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HCLTech Narrows Annual Revenue Outlook as Deal Momentum Strengthens

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HCLTech narrowed its annual revenue growth forecast on Monday, citing a stronger deal pipeline and a modest beat in quarterly revenue, even as global demand for discretionary technology spending remains muted.

The Indian software services exporter reported a 13.3% year-on-year rise in revenue to 338.72 billion rupees ($3.8 billion) for the quarter ended December 31, exceeding analysts’ average estimate of 330.46 billion rupees, according to LSEG data. New deal bookings during the quarter climbed to $3 billion, prompting HCLTech to revise its full-year revenue growth outlook to a range of 4% to 4.5%, compared with its earlier forecast of 3% to 5%.

Chief Executive C Vijayakumar said client spending is selectively returning in areas that support artificial intelligence adoption, though he cautioned that overall demand is unlikely to rebound to post-pandemic peaks. “While uncertainty persists in the global market leading to slowing growth, the fundamental demand for technology as a driver for business transformation remains structurally intact,” he said during a post-earnings briefing.

Analysts viewed the updated outlook as a positive signal. Jefferies said the revised guidance provides “stronger visibility for growth in FY27,” while Centrum Broking analyst Piyush Pandey noted that the results were encouraging despite the December quarter typically being seasonally weak for IT firms.

India’s $283-billion IT services sector continues to face headwinds from cautious client spending in the United States, where macroeconomic uncertainty and geopolitical tensions have delayed non-essential technology investments. Earlier on Monday, industry leader Tata Consultancy Services also posted revenue slightly above expectations. Peers Infosys, Wipro, and Tech Mahindra are scheduled to report earnings later this week.

HCLTech’s quarterly profit fell 11.2% to 40.76 billion rupees, missing analysts’ forecasts, after the company took a one-time charge of 9.56 billion rupees linked to the impact of India’s new labour codes.

India’s Wipro tops quarterly revenue estimates on strong Asia and Americas growth

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Indian IT major Wipro Ltd. posted stronger-than-expected results for the July–September quarter, supported by solid performance in its Asia-Pacific and Americas communications divisions and a healthy pipeline of large contracts.

The Bengaluru-based company reported a 1.8% year-on-year rise in consolidated revenue to 226.97 billion rupees ($2.58 billion), slightly above analysts’ estimates of 226.90 billion rupees, according to LSEG data. Wipro said it expects revenue growth between -0.5% and 1.5% for the current quarter, in line with market expectations, implying revenue of $2.59–$2.64 billion.

Net profit for the quarter rose 1.2% to 32.46 billion rupees, just below the forecast of 33.01 billion rupees. Among its major markets, Asia Pacific led growth at 3.1%, followed by Americas One at 0.5%, while other segments saw moderate momentum.

Wipro benefited from securing two mega deals worth over $500 million each — one with the UK’s Phoenix Group and another with a U.S.-based telecom provider — making it the only top-five Indian IT company to achieve two such contracts this fiscal year.

The company’s total deal bookings reached $4.69 billion, down from $5 billion in the previous quarter but up significantly from $3.6 billion a year earlier.

Peers Tata Consultancy Services (TCS) and HCLTech also exceeded revenue forecasts earlier this month, citing stronger demand in the second half of the fiscal year, signaling a broad recovery for India’s IT services sector.

India’s IT Sector Faces Uncertainty as U.S. Considers Outsourcing Tax

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India’s $283 billion IT industry is bracing for turbulence after U.S. lawmakers introduced a proposal to impose a 25% tax on outsourcing, a move that could reshape decades of cross-border technology contracts. Analysts and lawyers warn the bill could delay deals, trigger renegotiations, and heighten regulatory risks for a sector that makes up over 7% of India’s GDP.

The Proposal

Republican Senator Bernie Moreno introduced the HIRE Act, which would:

  • Impose a 25% tax on U.S. companies that outsource IT services abroad.

  • Bar companies from claiming outsourcing payments as tax-deductible expenses.

  • Funnel revenue into U.S. workforce development.

In some scenarios, combined federal, state, and local taxes could raise outsourcing costs to as much as 60%, according to EY India’s Jignesh Thakkar.

Why It Matters

India’s IT giants — including TCS, Infosys, HCLTech, Tech Mahindra, Wipro, and LTIMindtree — count Apple, Citigroup, FedEx, Cisco, and Home Depot among their major U.S. clients. Outsourcing has long been criticized in the U.S. for shifting jobs overseas, but it remains vital to companies facing domestic labor shortages.

The bill comes at a difficult time for Indian IT firms already struggling with weak revenue growth as inflation, tariffs, and deferred tech spending weigh on their U.S. business.

Industry Reaction

Analysts expect a wave of lobbying and legal challenges if the bill advances. “A bill like this would probably face a lot of backlash from U.S. companies that rely heavily on outsourcing,” said Sophie Alcorn, CEO of Alcorn Immigration Law.

Others anticipate dilution: “More likely is a narrowed or delayed version of the bill,” said Phil Fersht of HFS Research.

Still, the uncertainty is already affecting contracts. “When political noise turns into regulatory risk, clients quickly insert contingencies, reopen pricing and demand delivery flexibility,” said Saurabh Gupta of HFS Research, warning that signing and renewal cycles will slow.

Global Capability Centers at Risk

The proposed tax could also impact U.S. firms’ global capability centers (GCCs) in India, which have evolved from low-cost back offices into innovation hubs for R&D, finance, and operations. “It will be hard to pull back from existing work, but new set-ups and expansion may get impacted,” said Yugal Joshi of Everest Group.

Outlook

Experts note the U.S. still lacks sufficient skilled tech labor, meaning outsourcing remains a structural necessity. As Bharath Reddy of CAM put it: “The lack of availability of appropriate human capital in the U.S. will continue as a problem — one that can be addressed in the near future only through outsourcing.”