FY26 closed 3.9% / 17.2% EBIT vs raised mid-year 4-4.5%.

On North America performance this quarter - we have seen a decline of 128 million quarter-on-quarter, but verticals don't seem to show a sharp decline. Can you talk about what you are seeing in North America and was there material weakness compared to expectations?

If you remember last quarter, we had called out that there was one large program which got completed in the Retail CPG segment. And we did call out that that will have an impact in Q4. And that impact is probably playing out in the US business. Across the board we saw the quarter proceed as we had envisaged. There weren't any major surprises during this three months.

The caution baked into your guidance - is that something you have not really seen yet, but you think might happen looking at the deal deferrals you referred to?

Yes, that deal deferral was not directly related to the tariff. It was based on general environment. The client decided not to go forward on that. And we did not see any cancellation or any specific rundown during the last three months. The lower end, we believe the environment will deteriorate from where we are. And that's what the 2% represents. The midpoint also we assume the environment will deteriorate, but it assumes that a couple of large deals in the pipeline are likely to close in Q1. At the higher end, we believe the environment could remain the same and we will do well in Q1.

On the ER&D side - last year we had seen decline. How is the environment looking for that segment?

It's good. We are very happy to report that our year-on-year booking in ER&D has grown 75%. Our joint go-to market across most verticals are delivering very good results. We think it's going to be a good growth year for our ER&D Services purely based on what we have done and what we have seen. Obviously, the macro might have some impact, but as we see it now, we feel good about how ER&D will play out in FY26.

Median odds of US recession are 50-60% but that gloom is not reflecting in your guidance. What is driving this disconnect? Is it because industry is coming off back-to-back low growth years and easy comps put a floor?

So far we haven't seen any impact, but we are all reasonably certain that the environment will deteriorate. The recession is the most likely outcome. That's what is baked in the lower end of our guidance, which does not assume any meaningful growth from our exit. Our forecast is also driven by the Q4 bookings and we have had a good booking and it will definitely convert into revenue. 2% to 5% is still a very modest kind of guidance because we were used to much higher numbers in the past.

When Ukraine war and Fed hiking cycle started in Feb-March 2022, deal-bookings deteriorated by April-May. How has been deal-booking and pipeline discussions in March and April months compared to December '24 or January '25?

It may be contrary to what everybody expects. 50% of our $3 billion booking happened in March. So we did see a very good closure. There is a sense of urgency. It is quite possible this environment might make people make decisions faster, especially on efficiency-led, AI-led opportunities. So it could play out either ways.

On higher wallet share with AI-led efficiencies passed back - level of deflation, what happens to revenue run rate, and who are you getting wallet share from?

Level of deflation depends on what services we are delivering. In software development, we are looking like 20% to 25% when we implement and maturity picks up. In digital process operations, agentic solutions are very real - it can be anywhere between 20% to even 50%. The wallet share gained - most of the renewals we did this quarter had incremental business that was more than the deflationary impact.

On the net new deal wins - has there been any bunching up of decisions which led to significant increase in deal win this quarter? Or do you expect this as regular phenomena?

I don't think there was a bunching up. These were deals in the pipeline, some cooked for many quarters. They converted during the quarter. Our aspiration was to significantly increase our booking from the two billion kind of range. As I called out last time, our pipeline was near all-time high. This deal was just above our threshold of mega deals. Even without the mega deal, we would have delivered a very strong booking. We have good number of opportunities which we think will close in Q1 or H1.

From a 1Q perspective, will you see usual seasonality or will it be covered by strong ramps from the mega deal?

We do expect Q1 going to be better than what it was last year, but we will have a usual seasonality again playing out. C. Vijayakumar added: It wouldn't be like last year, last year was an outlier. We would revert back to the normal small seasonality that will be there in Q1. It's not like a people transfer type of opportunity - we need to ramp up and that will start like a couple of weeks from now.

From AI perspective, you have been talking about higher revenue per employee. This reduction would be more from offshore or onsite? Will that mean any change on the delivery model?

