HCLTech bets big on sovereign AI with strategic investment in Sarvam AI

HCLTech has made a strategic investment in Indian AI startup Sarvam AI, acquiring a 10.5% stake in a deal that values the company at approximately $1.5 billion. The move underscores HCLTech’s growing focus on artificial intelligence, particularly in enterprise and sovereign AI applications, as organizations worldwide seek secure, scalable, and localized AI solutions.

Speaking to ET Now, HCLTech CEO and Managing Director C Vijayakumar described the investment as far more than a financial transaction, positioning it as a long-term strategic partnership designed to help enterprises overcome some of the biggest barriers to AI adoption.

“First of all, this is a strategic partnership that we have built, and the investment is really to put some true skin in the game and really make this a very important relationship for us.”

Enterprise AI Moving Towards Hybrid Models

According to Vijayakumar, while AI technology has evolved rapidly over the past several quarters, enterprise adoption has not kept pace due to concerns around data security, cost efficiency, and deployment challenges.

He believes the future of enterprise AI will be built around hybrid architectures that combine private small language models (SLMs) trained on proprietary enterprise data with frontier AI models used for advanced research and broader knowledge tasks.

“The future enterprise AI architecture is going to be a hybrid architecture where, for a lot of tasks that are within the enterprise, you can train a private language model with the data of your own enterprise and really use it in an air-gapped manner within your enterprise without having data security concerns and also achieving very good price performance.”

The partnership with Sarvam AI is expected to strengthen HCLTech’s ability to deliver such hybrid AI solutions to enterprises globally.

Sovereign AI Emerges as a Major Opportunity
Beyond enterprise applications, HCLTech sees significant potential in sovereign AI initiatives as governments increasingly seek to develop domestic AI capabilities.

Vijayakumar highlighted India as a particularly attractive market, with opportunities spanning banking, insurance, government technology, and public sector agencies.

“India, we see a tremendous opportunity. Sovereign AI is one more big pillar of growth vector for us, both within enterprises, banking, insurance, GovTech, and other commercial enterprises, as well as across state and central government agencies.”

Valuation Backed by Explosive Growth
Sarvam AI’s valuation has drawn attention given the premium typically associated with fast-growing AI companies. Vijayakumar pointed to the startup’s rapid revenue growth as a key factor behind the investment.

The company reported provisional FY26 revenue of ₹45 crore, compared with ₹1.5 crore in FY25, representing a dramatic jump within a year.

“This is a 30x jump in revenue in one year.”

He added that transaction volumes on Sarvam’s platform have continued to grow exponentially in recent months, reinforcing confidence in the company’s growth trajectory.

“Sarvam is on a terrific growth trajectory. The quality of the platform that they have built is fantastic and the growth trajectory is very-very promising.”

Building AI Solutions for Enterprises
HCLTech plans to combine its deep enterprise expertise with Sarvam’s AI models and multilingual capabilities to create industry-specific solutions.

The company believes that AI adoption is not simply about deploying models but also about helping enterprises securely train, manage, and orchestrate AI systems while balancing the use of private and frontier models.

“Every company should really think of themselves as an AI company because it is a very-very big technological capability.”

The partnership is expected to focus on creating new enterprise use cases and accelerating AI deployment across industries.

Strengthening Internal AI Capabilities
HCLTech has already embraced AI across its operations through partnerships with leading technology providers, including OpenAI, Google, and Microsoft. Vijayakumar said Sarvam will add another layer of capability to the company’s AI ecosystem.

“We all strongly believe our own enterprise AI architecture will be a hybrid architecture.”

He revealed that HCLTech is also developing its own IT operations-focused small language model, which could be deployed across multiple client environments.

“There will be some very sensitive use cases for which we think a small language model is going to be useful, and we are also building an ITOps SLM which will be very effectively deployed in many-many clients.”

AI to Offset Industry Deflation Pressures
As automation and AI continue to reshape the technology services industry, concerns remain about pricing pressure and revenue deflation. Vijayakumar believes emerging AI opportunities will more than compensate for those headwinds.

He noted that HCLTech delivered the strongest growth among large technology services firms in the previous financial year and is now pursuing several new growth areas, including AI factories, physical AI, semiconductor services, and proprietary intellectual property.

“Sovereign AI adds another big growth vector for us to chase.”

“I am sure all of this will more than offset and continue to create a good net growth for us.”

Focus on Execution Rather Than Ownership
Despite speculation about increasing its stake in Sarvam AI in the future, Vijayakumar emphasized that the success of the partnership will depend on execution rather than ownership levels.

“This partnership does not just work because you invest and take a stake. It really needs a meeting of minds.”

“It needs a lot of work on the ground, building joint solutions, and really creating that real traction in the market.”

As enterprises increasingly seek secure, multilingual, and sovereign AI capabilities, HCLTech’s partnership with Sarvam AI positions the company to capitalize on one of the fastest-growing segments of the global technology landscape.