Information technology companies can expect discretionary spending by businesses to improve soon, according to HCLTech's Chief Executive Officer and Managing Director, C. Vijayakumar.
"In December 2022, we were at the peak of IT spending, but saw spending reduce soon after that," Vijayakumar told NDTV Profit's Niraj Shah on the sidelines of the World Economic Forum 2024 in Davos.
"Now, I think we are at the bottom of the cycle and the spending could come back... That's the kind of optimism that is there in several conversations," he said.
Discretionary spending will get triggered only when customers feel more comfortable with their overall profit and loss statements, and in macro terms, it is expected to see an uptick, Vijayakumar said.
Generative AI has increased curiosity in everyone's mind and last quarter alone, HCLTech signed over 30 programmes, Vijayakumar said.
On the business side, customers are not yet ready to adopt generative AI but are trying to find the best way to do so, he said. "Some of them are directly adopting publicly available models. I think it will not be efficient for every industry."
AI-based models will improve the efficiency of software development, but it is still far away, he said.
Customers need to adopt either an open source or one of the available models and do a little bit of customisation for their own use case, Vijayakumar said. "That is a significant amount of work we can do and is in a very nascent stage."
This has been an exceptional quarter and a seasonally strong one, the CEO said. "18–19% operational margin is the guided range, but this time, we were far above range."
In 2024, HCLTech's biggest focus will be on growth, Vijayakumar said. "This year, we buck the trend by growing 5–5.5%, which is the highest in the industry."
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