New Delhi: Google has reportedly reduced the size of its outsourcing contract with HCLTech by around $50 million annually as the technology giant accelerates its use of artificial intelligence, automation and vendor consolidation. The contract, previously valued at about $200 million a year, has been one of HCLTech's long-standing engagements for nearly a decade.

The reduction is expected to have only a limited financial impact on HCLTech, accounting for around 0.3% of its annual revenue. The company is not expected to carry out mass layoffs, with nearly 1,000 employees currently working on the Google account set to be redeployed to other projects, particularly in AI, cloud and digital transformation.

Industry experts say the move reflects a broader shift in global technology spending, with companies increasingly using AI to automate software development, testing and engineering tasks while reducing dependence on multiple outsourcing vendors. The trend is prompting businesses to reassess even long-term service contracts.

Despite the contract reduction, HCLTech recently secured a $1.14-billion multi-year deal with a European Fortune Global 50 client, highlighting continued demand for large-scale digital transformation projects. Analysts say the Google decision underscores the growing importance of AI capabilities, consulting expertise and innovation as key factors in winning and retaining enterprise technology contracts.

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