HGS Focuses on AI and Broadband Growth

Ashwin Thakker

— 2 min read
  • Outlook for Sales: Digital services pipeline exceeds 55% in Americas; CelerityX broadband contribution expected to reach double digits by FY26 end; aim to bring fiber broadband to 6 lakh villages in 3 years.
  • Outlook for Margins: Prioritizing margin expansion through digital services and AI adoption; expecting improved margin profile from technology services; price hikes in media business (Sept) to offset cost inflation; overall commitment to improve margins through efficiency and value-added services.

Hinduja Global Solutions (HGS) presented a strategic pivot in its Q1 FY26 earnings call, emphasizing a robust outlook driven by AI-enabled services and broadband expansion. The company projects significant shifts in revenue mix and margin improvements, signaling a transformative journey towards sustainable, high-value growth. This factual commentary provides insight into the company’s forward-looking strategies and anticipated market shifts.

Shifting to AI-Enabled Digital Services

HGS is actively transforming its operations, consciously prioritizing margin expansion over top-line growth. This strategic shift is reflected in their improved Q1 EBITDA margins, largely driven by a changing revenue mix dominated by digital services and the increased use of their proprietary AI platform, HGS Agent X. The company anticipates a gradual decline in revenues from traditional voice and non-voice services as AI-enabled operations gain traction and contribute more significantly. This evolution is aimed at optimizing the workforce and enhancing margins through increased efficiency and automation. The robust sales pipeline in the Americas, with over 55% in digital services, underscores this commitment.

"We have consciously decided to prioritize margin expansion over topline growth due to market changes, and this is reflected in our improved EBITDA margins in Q1." - Venkatesh Korla, Global CEO, HGS (Page 4)

This digital pivot is complemented by significant investments in next-generation broadband.

Accelerating Broadband and Strategic Investments

HGS's media business, through NXTDIGITAL, is embarking on an aggressive expansion of its fiber-based broadband footprint, with plans to extend high-speed connectivity to 6 lakh villages within the next three years. The wired and wireless home internet market in India is projected to reach $16.5 billion in five years, positioning HGS to become a top five player nationwide. CelerityX, their dedicated broadband division, has shown rapid growth and is expected to achieve a double-digit revenue contribution by the end of FY26. While the digital television segment faces headwinds, broadband growth is intended to offset these challenges, with a focus on stable ARPUs in Tier 2 and Tier 3 markets.

"By the end of this fiscal year, its contribution will be well into double digits as we expand the CelerityX business." - Vynsley Fernandes, Whole-time Director, HGS (Page 9)

Furthermore, HGS remains committed to strategic acquisitions to enhance its AI and overall capabilities, leveraging its cash reserves for targeted investments.

HGS is strategically transforming towards an AI-centric, high-margin business model. With a strong emphasis on digital services and an aggressive broadband expansion, the company is poised for sustainable profitability. Ongoing investments in AI capabilities, employee reskilling, and strategic acquisitions underscore a clear vision for enhanced revenue quality and long-term value creation. The management's commentary highlights a disciplined approach to navigating market shifts and building a resilient, future-ready enterprise.

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