eClerx Services Limited (ECLERX) Earnings Call Transcript & Summary

Hi, everyone. Good day, and welcome to Q4 FY '25 Earnings Call of eClerx Services Limited. Please note that this webinar will be recorded. To take us through the results today and to answer your questions, we have with us the top management of eClerx represented by Kapil Jain, Managing Director and Group CEO; and Srinivasan Nadadhur, Chief Financial Officer. We will start the call with brief opening remarks by Kapil, followed by Srinivasan, who will be sharing the financial update, and we will then open the floor for Q&A session. As usual, I would like to remind you that anything mentioned on this call that gives any outlook for the future or which can be construed as forward-looking statements must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with the SEBI and subsequent annual reports, which you can find on our website. Having said that, I will now hand over the floor to Kapil Over to you, Kapil.

Thank you, Asha, and good evening, everyone. I'm pleased to share the highlights of our performance in FY '25 Q4 and full year. Last year, around the same time, I laid out our 3-pronged strategy, which revolves around strengthening sales operations, mining existing clients, winning new logos and enhancing our market positioning. We have made good progress on all these 3 fronts. We have also elevated our visibility through analyst recognitions and our new industry service aligned go-to-market approach. Now coming to numbers. We reported strong revenue growth in Q4. Operating revenue was INR 104.9 million, up 4.2% sequentially. In INR terms, Q4 operating revenue was INR 8,983 million, up 5.2%. Margins came in stronger as well. EBITDA for Q4 was INR 2,505 million at a margin of 27.3%, up 9.8% sequentially. PAT for the quarter was INR 1,522 million at a margin of 16.6%, up 11% sequentially. For the full year, revenue was INR 397.6 million, up 12.3% over FY '24 in dollar terms. EBITDA was INR 8,946 million, up 6.4% and the PAT of INR 5,411 million was up 5.8%. Our deal wins for the quarter were $51 million. And for the full year, we did $140 million. Analytics and automation went up by 17% year-on-year. As we mentioned in the last quarter, we opened a new delivery center in Lima, Peru. We have also opened a delivery center in Cairo, Egypt. Operations in Lima have already commenced. These new centers will allow us to capture larger share of our existing clients' wallet. I would like to share some commentary and outlook about our 3 businesses. In BFSI, we see broad opportunities across large and small new clients, particularly in regulatory and compliance and change. Market volatility has increased due to the tariff and the uncertainty, certain transaction volumes in some domains around our trading operations. Fashion and luxury continues to remain under pressure with the U.S. market underperforming and inherent weakness in the China market. Hi-Tech manufacturing and distribution remains positive. Client budgets are concentrated on digital transformation and customer experience programs. Tariff changes are consuming management bandwidth of our clients in manufacturing and distribution segment and may lead to some slowdown in decision-making. Momentum around new logo acquisition and cross-sell of customer service continues and our cross-sell strategy seems to be working well. We have also started delivering our care services from Manila and Lima. And as I mentioned a little while earlier, we will start shortly from Cairo as well. On technology, we see a continued interest in our productized service offerings of Compliance Manager and Market Intelligence. Coming over to some of the recognition from our clients. We have been named as Partner of the Year 2024 by a leading Fortune 100 global media and telecom company. Additionally, we won 4 other awards at the same event. This extraordinary achievement is a testament to our customer focus, innovation and exceptional service delivery. The strong finish to the year gives us momentum for the next fiscal, and we are cautiously optimistic about our prospects for FY '26. I also want to share the 2025 marks the 25th year of eClerx. I have completed 2 years here. As PD, Anjan and I reflect on this journey, we feel immense gratitude to all those who have contributed to the firm's success. eClerx is what it is today because of our people, our employees, our clients, our shareholders and the community partners. We are thankful to our clients and partners for having placed their trust in us and for giving us the opportunity to be part of their journey and helping them stay relevant. We look forward to their continued support in the future. Thank you, and over to Srini for a more detailed commentary.

