IT Services business requires strategic repositioning with focused market approach as client discretionary spending collapses due to geopolitical uncertainty and tariff concerns:

“One example, I can tell you is we were doing a large SAP program, which was very critical for the client, and this was in the consumer sector. And when the client heard about the tariff situation, they were bang in the middle of that, and they put the whole program on pause, not because they don't want to do the program, but they wanted to understand, get the certainties of the tariff situation. This has definitely impacted our revenue growth momentum across sectors and markets.”

— Srinivas Pallia, CEO

Regional performance reveals underlying market dynamics with Europe showing consistent decline while Americas demonstrates resilience:

“Well, Europe, I called out, has been a challenge for us. It has de-grown 7% year-on-year and 2.5% sequentially in quarter four. Our focus has been to stabilize and bring this region back to growth trajectory. Americas, which contributes close to 63% of our revenue, that piece of business has grown 1.2% in FY25.”

— Srinivas Pallia, CEO

Competitive landscape positioning shows increasing pressure as deal pipeline shifts toward cost takeout and vendor consolidation opportunities with inherent pricing challenges:

“The reality is there will be pressure on margins as we start to Q1, there are two headwinds. One, of course of a weak revenue environment. Two, that of a lot of deals that we've spoken about which are a part of our pipeline are actually cost takeout and vendor consolidation deals which inherently come with pricing pressure and therefore are also very competitively fought. So, we will prioritize growth, we will prioritize the fact that we would like to invest in our clients.”

— Aparna Iyer, CFO

Technology transformation approach demonstrates balanced strategy as AI productivity gains are reinvested into expanded client scope rather than flowing through as margin improvements:

“I am not seeing any significant impact either on revenues or margins. What we are doing is whatever benefits of GenAI that are applicable to our customers, in many of the cases, some of the times, the customers budgets are getting freed up. So we are actually using GenAI and also getting some incremental work done for the same customer.”

— Srinivas Pallia, CEO

Explicit warning that while margins have improved, continued ramp of larger, lower-margin deals will pressure profitability , at least in coming quarters.

“Our focus and energy is going to be on conversion, right? A lot of these deals will ramp up over the next 4 to 6 quarters…these larger deals…the margin profile is weaker compared to the rest of the portfolio. So, there will be some pressures…”

“We have done well in order to improve our profitability. For now, our number one priority would be growth.”

— Aparna Iyer, CFO

A candid admission that deal wins environment is highly competitive—pricing is under pressure. Margin sacrifices are not from pass-through arrangements (which can obscure true profitability), but from necessary investments in talent, onboarding, and client-specific integration.

“…some of these large deal wins are very competitive. There will be price pressures on that. What matters is, how do you transition and how do you execute these deals…each of these deals are extremely strongly contested. What’s good news is that we have won despite that competition…So, we and everybody has to innovate. We have to generate more savings and continue to stay competitive.”

— Srini Pallia, CEO

Important for yield-focused investors: payout commitment raised from 50% to 70% of net income over 3 years, showing focus on cash generation. Buybacks still possible, giving flexibility based on future market conditions.

“we had communicated that we continue to prefer dividends and buyback as a means of returning cash to our shareholders. For now, in the January quarter and this quarter, We have given out dividends. Buyback continues to remain an option and we could consider that at an appropriate time.”

— Aparna Iyer, CFO

Management signals resolution of Europe-specific disruptions, with visibility for improvement in H2, despite overall sector and macro headwinds. Key for investors watching for inflection points in lagging geographies.

“…In Europe, we have said that it’s a combination of both the macroeconomic environment, the discretionary spend environment, and a few clients’ specific challenges. Client specific challenges are now behind us…in the second half of this financial year, we should start seeing some stabilization and growth in Europe.”

— Aparna Iyer, CFO

Resume demand is sector-specific: recovery is limited to AI and data-driven projects in select verticals and repeat clients; other budgets remain flat.

“…broadly…discretionary spend is coming around data, AI and modernization…for example, we have won a deal…for a particular retailer, we call it fashion intelligence, right? AI will know what to sell and this is a large American fashion brand…Similarly…a Financial Services company…look[ing] at…smart credit decision, right…how can we make this more AI so that it is less error-prone and also...more accurate…”

— Srini Pallia, CEO