If you see this year FY'25, revenue grew in Services 4.8% and headcount declined roughly 2%. So that's the nonlinearity that we want to build on an ongoing basis. We envisage this execution model to be less location agnostic as we kind of get to a mix of 50% people and 50% agentic resolutions. The location thing will become less important, at least for half of the work.

On vertical distribution - peers have called out specific weaknesses in Manufacturing and Retail. What are we hearing in these verticals - will this be the brunt of the entire market and spillover to other verticals?

We did not see an impact in the last quarter, but we do see Retail and Manufacturing, including Auto to be impacted. But this impact is going to spill over to all the verticals very, very quickly. It might show up in Retail and Manufacturing to start with, but it's only a quarter lag before it has an impact on other verticals.

Is the uncertainty client conversations a temporary one waiting for end of 90-day period, or do they believe it's a longer story?

From a discretionary spend, the little bit of thinking is to wait and watch because they don't have clarity on how this would play out. That's the way I think.

On the quarter - was March weaker than Jan and Feb? Did you see any kind of weakness in business activity or deal momentum?

As I said, we had a large part of our bookings happen in March. Obviously, these were programs that we have been working on for a long time. So we didn't see anything specific reflective of the upcoming uncertainties except one large deal which was delayed or deferred not directly related to tariffs but due to the broader environment.

Guidance at start of year was 3% to 5%. On organic CC terms you are just about closer to the lower end. Were there things during the year which happened unexpectedly?

Yogesh, we had very clearly articulated in January, 50 basis points is what inorganic is. So if you look at even from the start of the year, we are above the midpoint of the guidance that we gave. I can discuss this more with you later.

What is the organic growth guidance for FY26 given that the HPE asset acquisition closed on 2nd December and there will be practically a nine-month impact in next year of this acquisition?

Sumeet, we expect an additional ~1% impact on our next year's guidance because of CTG acquisition.

On ER&D side - very strong growth this quarter and 75% order booking growth in FY25. What's happening in your ER&D business given automotive/Manufacturing space and ER&D considered discretionary?

75% increase in booking, a big part happened in Q4 because we had one large deal and Western Union with significant digital engineering component. The current growth is influenced by the full quarter impact of CTG integration. Platform engineering, modernization is one thing. There is existing work in semiconductor and other firms. To enhance capacity or do more with less, they are looking at providers like us. We had success in telecom, tech vertical, and a couple of Manufacturing clients on the PLM side.

On the GCC opportunity - some deals are around setting up GCCs in India. What kind of margins are you seeing - similar to corporate average? Is it loss of opportunity or new opportunity?

We have had very good success in GCCs in the last six months. A very large company out of Germany has chosen us to build their entire digital capability. These are at company level profitability. We have enough opportunities in the pipeline where it's a GCC starting from scratch for a large firm and we become the partner. Obviously they may insource a percentage of it and we have made sure that the long-term for us is very meaningful in these opportunities.

Given that this insourcing can happen at any point in time from the GCC, does that reduce your annuity revenue visibility in the medium to long run?

I don't think the constructs are insourcing anytime. That's not the construct that we are working on. We have various models where it is meaningful at least three year or five year and a percentage that can get insourced. Net-net, I think it is going to be a positive impact so far.

On software business - 3.5% growth this year, improved margins by ~200 bps. Looking at guidance, software seems to grow similar to Services. What is fundamentally changing for software to grow at par with Services and improve margins?

The Services growth has come down, so software has become on par with this. Software has also accelerated, from broadly 1% to 2%, now it is 3.5%. We have done tremendous work in modernizing, repositioning our analyst ratings - most products now in leaders quadrant. We are significantly expanding software business in India, Middle East, and emerging markets. Products like marketing automation - we are the best solution available for large scale customers. Several banks in emerging markets are existing clients and we are migrating to cloud. There is some headwind due to conversions to term and other things. We feel good - our strategy is working.