Thank you, Kapil, and good evening, everyone. As Kapil mentioned, the performance this quarter has been strong on both the revenue and the margin front. In constant currency terms, operating revenue was up 4.4%. Including other income, total revenue was INR 9,165 million, up 4.7% sequentially. Other income for the quarter was INR 183 million, primarily owing to apprentice benefits from government skill development initiatives. On a Q-on-Q basis, there was margin expansion in both EBITDA and PAT of about 130 and 90 bps, respectively. This was driven by the strong revenue uptick in the quarter and the reduction in G&A because of lower rental and technology costs. There is a onetime reclass of 120 bps from delivery to S&D. And so, the right way to look at the Q-on-Q figures is that S&D costs are flat, while delivery is down by about 100 bps. EBITDA for the full year came in at 26%, which is right in the middle of our stated range. From this quarter onwards, as you would have noticed in the investor presentation, we are reporting revenues in 5 industry buckets: BFSI, CMT, Hi-Tech and M&D, which is a B2B-facing business, fashion and luxury and retail, which is a B2C-facing business and emerging. We hope this will give investors a better view of the work we do. Please also note that the analytics and automation figures have been restated by removing revenue, which we felt did not belong in this bucket. Coming to other metrics, DSO is in the same range as the preceding few quarters. Staff utilization is the same as the last quarter. Client concentration has gone up to about 64% for top 10 clients. Seating capacity has gone up somewhat with the new client facilities in Lima and Cairo. Exit headcount has increased by 4% to 19,400 and attrition is at 24%, which is par for the course. Thank you, everyone. And with this, we conclude our prepared remarks. We can now move over to the Q&A. Over to you, Asha. Thank you.

[Operator Instructions] We have first question from the line of Mihir Manohar. He is from Carnelian.

Congratulations on great set of numbers. Kapil, largely wanted to understand on the deal win side, I mean, $50 million of deal win for the quarter. I mean, what part of the deal -- I mean, is it more granular? Or is it, let's say, coming from concentration -- concentrated accounts? How to understand that? And which area is driving this deal win? I mean, is it customer support? Is it capital markets? Is it regulatory? How to understand that?

So, Mihir, I think for the quarter, the deal win, like I said, is $51 million and for the year is about $140 million. The wins are around our key focus areas, which is reg and compliance, customer operations because here, we see larger opportunities, both on-site and offshore. And in terms of FY '26, we definitely expect year-on-year to do better. I think we don't look at quarter-on-quarter numbers. We are looking at medium- to long-term. And the directionality, like I said, the strategy which we laid out is working well, both on cross-sell, upsell and mining our existing accounts.

Sure. Is there any more concentration on these deals? Or is it spread out?

This is like there may be some like with a few clients. But I think overall, if you look at -- like we have said in the past, don't look at quarterly number to see a trend. If you look at on a yearly basis, it's fairly well spread out.

Sure. Understood. Fair point. Just on customer ops side, I mean, would the margins be similar to the company levels? Or should one see some -- given the fact that this is, I mean, largely a commodity part of the piece. So how to understand margins for customer ops versus rest of the business?

Yes. So, Mihir, we don't disclose margin at an individual vertical level. Like I had said that our margin will continue to maintain in the zone 24% to 28%. I know you guys have requested us to narrow the range. We revisited it, but we'll continue to guide between 24% to 28% for FY '26. At a portfolio level, we will manage that margin and also show a sequential growth on EBITDA and PAT.

Sure. Fair point. Just one last question on this. Is this coming from existing clients? Or is this from new clients?

It's coming from both existing and new, which is what I said in the beginning that the strategy that we had laid out to mine existing clients, cross-sell services as well as open new logos is working well.

Understood, sure. And just on the Trump administration side, last time during Trump 1.0, we had seen, I mean, a couple of accounts resorting to in-sourcing. Do we see that challenge during the Trump 2.0 administration? Any clarification around that? Any client interaction, customer interaction around that would be helpful.

