Financial services that led the growth for the third largest Indian IT services firm HCLTech is set to see some revenue impact in the first quarter of FY25, said C Vijayakumar, CEO and MD, HCLTech, in an interaction with ET. Led by a 12.1% YoY growth in the financial services vertical, HCLTech delivered the highest on-year growth in the Indian IT industry at 8.3% in FY24.
While being upbeat about HCLTech’s industry leading growth, he also called out headwinds in the current fiscal in the financial services vertical and the slowdown in discretionary spending. Other large India IT services companies have reported a slower growth rate than HCLTech in FY24.

Within BFSI, larger rivals TCS and Infosys reported a 3.2% YoY decline in growth for the quarter with a 32% market share while Infosys, with over 26% share, posted a 8.4% YoY degrowth in Q4FY24. Younger peer Wipro‘s BFSI growth also dipped by 8.9%.

The firm saw strong growth in its financial services vertical in a difficult environment, said Vijayakumar. The vertical contributes about 22% of the topline. But he added there would be certain headwinds in the first quarter. “We also had divested the joint venture with State Street. So, that will have some impact on financial services.” These headwinds will moderate in the later quarters, he said.

Global financial institution State Street Corporation last year announced that it would acquire HCL’s 49% equity stake held by Investments UK Ltd in their JV State Street HCL Services. The joint venture, established in 2012, provided business operations services. The transaction was completed effective April 1, 2024.

The vertical has a lot of large clients and last year there were certain cost efficiency measures and clients scaled down some of the programmes that they were doing, and that’s why there was a decline, he said, explaining the lower growth. “But now we see a lot of new programmes getting initiated in tech verticals, and basing (factoring) good pipeline, I expect this year to be good.”

“Our business has got a good mix of programmes which are discretionary in nature and a good mix of annuity kind of businesses. Now, as we see, we have a good pipeline of large deals, which we expect will materialise in the next few quarters,” Vijayakumar said.The Noida headquartered firm saw a booking of $2.3 billion TCV in Q4. “These are all net new deals, and do not include renewals and rate cards. So, all of this will drive the revenue. We have assumed that the discretionary spend environment would be like last year, which means it would be weak. And that’s the broad thinking. We think we will have broad-based growth. We will grow a lot more in telecom compared to other segments, but it will be broad based growth.”

Speaking about GenAI, he said, the company has set up a separate Centre of Excellence for AI and GenAI under Vijay Guntur, CTO, and head of ecosystems at HCLTech. “GenAI is definitely a big focus and there is a huge focus on training. There are two types of training – one is of course, a lot of people need to be able to use Gen AI like copilot and other things. And then you have the whole developer community people who can work on developing on top of LLMs (large language models) and applications and integrations. So, we are focused on both the sets of training. We have at least close to 50,000 people covered under these types of training in the last financial year.”

Financial services that led the growth for the third largest Indian IT services firm HCLTech is set to see some revenue impact in the first quarter of FY25, said C Vijayakumar, CEO and MD, HCLTech, in an interaction with ET. Led by a 12.1% YoY growth in the financial services vertical, HCLTech delivered the highest on-year growth in the Indian IT industry at 8.3% in FY24.
While being upbeat about HCLTech’s industry leading growth, he also called out headwinds in the current fiscal in the financial services vertical and the slowdown in discretionary spending. Other large India IT services companies have reported a slower growth rate than HCLTech in FY24.

Within BFSI, larger rivals TCS and Infosys reported a 3.2% YoY decline in growth for the quarter with a 32% market share while Infosys, with over 26% share, posted a 8.4% YoY degrowth in Q4FY24. Younger peer Wipro‘s BFSI growth also dipped by 8.9%.

The firm saw strong growth in its financial services vertical in a difficult environment, said Vijayakumar. The vertical contributes about 22% of the topline. But he added there would be certain headwinds in the first quarter. “We also had divested the joint venture with State Street. So, that will have some impact on financial services.” These headwinds will moderate in the later quarters, he said.

Global financial institution State Street Corporation last year announced that it would acquire HCL’s 49% equity stake held by Investments UK Ltd in their JV State Street HCL Services. The joint venture, established in 2012, provided business operations services. The transaction was completed effective April 1, 2024.

The vertical has a lot of large clients and last year there were certain cost efficiency measures and clients scaled down some of the programmes that they were doing, and that’s why there was a decline, he said, explaining the lower growth. “But now we see a lot of new programmes getting initiated in tech verticals, and basing (factoring) good pipeline, I expect this year to be good.”

“Our business has got a good mix of programmes which are discretionary in nature and a good mix of annuity kind of businesses. Now, as we see, we have a good pipeline of large deals, which we expect will materialise in the next few quarters,” Vijayakumar said.The Noida headquartered firm saw a booking of $2.3 billion TCV in Q4. “These are all net new deals, and do not include renewals and rate cards. So, all of this will drive the revenue. We have assumed that the discretionary spend environment would be like last year, which means it would be weak. And that’s the broad thinking. We think we will have broad-based growth. We will grow a lot more in telecom compared to other segments, but it will be broad based growth.”

Speaking about GenAI, he said, the company has set up a separate Centre of Excellence for AI and GenAI under Vijay Guntur, CTO, and head of ecosystems at HCLTech. “GenAI is definitely a big focus and there is a huge focus on training. There are two types of training – one is of course, a lot of people need to be able to use Gen AI like copilot and other things. And then you have the whole developer community people who can work on developing on top of LLMs (large language models) and applications and integrations. So, we are focused on both the sets of training. We have at least close to 50,000 people covered under these types of training in the last financial year.”