HCLTech Q2 Profit Jumps 21% as AI Revenue Surges

HCLTech Q2 Profit Jumps 21% as AI Revenue Surges

Indian IT services company HCLTech reported a 21.2% year-on-year increase in consolidated net profit to ₹5,132 crore for the July–September quarter, supported by growth in its services and engineering businesses. Revenue rose 11.5% to ₹35,620 crore, although the company narrowly missed analysts’ revenue expectations.

The results, announced after market hours on October 12, came with an improvement in the company’s full-year outlook. HCLTech raised the lower end of its FY27 revenue growth guidance from 1% to 2.5%, keeping the upper end at 4% in constant-currency terms. The company retained its operating margin guidance of 17.5% to 18.5%.

The performance highlights a mixed picture for India’s technology services industry: established IT businesses continue to generate growth, while artificial intelligence is changing what customers buy, how projects are priced and which skills technology providers need.

Profit growth outpaces revenue expectations

HCLTech’s consolidated net profit reached ₹5,132 crore, compared with ₹4,235 crore in the corresponding quarter a year earlier. Revenue from operations increased to ₹35,620 crore from ₹31,942 crore.

Revenue was slightly below the average analyst estimate of ₹35,686 crore compiled by LSEG, according to Reuters reporting published by Mint. Profit, however, exceeded the average estimate of ₹4,859 crore.

The difference between revenue growth and profit performance matters because IT services companies must manage staffing, project delivery and investment costs while responding to client demand. Higher profits can reflect stronger operating efficiency and a better business mix, but they do not necessarily indicate that demand is accelerating across every service line.

HCLTech’s operating margin reached 18.2% in the quarter, up 71 basis points year on year and 131 basis points from the preceding quarter. The company also reported new deal wins worth approximately $3.24 billion, including a $1.14 billion deal involving Mercedes-Benz.

Advanced AI revenue rises to $219 million

Artificial intelligence was one of the quarter’s most prominent growth areas. HCLTech reported $219 million in quarterly advanced AI revenue, an increase of 28.4% from the previous quarter and 78% year on year in constant-currency terms. On an annualised basis, the figure equates to approximately $876 million, although annualising a single quarter does not guarantee that the same revenue will continue over the following year.

The figures suggest that clients are increasingly spending on AI-related services alongside established areas such as cloud infrastructure, engineering and enterprise technology support. Businesses are exploring ways to automate workflows, integrate AI into existing systems and improve productivity.

HCLTech also announced a global premier partnership with Anthropic to support the adoption of agentic AI across enterprises, with an emphasis on safety, cybersecurity and governance. Agentic AI systems are designed to perform multistep tasks with varying degrees of autonomy, making oversight and reliable integration important considerations for companies deploying them.

However, rising AI revenue does not remove the uncertainty facing the wider services business. Some customers are reassessing technology budgets, while others expect providers to deliver measurable productivity gains rather than simply supplying more workers or billing more hours.

The IT services business model is changing

Traditional time-and-materials contracts typically charge clients according to the hours worked or resources deployed. AI tools can reduce the time required for certain tasks, creating tension when suppliers and customers use labour hours as the primary basis for pricing.

As a result, providers are increasingly being pushed to demonstrate outcomes, efficiency improvements and business value. These arrangements can create opportunities for vendors that successfully deploy automation, but they can also require them to absorb more delivery risk or accept lower prices for work that becomes easier to complete.

For employees, the transition is likely to increase the importance of skills in AI implementation, cloud automation, cybersecurity, data engineering and industry-specific software. It does not mean that all conventional IT roles will disappear; rather, the mix of tasks and capabilities demanded by clients may change as adoption expands.

HCLTech management has pointed to geopolitical uncertainty and volatility in enterprise demand as factors shaping its outlook. Those pressures make it difficult to assume that strong AI-related growth will translate immediately into uniformly stronger spending across the entire IT sector.

What the revised guidance means

The increase in the lower end of HCLTech’s FY27 revenue guidance indicates greater confidence than the company expressed at the end of the previous quarter. Management cited its order book and deal execution as support for the updated range of 2.5% to 4% growth in constant-currency terms. The upper end remains unchanged, signalling that uncertainty has not disappeared.

HCLTech also declared an interim dividend of ₹12 per share for FY27.

For investors, the next questions are whether the company can convert its bookings into recognised revenue, maintain margins and sustain AI-related demand while traditional technology spending remains uneven. The performance of other Indian IT firms will provide further clues about whether HCLTech’s results reflect a wider improvement or company-specific strengths.

The quarter leaves HCLTech with stronger profit growth, a higher minimum growth forecast and expanding AI-related business. But the sector’s next phase will depend on more than AI sales alone: customers must continue spending, new contracts must deliver acceptable returns, and technology providers must adapt their commercial models without weakening profitability.