Sorry, can you elaborate on the question? I'm not sure...

Sure. So, I mean, during the first term of Trump administration, we had 1 or 2 accounts which resorted to in-sourcing. I mean, now with Trump Administration 2.0, do we see that challenge for us?

So far we haven't seen anything, Mihir.

We have next question from the line of Manik Taneja. He's from Axis Capital.

Congratulations on the steady performance. My question was on 2 things. If you could talk about the very solid growth that we've seen in our top 5 client base over the course of FY '25? And how should we be thinking about our emerging client growth because that continues to remain very subdued as well as the fact that there is very little movement when I look at your client metrics across different buckets? So that's question number one. The second question is that typically, our hiring tends to give us a good perspective of near-term growth. And if I look at the hiring for the quarter is possibly the highest in almost 5, 6 quarters. So should that be an indicator of how we are expecting our near-term sequential growth to trend?

So if you look at our top 5 and top 10 clients, they are Fortune 100 companies. And I think if you look at our productized services kit, many of it are relevant for our existing clients. And the way we have organized ourselves now around industry and services and capabilities is resonating well with the clients. As far as your question that how is the client mix changing in the 3 buckets, there is a very concerted focused effort to grow accounts outside of top 10. Obviously, because the base is smaller, we are looking at absolute growth in -- and we are measuring and monitoring that. And with the cross-sell initiatives and with some of the changes, a greater focus, we do expect that, that will yield positive results. Even if you look at year-on-year, this year versus last year, our $0.5 million and above clients outside of top 10, average revenue per client has increased. It's increased marginally. So nothing to write home about anything. But there is a very concerted focus on growing that bucket. But it's not to say that we will not grow in top 10 because these are all Fortune 100 companies, and these are large clients with very strong credit history, and there are a lot of our service offerings that are relevant in those clients.

Sure. And the second question was for Srini. Srini, basically, if I look at your -- I think you mentioned in your opening remarks that there is some amount of reclass from cost of revenues to S&M expenses, and that's the reason why S&M seems to have jumped up. If you could talk about some of the sales and marketing investments that you're doing because if I look at the headcount metrics that you disclosed, that number after increasing in between essentially is once again back to where we were last year. So if you could talk about how are we thinking about some of these investments on this side?

So, I guess, some of the headcount changes are purely because of performance reasons and realignment between what Kapil's focus areas are. And that number, we do expect that as we try to double down on growth, that number should go back up again. I think you had also asked about hiring for the quarter. So directionally, you are right. In the last few quarters, generally our headcount and revenue growth are broadly in line.

And that natural trend should hold through FY '26 as well? That's the sign that you're giving us.

Yes, hopefully, yes.

We have next question from the line of Dipesh Mehta. He's from Emkay Securities.

Congrats for steady quarter and strong execution. First question is about, I think in your -- one of the question-answer, you said you expect FY '26 to be better than '25. I just want to confirm whether we make that statement in terms of full year growth. Second question is about the roll-off trends. Are we witnessing any change in the role-off trends compared to, let's say, when we started FY '25? Third question is about sales effectiveness. If I look at our business development team, remain fairly stable, while our deal intake has materially increased in this year, almost over 50% growth. So if you can help us understand what is driving it and whether it is because of a couple of chunky deals, which explains it and that performance is likely to reverse when you don't have those chunky deal or there is some structural changes which is happening?

So, Dipesh, the first question, you wanted to understand what I said was ACV of the deals for the full year, we delivered $140 million. We expect to show an increase in the ACV of the deals for the full year for FY '26. That's point number one. Second question was...

On the roll-off trends.

