CEO C. Vijayakumar spells out why HCLTech is one of the few IT majors putting a number on GenAI revenue

HCLTech’s management said Monday that business from advanced AI technologies totaled $146 million in the third quarter, marking a significant sequential growth of 46%. HCLTech CEO C. Vijayakumar shed light on the company’s AI plans on Tuesday, saying it will continue to share Gen AI revenue as it gives stakeholders a perspective on how the company is future-proofing itself. Excerpts have been edited.

Could you continue to measure or define your advanced AI revenue, helping outsiders create some sort of guide for how the company will future-proof itself?

We’ve been very focused and we’ve called all the IP that we’ve built and proposed as part of our solutions physical AI, AI factory, and some mediated work, conversational AI, those are things that we classify and we believe we’ll continue to report on that because it really helps provide a very good view of what the new areas are that we’re covering.

Of course, it is mandatory to transform all existing services using AI and this cannot be considered as AI revenue. This is truly almost mandatory and a prerequisite for us to continue serving our customers.

Perhaps you were among the first Indian IT CEOs to talk about how AI could have an impact on renewables and deal offerings. We’re now in January 2026, and if we had to ask, what are some of the key implications for how AI-related technologies impact deal structuring?

Yes, we said there could be deflation during deal renewals (led by AI). But I think what we’re seeing is that we’re taking an approach where we need to proactively embrace generative AI and be comfortable passing some of our savings on to our customers, so they’re more motivated, so they’re energized to see how they can expand wallet sharing with us.

We have followed this proactive approach and generally see it in most renovations. Of course, there has been some productivity that we have achieved through AI, and that has increased from where it was in the past to where it is now. However, thanks to our proactive approach, we were able to gain more wallet share with the same customers. So that’s largely been the trend over the last four or five quarters.

You’ve revised the top and bottom ends of your IT services guide, even though your company’s top-end guidance has been pulled down a bit. Does this mean that the software products business grew at a slower pace throughout the year? If this is true, what is behind the slower growth in the product business and is Gen AI’s impact stronger in the product business?

Services are growing faster than the product business. So the product business has multiple portfolios. There’s a very strongly growing data portfolio that really benefits from generative AI and some of the interventions we’ve done in the past through startups like Wobby and Zeenea. All of them are definitely helping the data portfolio grow very strongly. And the last quarter was very strong.

However, we had some difficulties two quarters ago. Some of the product revenues are down, and that’s mainly because we have two types of revenue streams in the product. One of them is a perpetual license. The other is a subscription license. A subscription license is something that recurs every three months or every once in a while for whatever the specific period is, but it is permanent, mostly one-time.

As subscription revenue increases, we are converting many perpetual licenses to subscription-based licenses. So, as you can see in our descriptions, there is a rise and fall in the permanent line item. That’s why it’s a little quiet overall.

However, we still think our product business will grow more slowly. It’s going to grow in the low single digits, and that’s our primary ambition, but also more specifically around subscription revenue. Overall revenue may be down, but we’re really focused on growing subscription revenue.

This is what will help us in the long run. We think generative AI and others are just helping the product business because a lot of products, even though they’re late in their lifecycle, we’ve modernized them, we’ve enabled the cloud, and they’re still significantly embedded in many large businesses.

What are your views on the deployment of AI agents as software engineers performing automated tasks? Could 2026 be seen as the year when AI software agents are deployed to handle end-to-end work? How does this change delivery models and billing?

I think the IT services model is evolving from a purely human-based model to intermediaries with humans in the loop. In some areas, we are seeing significant adoption of agentic models, but in many areas, while agentic is a solution that works, effectiveness also depends on the underlying data, the underlying process simplification, as well as our ability to train those agents with all the information available to perform tasks.

There are certain prerequisites, and unless they are addressed and people invest in implementing the basic foundational blocks, it is not very easy to derive direct value from AI agents. This is an area where a lot of work is being done at some large companies.

Most analysts are of the view that FY27 will again be modest, just better than FY26, and single-digit growth is the new normal for IT services companies. HCL has reported blockbuster numbers with double-digit growth over the last decade. Do you believe double-digit growth is on the horizon for HCL?

I think this is a very big industry. Almost a trillion dollars or more; The market share of the technology services sector and major players is only 15%. There are many geographies where we are underrepresented.

So I’m a strong believer in the growth opportunity in the industry, whether it’s high, single digit, double digit, I can’t comment on that, but it’s a strong growth sector, if you can capture more market share with better solutions, greater adoption of AI and also go after a lot of new spending areas, growth rates can definitely increase significantly. I’ll leave it there.