HCLTech Reports Strong AI Revenue Growth in Third Quarter
HCL Technologies has revealed impressive numbers for its advanced artificial intelligence business. The company's management announced that revenue from AI technologies reached $146 million during the third quarter. This represents a solid 46% growth compared to the previous quarter.
CEO Commits to Continued AI Revenue Reporting
HCLTech CEO C. Vijayakumar spoke about the company's approach to AI revenue transparency. He confirmed that HCLTech will continue sharing generative AI revenue figures with stakeholders. According to Vijayakumar, this practice gives investors and clients a clear view of how the company is preparing for the future.
"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," Vijayakumar stated. He emphasized that while transforming existing services with AI is essential, this work doesn't count as separate AI revenue.
AI's Impact on Deal Structures and Client Relationships
The CEO addressed how AI technologies are changing business deals. He acknowledged that AI could potentially reduce deal values during renewals. However, HCLTech has taken a proactive approach to this challenge.
"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," Vijayakumar explained. This strategy has helped the company increase its share of business with existing clients over the past four to five quarters.
Product Business Growth and AI Integration
Vijayakumar discussed the performance of HCLTech's software products business. He noted that services are currently growing faster than products. The product business includes multiple portfolios, with data solutions showing particularly strong growth thanks to generative AI.
The CEO highlighted two types of product revenue:
- Perpetual licenses (one-time payments)
- Subscription licenses (recurring payments)
HCLTech is actively converting perpetual licenses to subscription models. While this transition creates some revenue fluctuations, the company remains focused on growing subscription revenue for long-term stability.
AI Agents and the Future of IT Services
Looking ahead to 2026, Vijayakumar shared his perspective on AI agents in software engineering. He described the IT services model as transforming from purely people-based to a combination of agents and human oversight.
"In some areas, we see significant adoption of agentic models," he noted. However, he cautioned that effective AI agents require proper data foundations and process simplification. Companies need to invest in these fundamental building blocks before seeing substantial value from AI agents.
Growth Outlook for HCLTech and the IT Industry
When asked about growth expectations, Vijayakumar expressed confidence in the industry's potential. The global tech services market approaches one trillion dollars, with large players holding only about 15% market share.
"I strongly believe in the growth opportunity in the industry," he said. While not specifying exact growth rates, the CEO emphasized that companies can improve performance through better solutions, AI adoption, and targeting new spending areas.
HCLTech's commitment to AI transparency and strategic implementation positions the company as a significant player in India's evolving technology landscape. The $146 million AI revenue milestone demonstrates tangible progress in this crucial business area.
