HCLTech Q3 FY25: How strong AI-led transformation drove $3.5bn revenue
HCLTech, a global leader in IT services and digital transformation, delivered exceptional results for the quarter ending December 31, 2024. The company achieved $3.5 billion in revenue, marking a 3.5% year-on-year (YoY) growth in USD terms and 4.1% in constant currency (CC). EBIT margin for the quarter rose to 19.5%, reflecting strong operational efficiency.
The total contract value (TCV) of new deal wins stood at $2.1 billion, highlighting HCLTech’s ability to attract and retain clients across sectors. CEO C Vijayakumar attributed the success to broad-based growth and a strategic focus on AI-led transformation, which continues to shape the company’s offerings.
How Did AI and Digital Services Accelerate HCLTech’s Revenue Growth?
Digital services played a pivotal role in driving HCLTech’s performance. Digital revenue, which accounts for 38.5% of the company’s total services revenue, grew by 6.3% YoY in CC. The company’s investments in cutting-edge AI and Generative AI (GenAI) capabilities have redefined its service offerings, enabling clients to innovate and streamline operations.
Key deals in this segment include:
Revolutionizing Contact Centers: HCLTech partnered with a US-based technology leader to enhance customer experience using GenAI and cloud-based tools, transforming traditional contact centers into AI-powered hubs.
Biopharma Digital Hub: A Europe-based pharmaceutical major selected HCLTech to establish a GenAI-enabled digital hub, optimizing product lifecycle management and improving operational efficiency.
Automotive Innovation: HCLTech collaborated with a Japanese semiconductor company to co-develop next-generation silicon-on-chip (SoC) solutions tailored for autonomous vehicles, advancing the automotive sector.
These examples underscore how HCLTech is leveraging AI to deliver targeted, high-value outcomes across industries.
Which Regions and Industries Drove HCLTech’s Growth?
HCLTech’s regional performance reflects its global appeal. The Americas led with a 6.2% YoY CC growth, fueled by robust demand for digital transformation services in telecommunications and financial services. Europe and the Rest of the World posted steady YoY CC growth rates of 2.6% and 2.9%, respectively, driven by demand in manufacturing and public services.
Vertical growth was equally impressive:
Telecommunications, Media, and Entertainment grew by a staggering 33% YoY in CC, underscoring HCLTech’s leadership in digital media solutions.
Retail and Consumer Packaged Goods (CPG) witnessed a 17% YoY CC growth as clients sought advanced customer engagement tools.
Technology and Services recorded a 7.6% YoY CC increase, driven by cloud and AI-enabled innovations.
How Is HCLTech Ensuring Operational Excellence?
HCLTech’s EBIT margin of 19.5% represents a 93 basis point (bps) improvement quarter-on-quarter (QoQ). This growth reflects the company’s ability to balance rising costs with operational efficiency, aided by automation and process optimization.
Shiv Walia, HCLTech’s Chief Financial Officer, highlighted the company’s focus on cash flow management, which resulted in a free cash flow (FCF) to net income conversion of 134%, well above industry averages. With a treasury balance of ₹27,707 crores, HCLTech is well-positioned to invest in innovation and acquisitions.
What Role Does Workforce Strategy Play in HCLTech’s Success?
With a workforce of 220,755 employees, HCLTech’s talent strategy is a cornerstone of its success. The company added 2,134 employees during the quarter, including 2,014 freshers, reflecting its focus on nurturing young talent.
Attrition stood at 13.2%, a manageable level that highlights HCLTech’s ability to retain skilled professionals. Women accounted for 28.8% of the workforce, underscoring the company’s commitment to diversity and inclusion.
HCLTech’s Value Creation Portal facilitated the implementation of over 2,000 employee-generated ideas in Q3 FY25, delivering customer-signed value worth $390 million.
How Is HCLTech Delivering Value to Shareholders?
In Q3 FY25, HCLTech declared a dividend of ₹18 per share, including a ₹6 special dividend commemorating 25 years of public listing. This marks the 88th consecutive quarter of dividend payouts, showcasing the company’s consistent financial strength and commitment to shareholder returns.
What Makes HCLTech Stand Out from Competitors?
HCLTech’s emphasis on innovation and sustainability sets it apart. Recognized by EcoVadis with Gold status for sustainability management and by Newsweek as one of America’s Most Reliable Companies, HCLTech is redefining industry benchmarks.
Chairperson Roshni Nadar Malhotra‘s leadership was celebrated globally, with her inclusion in Fortune’s “Most Powerful Women in Business” list. These accolades reflect HCLTech’s focus on governance, diversity, and social responsibility.
The company’s AI-led transformation strategy ensures it remains competitive in an ever-evolving market, delivering high-value solutions that address real-world challenges.
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