We are in conversation with C. Bajay Kumar, the CEO and MD of HCL Tech, right here at the HCL Tech Pavilion on the Davos Promenade. CBK, thank you very much for talking to Moneycontrol. You know, I was talking to you earlier and you said you have 44 meetings in three and a half days. Based on the meetings so far, what's the sense that you're getting from clients? Because when I talk to people in Davos, geopolitics seems to trump everything. There's a lot of uncertainty right now because of the tariff situation. But what's the sense that you're getting from them in terms of uncertainty, clarity going forward?
Um, thank you Chandra for spending time and doing this in our pavilion. I really appreciate it. For me, it's just the meetings have just begun, so it's a little early to really provide a perspective. But generally, geopolitics and all the uncertainties, it's been there in some form or other for the last three or four years. So the general approach a lot of clients are taking is we need to consider this as a new normal and still continue to make progress in growing the business and delivering new propositions. So I think it's the new normal. Uncertainty is the new normal and you have to continue growing. That's really the theme. Most people that I've talked to, while they're focused on solving the challenges that are caused by different uncertainties, at the same time, how can they leverage technology to transform their business, how can they adopt AI and make a difference to their own business?
Right, but are they holding back on spends? Are they waiting for some clarity?
I would think that was the case a couple of years ago, but I think some of these things you can't hold for long.
Right. New technology comes, you need to be able to leverage new technologies. If you don't do it, your competitors are already getting ahead of you. So, I think there is definitely a realization that we just can't hold on. We just need to leverage new technology and continue to make progress. And to that extent I would think that while customers not across all verticals have not completely opened up spending, a good section of them think that they just can't wait. They just need to make progress. I think we see more of that these days.
Right. You know, you've also been one of the most vocal IT leaders when it comes to calling out the traditional business model and how that needs to change. It cannot be a linear business model anymore where growth has a direct correlation with headcount addition. Now, what is the state of this industry today? Because it's very hard to determine if AI is already having an impact. We've seen some of your rivals consciously cut headcount, but again it is not clear if that was a result of overhiring during COVID and now there is some correction going on, or is it a result of productivity gains? Give us a sense of what's happening because for the longest time it has been such a strong engine of jobs for India. What is the ground situation with respect to AI and hiring?
So there are two broad dimensions to this. One is that the IT services industry has been delivering a certain set of services for a very long time. Those services evolved from traditional to digital, on-premise to cloud, and all the new technologies, SaaS, all of that happened.
And you had a SMAC phase, right?
Yeah, there was a SMAC phase which became a lot of mobility and all of that. So those areas are all getting significantly disrupted with the advent of AI, because almost everything that we could do without the help of generative AI and all the new agentic solutions that are available could be done with at least 30 percent less effort, more automation, and better quality. Now, is that adoption going to happen overnight? The answer is no. It's happening gradually. It is picking up good momentum. So that's going to cause deflation in a meaningful chunk of what all IT services companies are doing, right? Whether you acknowledge it or not, that's going to happen. So the approach that we're taking is, can we be proactive about doing it so that clients see the value of how this technology can simplify, automate, and bring more efficiency, better quality, better speed, and better client experience, so that we can try and get a little more wallet share from those clients and also expand our market share. So that's the approach we have taken, and because of that we are able to defend a large part of our existing business even though there is some deflation happening. We are getting more from the same clients, right? So that's what is making us the fastest-growing company now for the fourth year in the running among the large caps. The second dimension of this is that AI is also opening up a lot of completely new opportunities, right? Which were not possible before, like physical AI where there are physical objects and machines and other physical things. AI can sense, understand, and act. And that's what all robotics and physical AI is about. So it's believed that this spend can be close to a trillion dollars by 2030. Of course, that spend has multiple components, but there will be a very meaningful services component as part of physical AI because it's all about making a solution work for a client. So I think we are focused on that. We think it can really become a meaningful service line for us, especially with our deep engineering heritage where we were already doing mechatronics and a lot of work with many customers. So it's a natural evolution to use robotics and AI and really bring to life the physical AI services. Similarly, there are a lot of AI factories being set up, which are the AI data centers. So there is meaningful work in designing, planning, building, and implementing these data centers. So there are multiple such opportunities coming on the horizon. For example, while the intelligence layer is what all these big companies like OpenAI have created, for that to be leveraged in an enterprise at scale, there needs to be a lot more work done. So we are building IPs to enable that, like our AI Force 2.0, the agentic platform, to enable software development, IT operations, or business process operations. How can we use all the language models and the agentic technology to deliver an end-to-end solution and an end-to-end outcome in each of these areas?
Right? Um, both in your earnings call, you know, as well as today you've spoken a lot about physical AI. In fact, I think you used a term called HCLTech advanced AI revenue.
Yeah. All of this is combined, right? Physical AI, AI factory, all the revenue from IP that we have built and the agentic work that we do, all of this is what we classify as advanced AI.
But you know, in terms of infusing AI in the existing offerings,
