HCLTech Bets on 'New Spending Pockets', Revises FY26 Guidance After Q3

While uncertainty persists in the global market leading to slow spending growth, the fundamental demand for technology as a driver for business transformation remains structurally intact, according to HCLTech CEO C. Vijayakumar. He noted that as overall discretionary spending remains subdued, the IT major is looking for “discretionary spending emerging in new pockets”.

“Our focus is on proactively identifying where the new spending is occurring and targeting those opportunities. We at HCL Tech are always working to address such evolving trends and I'm confident we will do it well in this cycle as well,” said Vijayakumar at the post-earnings press conference at their Noida campus.

The company reported a consolidated revenue increase of 13.3% from a year earlier to ₹33,872 crore in the quarter ending December 31. In constant currency (CC) terms, the firm’s revenue grew 4.8% year on year.

“On the back of a standout quarter and sustained growth momentum and strong bookings, we are raising our full-year services guidance to 4.75 to 5.25% in constant currency and the overall company-level guidance to 4–4.5% in constant currency,” the HCLTech CEO said.

However, for the quarter, the company’s net profit declined 11% year on year to ₹4,076 crore. This was due to what the company said was a one-time impact of a new labour law notified by the government last year. Earlier, India’s new labour framework, brought together under four codes covering wages, industrial relations, social security, and workplace safety, came into force on November 21.

A key change is the standardised definition of wages, which prevents firms from shifting a large portion of compensation into allowances to reduce statutory contributions. Under the rules, basic pay must make up at least 50% of an employee’s total cost to company. The reforms also introduce provisions such as timely payment of salaries, revised overtime norms, and other compliance requirements.

HCLTech booked an exceptional charge of ₹956 crore to account for the impact of the revised labour regulations.

Headcount slightly down, fresher addition up

The company’s total headcount stood at 226,379 at the end of December, with net additions of 261 employees during the quarter. HCL Tech hired 2,852 freshers in Q3 FY26, while its last-twelve-month attrition rate declined to 12.4% from 13.2% a year earlier.

“we added 2852 freshers during this quarter that takes the total fresher addition for this fiscal year today to 10,032 so which is almost two-thirds higher than what we had done in the same period last year so significant addition that's one of the call-outs that we made at the beginning of this fiscal that fresher addition this year will be significantly higher compared to last year,” said HCLTech’s Chief People Officer Ramachandran Sundararajan.

The company also announced that it will be hiring an “elite cadre” of engineers in Q1. Sundararajan said they make up around 14–15% of its onboard workforce, a level it has maintained for some time and not one that is capped. He said the share could rise further if suitable talent is available.

The company also reiterated that elite engineers are offered significantly higher compensation, with entry-level salaries about three to four times that of the regular cadre. These hires fall into two salary bands ranging from ₹18 lakh to ₹22 lakh per annum, in line with what the company had outlined earlier.

Emerging spending areas

According to Vijayakumar, in Q3 discretionary spending was broadly in line with the previous quarter and remained “somewhat soft, particularly in traditional areas.”

“We are no longer expecting discretionary spend to return to pre- or post-Covid levels. Instead, we are focusing on where spending is actually taking place. It is not in legacy discretionary segments such as SaaS, but in what I call ‘day minus one’ work for AI. There is significant capex flowing into data centres, driving demand for professional services,” he said.

Adding that similar momentum is visible in robotics, physical AI, and semiconductors, including silicon for edge inferencing.

“These are the core enablers and foundational building blocks of AI, and this is where we are seeing strong investment and robust growth,” Kumar added.

HCLTech’s total contract value (TCV), or new deal wins, grew more than 43% year on year to $3,006 million by the end of December.

The company, which for the first time reported its “Advanced AI” revenue in Q2 FY26, reported a 19.9% quarter-on-quarter rise in the same. It grew from $100 million to $146 million.

Segment-wise, HCLTech’s IT and Business Services grew 3.8%, while Engineering and R&D Services posted a stronger growth of 10.8%. Together, services recorded a 5.0% increase in Q3. HCLSoftware delivered a 3.1% year-on-year growth.

HCL Tech said its Q3 FY26 EBIT margin was impacted by 81 basis points due to restructuring costs. The company began an internal restructuring in Q1 FY26.

Net income came in at ₹4,795 crore, accounting for 14.2% of revenue. This marked a 13.2% rise quarter on quarter and a 4.5% increase year on year. Along with its Q3 results, the company declared an interim dividend of ₹12 per equity share for FY26. The record date for dividend eligibility is January 16, with the payout scheduled for January 27.