On the roll-of trends, we are not seeing any adverse. So I think it's around the same number. So neither we are seeing a higher or a lower trend on the roll-offs. So that's, I think, is your second question. And sales effectiveness, I think what's driving it is, like I said, right, in terms of the cross-sell opportunities that we have identified, the one eClerx theme that we are driving is resonating well with the clients on the back of our strong delivery. So if in a particular service kit, our delivery is strong and we are trying to take or talk to the client for another product type services, that's resonating well with our clients and hence more rigor on sales reviews, planning is what is helping us bring in higher momentum in the sales organization.

Just on -- so '26 and '25 comparison, which you gave, it is for deal intake, not for revenue growth?

No, for ACV of the deals.

Understand. And in a way, it partly reflects your pipeline likely to be similar or better than, let's say, when we started FY '25. That is the right way to understand it?

Yes, pipeline, we are continuing to build the pipeline. So FY '26 pipeline is better than when we started in FY '25.

Understood. And last question, can you help us understand how many new logos which we might have added in FY '25? And similar number, let's say, if you can provide for FY '24?

So we don't report that number. I think we are looking at the client buckets, which we have laid out in 3 segments: top 10, greater than $0.5 million and the rest. And there, like I said to the previous question, when Manik was asking, there is a concerted focus to grow outside of top 10. We don't see, from a client concentration, 64%, 65%. We will continue to grow in our top 10 as well because I think there is still a lot of opportunity that exists in our top 10 clients with the service offerings that we have and the relevance that we have for these clients. Did I answer your question, Dipesh?

Yes, it does.

We have next question from the line of Sandeep Shah from Equirus Securities.

Congratulations on a very strong execution on most of the aspects. Sir, just wanted to understand looking at the TCV wins, which are showing a solid trend and the growth on an organic basis, is it fair to assume that is it more coming through wallet share increase within our clients? Or is it you believe the outsourcing demand is increasing in an uncertain macro?

I think I would put it as a former. But I think it's in -- as you know, when there is uncertainty, clients -- like people shy away in making decisions, any amount, any volatility on either side. I think it's more driven from our existing clients and capturing a larger wallet share.

Okay. And just a continuation of Dipesh's question. Your outlook for FY '26 better than FY '25 is more on ACV of new deals, correct?

Yes, that's correct.

And sir, you also made a comment that there is no major significant change in the roll-offs. So in that scenario with a higher order book in FY '25, that can even translate into better growth than what we reported in FY '25 -- in FY '26, I'm asking.

Sandeep, I'll lay out the assumption that if the time series of the deals that we closed in FY '25 stays exactly the same in FY '26 then the answer is yes. But it may not happen some -- like the momentum that we had in FY '25 versus FY '26 when you close, exit in Q1 versus Q4. That's actually -- I think what will also determine the Y-on-Y growth. I think in terms of FY '26, like I have said in the beginning, I want to reiterate the same thing. On margins, we are giving a band of 24% to 28%. I know you guys have requested us to narrow the band. There is the reason why we have chosen to stay in the band because we are looking at growth opportunities. We are opening up new centers that we have opened up in Lima and Cairo. And initially as and when you open a center, there will be some headwinds on the margins. Second is, we would show sequential growth on EBITDA and PAT. And third is, we will be in the top quartile of the industry growth. These are the 3 things I have said, and we continue to maintain, which also gives us the confidence that the strategy that we laid out at the beginning of last year is working well. So we are not making any changes, minor tweaks here and there, but we are not changing the overall direction in which we are heading.

Just a few questions. Any status update in terms of how are we progressing in GenAI and Agentic AI, both on a reactive and proactive basis? What I mean by reactive is the client asking for productivity gains? Or do you still believe we are in the phase where investment will lead to additional demand related to adoption of Gen AI, Agentic AI? Or do you believe that you have to keep passing on some productivity gains back to the clients?

