HCL Tech Q4 Results | CEO & MD Vijayakumar On FY27 Outlook, Acquisitions, AI Revenue & More

Yeah. Good morning. Yes, our guidance range is 3%. Last year also it was 3%. We started with the 2 to 5% range for the full year FY26 and we delivered a 3.9%. This year again we're at the 3% range. At the lower end of the range we think the softness in the discretionary spending will continue. And we have two client specific situations which will also take away half a percent. And at the higher end we think the situation will slightly improve and we also expect a couple of large deals to be concluded in the first half of the year which will translate to revenues in the second half. So that's really the overall logic.

Actually, it's very difficult to really visualize the overall macro and possible impact. If I were to just take an overall view, I think Europe is looking a little softer. North America continues to look good across various clients except a couple of client-specific things that I talked about in two telco clients. That's really what it is, and I don't want to take a view on how the overall macro will impact. We think overall the discretionary spending has been soft and it turned a little softer in March. That's why we came below our own expectations for the quarter, and that's what we baked in: that environment will be soft. But the bigger theme is how do you really use AI to build new services which will offset some of the deflation that is being caused due to AI in the traditional services. If you look at our numbers and guidance on the services, it is 1.5 to 4.5, which is 3% at the midpoint. Last year, FY26, we delivered 3.8% in organic growth in services. So it's actually 80 basis points lower than last year at the midpoint of our guidance. So we've been able to offset a lot of AI-led deflation, almost two-thirds of AI-led deflation we've been able to offset. Because if you recall, we talked about 2 to 3% deflation in the traditional services. So we've been able to offset that and still deliver 3% services growth. We are still guiding 3% services growth in FY27. So I think we are very confident and optimistic about our ability to really grow the new services. There are six or seven new areas that we are growing, and that is going to help us accelerate growth as we move forward in the medium term.

I think it's client specific at this point because leadership changes, strategy changes, all of that drives certain new strategies and that would have its own implications on spending. I would not broad-brush it across sector or across geographies. That's why I was very careful about calling out specifics rather than giving a broad-brush macro as a factor in whatever happened in last quarter and also the future.

So actually, if you take our FY25, we were generally in the 18% plus range, and in FY26 we had guided for a slightly lower margin, and we are just getting back to that 18% at the midpoint. Because we have taken a lot of steps in the past in the last 12 months, and all of that will help us to get to this 17.5% to 18.5% guided range.

Actually, the timelines are a bit fluid because it is waiting for certain government approvals. On a full year basis, if you take 12 months post-acquisition consummation, it should give us a 1.5% increase in growth. But at this point, we are not able to put a definitive timeframe when these acquisitions will close. But whenever it closes, 12 months after that we would have delivered 1.5% incremental growth.