HCL close to hit all time high in deal pipeline
CEO of HCLTech, C. Vijayakumar stated that the deal pipeline of the company is close to recording an all-high high. HCL Tech is considered as India’s third largest IT services company. On 13th January, 2025, HCL Tech announced its third quarter report of the financial year 2025. It recorded a 5 percent year-on-year growth in operational revenue. Its third quarter earnings report is in line with market expectations.
Reasons for deal pipeline reaching an all time high
HCL Tech’s previous high peak was mainly due to its mega-deal of $2.1 million with Verizon Business. The deal was to provide managed network services. Unlike this previous peak, the current peak is strongly driven by the company’s growth in various sectors. It indicates that the success of reaching a peak is not fueled by one single big deal, but by multiple deals with various sectors. This all time high peak is driven by diverse growth.
The order books of HCL tech for the regions in America and Europe is recorded as all-time high. The company is observing strong growth in vertical sectors such as retail, technology, and consumer packaged goods services.
The reason for growth in diverse sectors is driven by strengthening of discretionary demand. Also rather than big deals, the multiple smaller deals in various sectors are secured in HCL tech. The reason for this is shortening of deal cycles leading to an increase in demand for small deals. This is also the reason for change in Annual Contract Value (ACV), but no change in Total Contract Value (TCV).
HCL Tech’s peer Tata Consultancy Services (TCS) also recorded a change in client trends due to a shortening timeline of deals.
Deals in the third quarter
HCL Tech acquired a deal worth $2.1 billion in the third quarter of the financial year 2025. It was mainly driven by its main services and software business. It secured twelve deals in the third quarter. The twelve deals consist of seven deals from services business and five deals secured from HCL software. The considerable number of deals includes features related to Artificial Intelligence (AI) and Generative AI (Gen AI). It indicates that many deals are driven by AI-led transformation. The deal is spread across various areas such as engineering, R&D services, digital application business, and digital process operations. The AI and Gen AI play a critical part in the company’s operational activities. HCL tech’s some of the largest deals are driven by AI-led transformation only. One of the reasons for this is that Gen AI has a strong practical advantage due to the significant fall in cost incurred from the beginning of the year 2023.
In terms of its broad-based growth in diverse sectors, the company also registered a growth in client spending in the financial services sector.
The HCL tech expects the impact of wildfires in Los Angeles is not much significant on their contracts with the US insurance companies. Further, the company is recording an increase in small as well as large deals in the Europe region. This indicates that healthy growth in the deal pipeline with both America and Europe is recorded across various sectors. This also hints at favorable future growth of HCL tech’s small and large deals with both these regions.
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