So, Sandeep, I think we have never shied away in passing any productivity gains to the clients because I think we never shied away from cannibalizing our revenue if technology is, as I said in the previous calls, is our biggest differentiator. There are services that we deliver on the back of our IP, where we have our services, we are delivering on the -- where we are leveraging our own IP, which we are enabling with GenAI and making it more and more relevant. So that's the one bucket. Second is on the pure tech analytics data revenue that we are seeing greater traction. And on the third bucket, where we are working on client systems, where we are looking at Agentic AI and also looking at change opportunities. And whenever we are able to give client productivity, it's not like we are seeing a massive ask because we are not selling tech and ops or services separately. Large portion of our book is around our productized services where we are using our IP and working on the client systems where we are using Agentic AI and trying to stay ahead of the curve.

So, sir, nonlinear productized service revenue would be how much percentage of total?

So I think BPaaS is about 19% or 20% that you will see on the metric slide. But that's one of the metrics that I also mentioned earlier that we may reconsider and decide to revise how we are showing it. We are looking at seeing how we can show this productized services metric, which we believe is a better indicator of the impact that our own technology has on our book. So that metric may get replaced with something more relevant for our business.

Okay. The last couple of questions on the margin. Sir, this year, you said FY '25 would be between 24% to 28%, and we actually ended up at the midpoint. And this strategy bearing fruits, is it fair to assume there would be more operating leverage opportunities in FY '26 versus FY '25 and we could be slightly better, if not lower in terms of the margin?

Sandeep, like I said, there will be tailwinds and headwinds. The tailwinds would be, like you said, we may get some benefit of the operating leverage. But I've always said that we are a growing business, and we are focusing on driving profitable growth. The headwinds would be the new centers that we have opened. As you know, any new center that we have opened will take time to deliver profitable growth. And despite that, we are saying we will maintain the same band as we had laid out last year.

Okay. And just, sir, last question, Srini, sir, the nature of these losses in the investment at a fair value basis, INR 13 crores, INR 14 crores. What is the nature of this investment? What are the underlying assets where we had such a considerable loss in a one quarter?

So actually, this pertains to a loss -- a long-term loss that was eligible for -- in 2016, '17, that is eligible for carryforward and set off as the IT laws allow for about 8 assessment years and that was going to expire on 31st of March. And we had made long-term investments with the perspective to offset against those capital losses. And when we actualize the gain is recorded in other income, but the accrued fair value of this investment in the startup or guidelines is reversed in the other expenses. So in the investor PPT, we have netted these gains because that is the right way of looking at it. But that accounts for the difference between what is reported on the consol P&L versus what we show on the PPT.

Okay. And this nature of investment are mutual fund, FMP or liquid fund?

That is correct. Yes.

We have next question from the line of Baidik Sarkar. He's from Unifi Capital.

Kapil and Srini, congrats on a great set of numbers. At a very broad level, and actually, this is a continuation of Sandeep's question. We know for a fact that there is a bit of cost deflation on delivery models given the progression of Agentic AI, right, especially in our areas of transaction processing and service delivery. So I was just trying to understand, given the absolute growth of ACVs we've had in Q4, could you perhaps help us understand what the new business really entails in terms of does it have a higher element of volume, which is offset by an even higher element of AI? Or are these traditional projects which are automation and people-led? I'm just trying to understand the composition of the new wins that you might have had, gentlemen.

Baidik, I think it's not volume growth, which could -- like you said, on the Agentic AI side, it's related to change. It's related to migration projects. And I think -- and it's across a broad spectrum of our services and across clients.

Right. So I would be right in assuming that the mix of projects that you might be winning is not very different in terms of the traditional people-led and automation-led delivery models, right? I mean, there is no change in that underlying.

Yes, no change -- no significant change to see a trend, Baidik.

Right. And in terms of your comment on the pipeline for '26 being better than '25, what's the genre of these? Are these vendor consolidation-led transactions that the industry is seeing around cost optimization? Or perhaps would there be new areas of outsourcing that clients are opening up to in terms of process automation and in terms of efficiency? I'm just trying to understand the nature of pipeline that's building up, which kind of gives you this kind of optimism.

