New Delhi, April 21 -- India's third largest IT services firm HCLTech reported a muted March-quarter performance, with steady profit growth offset by a sharp decline in deal wins and a cautious outlook on hiring, reflecting broader demand softness across India's IT services sector.

The company posted a 4.2% year-on-year increase in net profit to Rs.4,488 crore for Q4 FY26, while revenue rose 12.3% to Rs.33,981 crore, according to its latest earnings disclosure. Growth, however, came in below market expectations, with sequential momentum remaining largely flat due to delays in client decision-making and weaker discretionary spending in key markets.

A key drag was deal momentum. New bookings fell to $1.94 billion in the quarter, significantly lower than the previous quarter, signalling a slowdown in large transformation contracts. The company indicated that clients continue to prioritise cost optimisation, impacting the pace of deal closures.

At the same time, HCLTech is seeing rising traction in artificial intelligence-led engagements. Revenue from AI and advanced services has scaled up sharply, with growing demand for AI engineering and automation-driven solutions. The shift underscores a broader industry transition toward smaller, outcome-based deals anchored in productivity gains.

Hiring remained measured during the quarter. The company added 802 employees, taking its total headcount to about 2.27 lakh. Attrition inched up to 12.5%, though it remains lower than year-ago levels, suggesting stabilisation in the talent market. Like peers, the firm has slowed fresher hiring and is focusing on niche, high-skill roles aligned with emerging technology demand.

For the full year, HCLTech maintained a cautious stance, guiding for 1-4% revenue growth in FY27, citing a "fluid" demand environment and continued pressure on discretionary spending, particularly in the Americas and Europe.

The performance and outlook mirror trends seen across the sector. Larger peers such as Tata Consultancy Services and Wipro have also flagged uneven demand and slower decision cycles, even as deal pipelines remain active.

Mid-sized IT firms are also facing sharper pressure due to higher exposure to discretionary projects and fewer large contracts. Across the industry, companies are cutting back on volume hiring, focusing instead on automation and AI-led efficiencies.

Published by HT Digital Content Services with permission from TechCircle.