C Vijayakumar, CEO and Managing Director at HCLTech, talks earnings on CNBC. He highlights the pivotal role of technology in businesses and emphasizes the need to reorient services towards industries with significant spend, like the tech industry, which contributes 15% of HCL Tech's revenue.

Bengaluru

HCLTech has responded to ongoing global challenges such as US economic uncertainty, geopolitical shifts, and the transition to artificial intelligence by emphasizing technology-driven business transformation. The company reported 4.2% sequential growth in constant currency, 6% quarter-on-quarter growth in rupee terms, and a 20% increase in AI revenue, along with $3 billion in net new bookings.

Despite preferring higher growth rates, HCLTech is adjusting its services to match evolving client spending patterns, particularly in sectors with significant discretionary expenditure. The company acknowledged that rupee depreciation has provided some cost advantages, but stressed that its main priority remains long-term growth.

Indian IT giant HCLTech on tech transformation needs

I want to just start by asking you very clearly what you make of the fact that the overhang has been the US. It's almost like a perfect storm consistently over several months. You know, there's been US status, geopolitical uncertainty, the AI transition, the job market is not up to the mark. You need skilling. How have you as a company dealt with that and correlate that with your earnings? Yes, that's a great way to start. Of course, this is the new normal. There is geopolitics, there is so many external variables that you have to deal with. But what I believe is technology is so pivotal for every business, whether it is for growing, transforming, sustenance, technology is very, very pivotal. And that is the reason why we have identified several areas which will really help businesses undergo this transformation using all the technologies, including AI. And that's directly reflected in our numbers. We delivered 4.2% sequential growth in constant currency terms and 6% quarter-on-quarter growth in rupee terms. And we improved our margins. Our AI revenue increased 20% quarter-on-quarter. We've had an exceptional booking. We did $3 billion of net new booking, which is really 45% more than what it was in the same time last year, and 17% higher than the last quarter. So we're really addressing or really chasing where the spend is happening and kind of driving our business growth momentum. But given the headwinds you're facing, is it fast enough is the biggest concern that, anyone who's watching the India market is watching, the importance of the IT sector, as you know, sir, better than anyone else, perhaps, is just so significant in the global context? Yes, I do think, of course, we would all prefer to look forward to having a much higher growth than maybe 4% or 5%. We would prefer to have a double-digit growth. But the nature of spend, the nature of discretionary spend, where clients are spending, which industries are spending, that is changing significantly. And that is a pivot that we are making to really get our services reoriented and really put disproportionate emphasis on the industries which are spending significantly and how that can translate into meaningful revenue streams for us. For example, tech industry is one of the strong industry verticals for us. Close to 15% of our revenue comes from there. And we've grown 14.4% year on year in that vertical. So I think people have to do a little, some more pivoting around similar themes to really chase where the discretionary spend is happening. And that's how we will deliver higher and higher growth. So there are those who will say that the impact of the weakening rupee is what is, well, keeping everyone in the IT industry, in other words, afloat. What would you say? I know that it's perhaps too much of a statement to say afloat, but there is an impact for sure. Because if you see, rupee depreciation has been, if you take any long-term average, every two years, three years, four years, there has always been some uptick. Of course, we've had some sharp uptick recently. Of course, it is helping us get a little bit more from, reduce our costs a little bit in dollar terms. But of course, the most important thing is growth. And that's where all of us are focused on. How do we drive better growth and get to a much higher growth than what we have delivered in the last two or three years?

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