So, Baidik, I think it's a combination of all the 2 things that you said, both in terms of clients looking at more efficiency, a stronger delivery partner as well as new areas.

We'll go for next question, which is from the line of Dipesh Mehta.

Kapil, I think last May also, I asked you this question on the first year of, I think, your operational management kind of thing. You said 4-year strategy, revenue growth, top quartile and EBITDA margin higher. I ask about EBITDA absolute growth. Can you help us understand, let's say, are we confident about top quartile revenue and absolute EBITDA growth in this 4-year journey of ours?

Sorry, what was the last -- can you repeat the last point in the 4-year journey?

Revenue and absolute EBITDA growth? EBITDA margin, I think, we already have a healthy margin compared to peers. I am referring to, let's say, this year we did 15% kind of revenue growth, 6% EBITDA growth. I'm referring 4-year journey when we complete. Are we confident it would be top quartile EBITDA growth also?

I think like I said, we are comparing ourselves because in terms of our margin range will be 24% to 28% and revenue percentage, we will be in the top quartile growth. In absolute revenue terms, we will show a growth. I cannot comment whether we will be in absolute EBITDA growth in the top quartile or not. I think you have to look at 3 metrics and then make a decision on that basis.

Okay. Second question is on the deal ACV side. As far as I remember our definition is it includes net new. It doesn't include renewal.

That's right.

That is the right definition?

Yes.

Okay. Can you provide some color around the vertical kind of thing? So, let's say, this quarter, it is a fairly strong deal intake. How it is -- whether it is broad-based across vertical or one there is a skewness to some extent? And last question is about Europe. I think Europe remained fairly weak this quarter, but some of that weakness is not visible in, let's say, fashion and luxury. So if you can provide, let's say, what led to sizable weakness in Europe?

So I think if you look at bulk of our growth has come from financial, BFSI and CMT segment and our CO, customer care business. We are beginning to see growth in Hi-Tech and M&D as well. So that's the commentary on the overall growth. And the Europe and the CLX business we spoke about on high-end fashion and luxury that, that continues because the clients there also are struggling in delivering their top line growth because of the U.S. and China overall macroeconomic environment.

Okay. Is it possible to, let's say, reconcile the vertical mix which you provided versus the 3 other bucket earlier which you used to report financial market, digital and customer operation from the 5 vertical you provided, if you can provide some sense. I understand about, let's say, digital might be into multiple buckets. So if you can provide some sense how one should understand those things?

Yes, sure. Please go ahead, Srini.

So broadly, the services that we do for investment banks, which is client life cycle and credit life cycle, which we used to call as financial markets that will be broadly speaking in BFSI. Again, broadly, the customer operations, the CX business services that we used to deliver that has the majority overlap in CMT, but that may not remain for a long time because we're also now selling CX services outside of CMT. But historically, that would be the mapping. Then the rest of the digital business, you can think about as a combination of Hi-Tech, M&D, fashion and luxury, retail, emerging and so on. Technology is across all 5 of these. I hope that gives you -- again, digital also actually, I should correct myself, digital, what we used to call digital is also present. Those services have also been provided to BFSI and CMT vertical.

Understand. So digital is across and other thing, I think you provided some sense.

We have next question from the line of Sandeep Shah.

Sir, in terms of your commentary on TCV entering FY '26, about pipeline better versus what we had at the start of the year last year. Is it fair to assume then TCV growth can be similar versus what we have seen in FY '25 and quarterly TCV can have a run rate of $50 million plus or minus? Or is it not -- because $50 million is much higher than the earlier quarter, so one should not extrapolate?

Sandeep, like I said, we are looking at building a franchise, which will deliver value to our clients, shareholders and all stakeholders in medium- to long-term basis. For full year, we delivered ACV of $140 million. I said we will -- we are optimistic to deliver a higher number on the ACV for the full year. Quarter-on-quarter, there can be aberrations. So that's really the comment I made, and I'm repeating the same thing in terms of how we view our business and franchise.

