HCL Technologies Ltd is restructuring its software products business as it looks to grow the legacy portfolio acquired from International Business Machines (IBM) more than threefold next fiscal year. The move comes even as the rise of artificial intelligence (AI) tools poses an existential challenge to software makers and services firms.
HCLTech, India’s third largest IT services firm after Tata Consultancy Services Ltd and Infosys Ltd, will reorganize its software products arm HCLSoftware into three core sub-groups: Xperience, Data and Operations, each with its own head and a specialized sales team, according to at least three people familiar with the matter.
HCLSoftware had ended FY25 with a revenue of $1.43 billion, comprising a little more than a tenth of the company’s $13.84 billion topline last year. The software business grew 3.3% on a yearly basis last fiscal and the company aspires to triple this growth by FY27.
According to the three people in the know, the Xperience division will include software focusing on app interfaces and marketing functions, while the Data sub-group will handle data analytics and data management software. The Operations sub-group will handle and back-end IT management products.
As part of this restructuring, Kalyan Kumar, currently the chief product officer of HCLSoftware, is expected to appoint chief revenue officers under him starting April. Former Actian chief executive, Marc Potter, is likely to be the chief revenue officer for the Data unit, whereas Marcelo Cabane, chief customer officer of HCLSoftware, is the frontrunner to head the Xperience wing, said the people cited above.
Mint could not independently ascertain details on the head of the operations unit.
An HCLTech spokesperson said, “As per company policy, we refrain from commenting on market speculations.”
Rise of AI tools from firms including OpenAI and Anthropic has thrown top software makers such as Salesforce into disarray on fear that these disruptive technologies could replace the need for customized software tools. Shares of almost all software product makers and IT services firms have fallen since the start of the year.
Recently, software giant Adobe Systems’ chief executive officer Shantanu Narayen decided to leave the company after nearly a two-decade stint. The exit was framed as a planned transition, but it also came at a time when Adobe is facing investor pressure and strategic questions over its positioning in the .
The software push
For HCLTech, the latest restructuring comes after it acquired two firms to boost its software offerings. The company acquired Florida-based data analytics firm, Jaspersoft, and Antwerp-based agentic AI startup, Wobby, for a total of $245.3 million in December last year.
The genesis of HCL’s venture into software products can be traced back to December 2018, when the company spent $1.8 billion to acquire six software products from IBM. This was its highest spending on acquiring specific software products and the largest purchase by value in the at that time.
However, the business growth has not exceeded 3.5% in the last four years. The company’s overall full-year growth was 4.3% in the last fiscal year, faster than its peers.
The restructuring plan also suggests the company is not just eyeing the products business as a margin booster. HCLSoftware has traditionally reported higher operating margins than the core IT services business due to low human-related costs. The company gets much of its software revenue from selling software products and their licences, using little manpower. While HCLTech reported operating margins of 18.3% last year, the software arm ended with margins of 26.6%.
Why this restructuring?
At least one of the persons cited above attributes the restructuring to the aim of boosting revenue growth, which has been slow due to the outdated nature of these products.
“HCL has lost key clients in the software arm to peers, including Microsoft, because its products were too old. For instance, the email tool HCL Verse was too slow. Sending direct mails and searching for specific mails was complex, forcing clients to shift,” said a second person with knowledge of the matter.
For now, the company expects the software business to grow at 2-4% in FY26. Much of this business is expected to come from the Data and Operations wing, which one of the people cited above said is “already growing upwards of 9%.”
An analyst said the company’s motive was to increase cross-selling of its software products in the AI age.
“A restructuring is needed when an existing model is not working. The rise of automation is raising concerns about the global SaaS model, and this rejig is partly to increase cross-selling of its software products to maintain and increase the client base,” said Amit Chandra, vice-president of HDFC Securities.
HCL is looking to include up to five software products within each of its sub-groups. For now, each of these sub-groups makes up about a third of HCLSoftware’s revenue, added the second person.
This restructuring has also led to a change in sales approach. According to the third person in the know, there were separate sales teams for specific software products, but there is a consolidated sales team now for an entire sub-group to cross-sell software.
A second analyst attributed HCL’s move to meeting AI-led client demands.
“What HCL is doing here is shifting from a portfolio of assets to a coordinated operating model, which is exactly what AI demands. The move to unified sales across Xperience, Data, and Operations is critical because enterprise buyers are no longer purchasing point solutions; they are buying outcomes tied to AI-enabled workflows,” said Phil Fersht, CEO of HFS Research, a Massachusetts-based IT research and consulting firm. “This is less about chasing AI hype and more about removing internal friction that was blocking AI-led growth.”