- HCLTech reports weak Q4 FY26 results with sluggish discretionary spending in Europe
- CEO Vijayakumar notes weak FY27 start guidance due to ongoing spending softness
- Company offsets nearly two-thirds of AI-led price deflation through new service lines
After reporting underwhelming numbers in the fourth quarter of financial year 2026, HCLTech believes it can successfully combat the expected artificial intelligence-driven price deflation by scaling its new AI service lines.
Speaking to NDTV Profit, HCLTech CEO C Vijayakumar acknowledged that near-term discretionary spending remains sluggish, particularly in Europe. As a result, the IT major has given a weak guidance for the start of FY27.
"At the lower end of the range, we think the softness in the discretionary spending will continue. And we have two client-specific situations which will also take away half a percent. And at the higher end, we think the situation will slightly improve and we also expect a couple of large deals to be concluded in the first half of the year, which will translate to revenues in the second half," he said.
However, there is much talk around how HCLTech will combat the upcoming challenges around AI, with brokerages expecting the IT company to face AI-led deflation going forward.
"But the bigger theme is how do you really use AI to build new services which will offset some of the deflation that is being caused due to AI in the traditional services," Vijayakumar stated.
To that end, the management is looking at a structural plan, adding that the company has already been able to offset some of the deflation.
ALSO READ: HCLTech Q4 Result Review: Brokerages Issue Sharp Target Price Cuts After Poor Show
We have been able to offset a lot of AI-led deflation, almost two-thirds of AI-led deflation we have been able to offset because, if you recall, we have talked about 2 to 3% deflation in the traditional services," he said.
In order to further combat the AI-led deflation and also to make use of the opportunity, HCLTech has partnered with tech giants such as Nvidia and Anthropic. It is also relying internal upskilling program for its workforce, turning them into AI builders and super users.
"We called out advanced AI revenue; it's already $620 million in annualized revenue," he noted.
Furthermore, Vijayakumar highlighted that upcoming strategic acquisitions provide a clear path to outperform the stated 1-4% revenue estimates.
"Yeah, right now the acquisition impact is not factored in the guidance. So whenever the acquisition gets completed, we will add and, whatever subsequent quarter, we will kind of upgrade the guidance based on the acquisition," he confirmed, noting that pending deals should eventually contribute a 1.5% increase in growth on a full-year basis.
ALSO READ: HCLTech Shares See Biggest Intraday Fall In Six Years — Here's Why
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