Welcome back. The conversations continue here at Davos 2025. We're celebrating two milestones: 25 years of CNBC TV18 and 20 years of covering the World Economic Forum's annual meeting. Joining us now is a man who's also celebrating a very significant milestone. HCL Tech has turned 25 since the time that it listed. What a journey it has been for the company. In fact, I was just taking a look at the numbers: a CAGR growth of 20.5% over the last 25 years. CVK, congratulations and many thanks for joining us here on CNBC TV18. Thanks very much for your time. Let me start by asking you about the last 25 years and the many milestones you've been able to achieve in terms of revenue, profitability, and returns to shareholders. Then I'll talk to you about the next 25.
Yes, it's been an amazing journey for the company. It's a trust of our clients and the dedication and passion of so many HCLites and so many leaders who shaped the journey of the company. We've delivered industry-leading TSR: 20.6% CAGR TSR over the 25 years, even beats Warren Buffett's record. So we couldn't be in a better place and we're very happy about that.
Speaking about Warren Buffett, let's talk about the future. CVK, at this point in time, it certainly seems like the mood is better, there is more optimism, specifically with respect to the US market. That's the mother market as far as you're concerned. What are you picking up on?
Yes, certainly there was a lot of uncertainty and lack of clarity when we met here last year. But this time, even though some of the things are not clear yet, at least most decision makers seem to know that this is the direction things are going to go, because everybody's positions are clear and they want to plan. I think the biggest theme everyone is talking about is how do you become very adaptable. Adaptability to any changes, whether it is regulations or geopolitics, that seems to be the biggest theme. I think people have also prepared to some extent because none of this is new, whether it is tariffs or geopolitics. So I think leadership seems to be better prepared to deal with the change that could be coming. In terms of business confidence translating into higher spend, I think so. There was a holding pattern when we met last time, and over the last two quarters we already see discretionary spend picking up. Financial services saw a good pickup in the last two quarters. Last quarter, even technology and all other verticals saw some good pickup. I'm really hoping this momentum will continue, and given all the conversations, I feel more confident.
Speaking of the conversations, the conversations here are all about AI in its different facets. You're going all in as far as agentic AI is concerned, and that seems to be the big theme for you here in Davos this year.
Yes, so the way we are looking at AI is, first and foremost, every service that we deliver needs to really benefit from generative AI. That means we are proactively talking to our clients about what is the art of the possible. If we believe we can provide maybe 25% more efficiency, we are not shying away from it. We're talking to them, saying this is the art of the possible, we need you to walk this journey with us. We have an amazing platform, AI Force, which leverages all the best-of-breed language models, small language models, large language models, agentic, all of that. We are proactively implementing. We already have very good success with six large clients, and we want to roll out to 100 clients by financial year 26, which is March of 2026. That journey is going well. That's on the service transformation side. There is another very big area, which is value stream innovation. For example, if you're working for a bank, there is an opportunity. We built a solution for trade surveillance. We're working for a very large hospital for the physician assistant. These solutions are what we are calling industry-focused repeatable solutions. We have come up with about 70 solutions, all of them have at least one or two clients who are already using it, they're seeing the value, and we want to build on it. Eventually, a big part of our business is services. The way it will evolve is it's going to be more solutions, a combination of IP and services. That's the way we believe the industry will evolve, and we are just working that part.
That's exactly the conversation I've been having here in Davos with your peers as well, on making this transition from being services to being services and IP driven. But those six success stories that you spoke about, can you give me some color on the kinds of impact you've been able to drive on account of the adoption?
Yeah, so I'll give you an example. A very large financial services firm headquartered out of the US, where we are one of the largest service providers for them. They have a modernization program, a 5-year modernization program, and they're spending roughly a billion dollars a year. We believe through all the interventions we can finish that in four years, which is a billion dollar saving. We have created proof points in a certain segment of the program to demonstrate this, and they're very happy to adopt it and walk the journey with us.
Would you say that it's largely the BFSI side that is the early adopter at this point in time for AI?
This is really how do you use generative AI to accelerate a modernization journey. But there are other use cases. For a very large technology company, we are using generative AI to significantly reduce the test cycles and also the number of test cases is significantly higher, which increases the quality of the end outcome. There is a big healthcare company where we piloted the physician assistance. Conservatively, it's expected to save at least $100 million a year. But the challenge there is how do you drive adoption across all the doctors who are part of that healthcare ecosystem, and that's a journey that's just begun.
Speaking of the journey, let's talk about your own journey with respect to your people and being able to adapt to the future and the future needs of your clients. How many have you already been able to train to deal with an AI world, and what's the outlook on that front?
I think we have two programs. One is the users of AI, not the developers of AI, which pretty much everybody in the company needs to be. A very large percentage of teams are already trained to use some aspects of AI, whether it is GitHub Copilot or M365 or many other things. There is also a set of people who are building new applications, fine-tuning, LLMOps, all of that. I think we have about 4,000 people who are very capable to build, engage with clients, and are architects and things like that. They are also significantly deployed in the eight labs that we have built over the last maybe a year or so.
In terms of driving efficiency within HCL, what have you been able to unleash and unlock?
HR is a big topic because we are constantly skilling people, redeploying people. We have built a solution for people redeployment because the skill matrix that we have is very complex. Just by all the data that we have on the projects that people have done, we are able to precisely identify the right person for the role. What used to take maybe a few days, we are able to do it within hours. That's a significant thing that we're trying to scale up internally.
Let's not talk about the bread and butter stuff. You've done the quarter, so I won't go back to the numbers. But essentially, I want to understand from you the margin trajectory from here on. You've seen 20% kind of margins, you're below that at this point in time. When do you anticipate being able to get back to that?
