HCL Tech Q1 Profit Rises 20%, Retains FY27 Outlook; Approves ₹3,500 Cr AI Data Centre Investment

HCL Technologies on Monday reported a more than 20% rise in consolidated net profit to ₹4,624 crore for the June quarter on "good all-round performance" and retained its FY27 revenue growth guidance of 1-4%, citing strong deal momentum and a positive outlook.

The company said its record $2.4 billion in Q1 bookings, the highest-ever for a first quarter, and a robust deal pipeline reflect resilient demand despite some softness in West Asia.

"We expect a strong booking even in Q2. So, we feel quite positive about the overall outlook," HCLTech CEO and Managing Director C Vijayakumar said.

The HCL Tech board has also approved an investment of up to ₹3,500 crore for setting up data centres in India.

The Noida-headquartered IT services company announced its entry into the full-stack AI market to address the complete spectrum of business opportunities arising from growing demand for AI-led services and solutions across the private sector and government.

"We are in conversation with several clients, and we are very close to establishing our first client with some committed capacity," Vijayakumar said during the Q1FY27 earnings conference.

He said HCL Tech's AI data centre strategy goes beyond infrastructure, combining GPUs, models, applications, and managed services to deliver full-stack AI solutions, reduce costs, and enable outcome-based contracts for global clients.

On the recent strategic investment of $151 million in Sarvam, India's full-stack sovereign AI company, Vijayakumar said it reinforces HCL Tech's position as an AI innovator and underscores the company's commitment to building, co-innovating, and shaping the next wave of artificial intelligence.

By combining Sarvam's research depth with HCL Tech's global enterprise relationships, engineering expertise, and software IP, "we are creating a differentiated full-stack AI platform spanning models, platforms, applications, and managed services", he said.

"...this meaningfully opens up the Indian sovereign AI market for us across industries and the government sector," Vijayakumar said.

He further said that while large general-purpose AI models attract most attention, enterprises often benefit more from smaller, domain-specific models that are trained on industry or client data. These specialised models are faster, more cost-effective, and more accurate for business use cases.

He also highlighted HCL Tech's strategic initiative: a full-stack AI offering powered by AI data centres.

"The business is shifting from physical infrastructure to higher value, AI-ready full-stack solutions, one we believe will be a new growth vector for HCL Tech," he said, adding that the company will combine its capabilities across AI data centre design, DevOps, and cloud operations, as well as its software portfolio, with a new AI data centre business for this.

Its revenue from operations came in at 14% higher at ₹34,579 crore for Q1 FY27.

Profit (attributable to owners of the company) stood at ₹4,624 crore during the just-ended quarter, up from ₹3,843 crore in the corresponding period of the preceding financial year.

On the Q1 report card, he said the deal pipeline remains strong, with sustained growth in AI-native and AI-amplified services, while AI-driven automation is optimising services.

HCL Tech is well-positioned to capitalise through targeted strategies, he pointed out.

Services revenue stood at ₹31,748 crore, growing 1.7% quarter-on-quarter and 14.9% year-on-year. The software revenue was ₹2,960 crore, up 3.6% quarter-on-quarter and 4.7% year-on-year.

"...there has been some impact due to West Asia. We did talk about it in the last quarter - some of that is continuing. So, some of the discretionary spending softness continues to be there, but we see a large pipeline, very healthy booking," he said.

The company management said that the telecom discretionary spending remained weak, retail grew strongly on a major client ramp-up, while manufacturing, especially automotive, continues to face challenges despite new engineering services wins.

HCLTech expects its hiring plan to be in line with the revenue guidance.

"For a couple of years now, we have moved away from trying to commit to an annual number and instead created a rolling quarterly plan, and that's what we will stay with. In aggregate, at the end of the year...this year would be similar to what we did last year," HCLTech Chief People Officer Ram Sundararajan said, adding that lateral hiring will be need-based.

Last week, the country's largest IT services company TCS, reported a 4.61% increase in its June-quarter net profit to ₹13,349 crore, and guided towards an improvement in demand impacted by the West Asia crisis, returning in the ongoing quarter.

TCS net income rose 8.5% year-on-year to ₹13,849 crore if one were to exclude exceptional items.

The company's managing director and chief executive K Krithivasan said the demand environment remained sluggish during the reporting quarter amid ongoing conflicts and noted that Q1 also saw some clients deferring work. However, even though the conflicts continue, he sounded more sanguine.