HCLTech plans restructuring, to reduce overseas headcount in FY26

HCLTech

IT services giant HCLTech is all set to restructure its operations, including a planned reduction in headcount outside India over the next few quarters, the management said on July 14.

The Noida-headquartered firm, addressing a press conference after declaring its Q1FY26 earnings, hinted that the move is aimed at achieving operational agility and protecting margins amid a shifting technology landscape dominated by artificial intelligence (AI).

“There will be some talent ramp down that has happened, especially in some of the geographies outside India. So that will also be part of the restructuring plan. More details we will share once we have a concrete timeline and plan agreed,” HCLTech CEO and MD C Vijayakumar said.

The restructuring will occur in phases across the second and third quarters, with some impact extending into the fourth quarter. Management explained that the "talent ramp down" would focus on geographies outside India and be accompanied by the optimisation of underutilised facilities, many of which were inherited from past acquisitions.

The company aims to restore operating margins to a range of 18-19 percent, after reporting a lower-than-expected margin of 16.3 percent in Q1.

The margin decline was attributed to several factors, including a delay in deal ramp-ups, increased bench strength, and a mismatch between skill supply and demand in different regions. A one-time impact from a client bankruptcy also contributed.

Moreover, HCLTech also reduced its FY26 revenue guidance to 3-5% from its earlier projection of 2 percent to 5 percent given at the end of FY25.

The restructuring will be across people and non-people assets and will be in India as well.

The company disclosed that over 127,000 employees are now trained in foundational AI, with 42,000 trained in advanced generative AI and around 12,000 actively working on related projects.

Nevertheless, the dual focus on investing in future capabilities while restructuring highlights a balancing act.

Although HCLTech said macroeconomic conditions remain the same, its largest rival, Tata Consultancy Services (TCS), said conditions have deteriorated.

Additionally, HCLTech is changing its fresher hiring strategy. Not quantity, but quality and specialisation will determine the candidate’s eligibility, also promising a 4 times higher pay package than regular fresher hires.

HCLTech is internally calling this group of freshers, the ‘elite cadre’, reflecting the need for IT companies to rethink hiring as artificial intelligence (AI) and its adjacent new-age technologies, such as data analytics and cybersecurity practice, disrupt the industry.

Meanwhile, the Noida-based company, on July 14, reported 10 percent decline in consolidated net profit at Rs 3,843 crore for the quarter ended June 30, 2025. The firm reported consolidated net profit of Rs 4,257 crore in the year-ago period.

HCLTech reported a net reduction of 269 employees during the June quarter (Q1FY26), bringing its total workforce to 2,23,151. Despite the marginal decline in headcount, HCLTech onboarded 1,984 freshers in Q1.

Voluntary attrition on a last twelve months (LTM) basis stood at 12.8 percent, unchanged from the same period last year.