AI-driven software and hardware are two key development areas that HCLTech is anticipating: C Vijayakumar, CEO

As the $283-billion IT services industry grapples with shifting delivery models and evolving revenue streams, HCLTech is sharpening its focus on new growth areas rather than waiting for a macroeconomic rebound, said C Vijayakumar, chief executive and managing director, in an interview with ET’s Shristi Achar and Surabhi Agarwal.

With artificial intelligence increasingly reshaping enterprise technology, the Noida-headquartered firm is betting on AI-enabled services, capability-led acquisitions, and in-house intellectual property (IP) to drive growth, even as some traditional service lines face cannibalisation. Edited excerpts:

How do you see IT spending shaping up in 2026 amid continued macro and geopolitical challenges?
Technology spending remains critical for businesses—not just to transform, but even to sustain operations. While we continue to be linked to traditional discretionary spends, there are segments where spending is clearly rising. For instance, our tech vertical grew over 14% year-on-year.

Over the last two to three years, enterprises have invested heavily in AI hardware and software. That capex is now translating into services spend, and these are the new discretionary areas we are actively targeting.

Are enterprises beginning to spend despite ongoing uncertainties such as tariffs and geopolitical tensions?
Clients increasingly view volatility as the new normal. You cannot pause business decisions indefinitely. As a result, many customers are continuing with their strategic initiatives—whether that is business transformation or modernisation of the entire software engineering lifecycle, both of which are strongly enabled by AI.

There is growing talk of revenue cannibalisation in the industry. How is HCLTech approaching this?
About 18 months ago, we said publicly that we were comfortable proactively cannibalising parts of our own revenue. We believe modernising offerings with AI at the core is essential for long-term relevance.

While there is some deflation in existing revenue streams, we are gaining greater wallet share from clients. That strategy is working—our client count has increased across all categories in the last quarter.

Where do you see revenue deflation playing out most sharply?
This is not a one-time event; it will play out over the next three to five years. The most impact will be seen in business process operations and application development, which can be significantly simplified and optimised using Agentic AI technologies.

HCLTech made three acquisitions in December alone. How is this shaping your M&A strategy?
We are not looking at big-bang acquisitions. Our focus is on capability-led deals.

In software products, we look for startup-like companies with strong growth potential that can scale and fit strategically into our portfolio. In services, acquisitions may be driven by geographic expansion or strengthening capabilities in key verticals such as telecom and financial services.

How can the IT industry remain a talent hub amid AI-led automation?
The key lies in meaningful adoption of AI and continuous upskilling of talent. AI enables people to deliver far more value than was possible earlier.

The future operating model will be a combination of Agentic AI with humans in the loop, blending IP with services. The industry must prepare to transform a large part of its service delivery into this model.

How is HCLTech building IP-led growth?
While large global players focus on building foundational large language models, our focus is on creating enterprise-grade AI IP that makes those intelligence layers scalable and adaptable. Our AI Force platform is a key step in that direction.

Does this shift towards newer revenue streams help sustain large deal momentum?
Mega deals are inherently unpredictable—you may see them in one quarter and not in the next. That’s why we also track total contract value excluding mega deals.

In the third quarter, even without mega deals, TCV exceeded $2.5 billion, and that is a metric we aim to consistently grow.