a perpetual licence. The other one is a subscription licence. Subscription licence is something which repeats every quarter or every, whatever certain duration, but perpetual is mostly one-time.

We are, while the subscription revenue is growing, converting a lot of perpetual licences to subscription-based licences. So there is an up and down in the perpetual line item, as you can see in our disclosures. So that is why, overall, it's a little muted.

However, we still think our product business will grow more slowly. It will grow in the low single digits, and that's really our aspiration, which is also more specifically related to the subscription revenue. Overall revenue could go down, but we are really focused on increasing the subscription revenue.

That is what will help us in the long term. We think generative AI and all are only helping the product business, because a lot of products, even though they were late in the life cycle, we have modernized, cloud-enabled them, and it is still significantly embedded in a lot of big enterprises.

What are your views on deployment of AI agents as software engineers handling automated tasks? Could 2026 be seen as a year where AI software agents are deployed to handle end-to-end work? How does this change delivery models and billings?

I think the IT services model is transforming from purely a people-based model to agents with human in the loop kind of construct. In some areas, we see significant adoption of agentic models, but in a lot of areas, while agentic is a solution that works, the effectiveness is also predicated on the underlying data, underlying process simplification, and also our ability to train these agents with all the knowledge that's available to carry out tasks.

There are certain prerequisites, and unless these are addressed and people invest in getting the fundamental foundational blocks in place, it's not very easy to derive direct value from AI agents. So that is an area where a lot of work is happening within some big companies.

Most analysts have been of the view that FY27 will again be modestly, just better than FY26, and that single-digit growth is the new normal for IT services companies. HCL has reported blockbuster numbers over the last decade, growing at double digits. Do you believe double-digit growth for HCL is on the horizon?

I think this is a very large industry. It's almost a trillion dollars, or more; the tech services industry and the large players only have 15% market share. There are a lot of geographies where we are underrepresented.

So I strongly believe in the growth opportunity in the industry, whether it is high, single digit or double digit, I wouldn't be able to comment on it, but it's a strong growth industry, if you can capture more market share through better solutions, more adoption of AI, and also go after a lot of new spend areas, definitely the growth rates can significantly improve. I will leave it there.