How is HCLTech’s CloudSMART plus enterprise GenAI strategy positioning it as a rising IT services force in 2025?

HCL Technologies Limited (NSE: HCLTECH), the Noida‑based global IT services and digital engineering provider, is using its CloudSMART initiative and GenAI‑enabled platforms to boost its relevance in 2025. With consolidated revenues reaching $13.8 billion for the year ended December 2024—reflecting a three‑year compound annual growth rate (CAGR) of approximately 8 percent—the organisation is transitioning from traditional, headcount‑driven projects into outcome‑oriented digital innovation. Institutional investors have welcomed the pivot, but they will be scrutinising whether HCLTech can convert this early momentum into sustained, high‑margin growth as it competes with larger peers.

Founded in 1976 as a mainframe repair provider, HCLTech has undergone four decades of strategic evolution—from hardware support to enterprise IT, and now to cloud‑native and GenAI‑powered engineering services. Its CloudSMART strategy, formally launched in 2024, encapsulates this journey by combining core modernization services with advanced AI/ML and cloud platforms. Its 18–19 percent EBIT‑margin guidance for FY25 reflects investor confidence, though HCLTech’s ability to demonstrate recurring margin improvement through AI‑led services remains key.

How is HCLTech combining its CloudSMART framework and GenAI platforms to outpace rivals in the enterprise IT services landscape in 2025?

CloudSMART positions cloud modernization as the gateway to deeper business transformation supported by embedded GenAI capabilities. By mid‑2025, HCLTech had enabled clients to reduce cloud infrastructure costs by up to 30 percent in modernization exercises—most notably with Unilever, which shifted to a microservices architecture with embedded AI pipelines for predictive demand forecasting. Internal surveys show 87 percent of global enterprises pursue multicloud strategies, almost all including GenAI pilots. CloudSMART is tailored to serve these dual objectives through a four‑pillar offering—AI Force, AI Foundry, AI Labs, and AI Engineering.

The AI Force module serves as a GenAI orchestration layer that connects prompt engineering, AI agents, and DevOps pipelines, enabling automation across software development, cloud operations, and customer-facing applications. It supports integration with NVIDIA’s AI Enterprise suite and Omniverse, allowing HCLTech to pilot digital twin solutions in manufacturing and logistics. AI Labs promote rapid innovation through client‑facing incubation workshops, while AI Foundry offers reusable LLM‑based models for specific vertical tasks—such as claims adjudication in insurance. AI Engineering ensures scalable deployment across global delivery centres, enforcing governance protocols and DevOps best practices.

CloudSMART’s theoretical framework translates into tangible client projects across sectors including retail, telecom, financial services and life sciences. For example, a European drugmaker adopted AI Force to automate pharmacovigilance workflows, achieving a 40 percent reduction in manual review time. These increasingly sophisticated use cases help HCLTech differentiate period‑Vs‑vendor competitors by offering rapid pilot‑to‑scale journey through Snowflake‑like low‑code interfaces for GenAI deployment and security‑first architecture validation.

What signs of GenAI scale and impact emerged from HCLTech’s FY25 performance and client deployment activity?

HCLTech reported 12 exclusive GenAI contract wins in Q4 FY25 alone, contributing to over $3 billion in net new bookings. The firm also crossed the milestone of 500 GenAI engagements, a significant uptick from earlier counting in the low 300s. Training efforts encompassed more than 100,000 business users and 4,000 developers across GenAI and cloud platforms. One of the most compelling case studies included AI Clinical Advisor in healthcare, where reduced per‑consultation time by three minutes translated into projected annualized savings of $50 million.

Revenue mix is shifting toward digital and engineering services, which now account for nearly 45 percent of total revenue, up from 38 percent a year prior. While GenAI‑led revenues remain bundled into digital transformation segments, management stated in investor calls that roughly 15–18 percent of digital bookings now feature GenAI, up from single-digit levels in FY24. As GenAI contributes increasingly to client outcomes, investors are watching for when HCLTech will begin disclosing AI‑specific revenue numbers.

How have HCLTech’s hyperscaler partnerships reinforced its GenAI delivery capabilities across enterprise domains in 2025?

Partnerships are central to HCLTech’s growth narrative. Its strategic alliance with NVIDIA now includes engineering joint solutions for generative AI in CAD and digital twin modelling. An initiative involving Omniverse has enabled virtual pinpointing of industrial equipment failures through AI Force orchestration. Meanwhile, Microsoft collaboration has delivered Copilot‑based contact centre solutions built on Dynamics 365, enabling multilingual customer support with sentiment‑aware GenAI bots. On Amazon Web Services and Google Cloud fronts, HCLTech is co‑delivering enterprise data modernization projects augmented by on‑demand AI inference. These alliances exemplify a multi‑cloud strategy that enables enterprise readiness while mitigating hyperscaler lock‑in concerns.

Together, these partnerships showcase HCLTech’s capacity to integrate GenAI at scale across hybrid environments—a capability increasingly demanded by global CIOs and Embedded GenAI use cases, positioning HCLTech as a credible alternative to peers such as Infosys, TCS, IBM Consulting, and Accenture.

What are the expectations and interpretations of HCLTech’s GenAI performance and strategic positioning from institutional investors through FY26?

Analysts and institutional investors perceive HCLTech’s GenAI efforts as strategically sound and well-executed, yet still early in monetization. More than 40 percent of Q4 digital bookings were anchored on CloudSMART with GenAI components included. EBIT margin guidance of 18–19 percent for FY26 has been interpreted as affirmation of disciplined execution. However, with broader Indian IT peer multiples (P/E) trading at 18–20x, HCLTech currently trades at a 15–17x multiple, indicating investor caution.

The market anticipates clear breakout reporting of GenAI-linked revenues or pipelines in H1 FY26. Investors are particularly focused on HCLTech’s ability to embed recurring, outcome-based AI models—like performance-based pricing in diagnostics, continuous monitoring, or yield optimization—rather than one-off engineering contracts.

What execution and competitive risks could restrict HCLTech’s ability to scale its CloudSMART and GenAI strategy by late 2025?

Despite strong indicators, HCLTech must address multiple risk vectors to sustain its strategy. Proving and replicating pilot use cases remains vital in highly regulated industries such as life sciences, financial services, and critical infrastructure, where cybersecurity and privacy guardrails are mandatory.

Competition is intensifying. Accenture’s revenues nearly doubled over three years after iterating its SynOps offering; IBM Consulting is integrating watsonx into consulting frameworks; Tata Consultancy Services is harnessing its AI.Cloud; and Infosys is expanding Topaz. This competitive landscape increases client expectations around measurable outcomes, flexible pricing models, and speed to insight.

Internal challenges include talent retention; mid‑career GenAI engineers are heavily recruited by hyperscalers, and HCLTech’s ability to build career pathways enhanced with IP‑led innovation will be important. Additionally, macroeconomic pressures—such as political uncertainty in Europe and slower IT budgets in North America—pose demand risks. Many GenAI and cloud projects are being split into smaller phases as clients hedge waiting for proof. This extension of procurement cycles may delay large contract signings until late FY26 or even FY27, impacting quarterly guidance.