HCL Technologies (HCLTech), India’s third-largest IT services provider, has adjusted its full-year revenue forecast, trimming the upper end while expressing confidence in consistent demand. Despite a challenging period for Indian IT companies marked by restrained client spending, HCLTech’s CEO, C. Vijayakumar, conveyed that there has been no significant change in demand sentiment.
The adjustments to the fiscal year 2024 revenue forecast, described by analysts as a challenging phase for Indian IT firms, now range from 5% to 5.5%, down from the earlier projection of 5% to 6%. Indian IT companies, including HCLTech, have encountered difficulties as clients prioritize cost-oriented deals over growth-focused ones.
Vijayakumar emphasized that macro indicators, such as potential U.S. Federal Reserve rate cuts, are unlikely to impact sentiment immediately and may take a few quarters to reflect in demand. The sentiment echoes the uncertainty expressed by the head of Tata Consultancy Services, who noted the difficulty in predicting a recovery in demand for IT services in the next two quarters.
During the quarter, HCLTech’s total contract value for new deals declined by nearly 18%, amounting to $1.93 billion compared to the previous year. Despite this, the conversion of older deals into revenue provided a boost to third-quarter results.
HCLTech reported a 6.2% YoY increase in net profit to 43.50 billion rupees ($524.80 million), surpassing the average estimate of 41.51 billion rupees. Revenue rose 6.5% to 284.46 billion rupees, exceeding street estimates of 281.26 billion rupees.
The company’s positive performance is attributed, in part, to a $2.1-billion technology deal with U.S. telecom company Verizon, which commenced revenue generation in November. Although facing setbacks, HCLTech remains optimistic about the growth prospects for Indian IT vendors, according to Biswajit Maity, Senior Principal Analyst at Gartner.