Fair enough. And just a question in terms of short-term. Most of your peers have spoken that the macro-led uncertainty impacted demand starting from March. Is it fair to assume 1Q, we can have some headwind on the growth despite better pipeline? And generally, if I'm not wrong -- correct me if I'm wrong, 1Q is seasonally a soft quarter for us, which can have an impact even this time because of the macro issue. So is it fair to assume that way? Or do you believe because of the order book, 1Q will also have a growth momentum similar to last few quarters?

I think we are cautiously optimistic for Q1. Q1 does see some headwinds because of the wage hikes and other things on the margin front. And I think that's the visibility we have because of the overall -- like you said, the overall macroeconomic environment and the volatility that we have seen.

[Operator Instructions] So we have next question from the line of Girish Pai from BOB Capital.

I just want to ask, did 4Q play out the way you anticipated? Or was it stronger or weaker? Or how did it play out before the beginning of the quarter, you must have had certain expectations?

I think it was in line with our expectations, Q4, so in terms of how it played out. The only thing I would say is the dollar-rupee volatility was not something that was -- as you know, like from INR 87, INR 88, it went down to INR 84, INR 85. That was the only element that sort of came as a surprise. But otherwise, things were as what we had expected.

Okay. My second question is regarding seasonality or 1H versus 2H or the 4 quarters, will there be -- the growth is going to be smooth across the various quarters or the 2 halves? Or could there be some seasonality in this?

So, Girish, with the overall volatility in the market, the overall macroeconomic factors, the geopolitical uncertainty, there could be quarter-on-quarter aberrations that are hard to predict and give a view on. I think full year, we are confident on ACV. And like I said, our pipeline at the start of this year is higher than what it was at the start of last year.

Okay. And the salary increase this year, will the quantum and the spread in terms of the number of people who kind of get the salary increase, is that going to be the same like what we had in FY '25?

It's around the same, but Srini, you want to comment on that.

The increase is about the same, but the number of people are obviously more.

Okay. My last question is around GCCs. I mean, everybody seems to have a GCC strategy. Anything that you would want to kind of spell out from your side?

Yes. So, Girish, as you would know, we have clients who have GCCs and we -- it's not either or. We exist along with GCCs and they see us as a strong partner. So we are also looking at growing our GCC footprint, and we are also looking to invest in that area by bringing in people in India who can solely focus on the GCCs.

And would your GCC revenue be like in the high single-digit to low-teens kind of number or a higher number?

So, Girish, we don't -- we report client revenues, not GCC. So depending upon the vertical that we laid out, the 5 verticals Srini spoke about, depending on which vertical the client falls in, it will fall in there.

We have a follow-up question from the line of Mihir Manohar. He is from Carnelian.

Just on the deal win side, I mean, broadly wanted to get an understanding. This financial year, there has been a very good growth in deal wins. I mean, how is productized services helping us on the deal win side? Some use cases, I mean, 2 or 3 problem solutions around that. I mean, some key solutions that we are delivering within the productized services, that will be helpful.

So like I said, compliance manager, market intelligence, ROI for CMO. So there are different set of use cases we can highlight and which are helping our clients to stay relevant. I had mentioned this in the initial few calls that we operate on both sides of the equation, helping clients on the revenue side in terms of how you are spending your marketing dollars, how you are running your campaigns, how you are enhancing your customer experience, removing friction points as well as on the traditional outsourcing, which is on the cost side of the equation. And on both the sides, we have our IP that we use to deliver our services. So I hope that answers your question, Mihir, in terms of the sort of deals that we are seeing. And our strong delivery is also giving us the momentum in terms of our existing clients.

Okay. Sure. Understood. So it's not that out of $140 million, some specific deals are coming from productized services. It's the case that across all the conversations, productized services is becoming an integral part of the conversation itself, right?

Because like -- see, it's -- what we are trying to do is, we are selling in orthogonal circles around technology, consulting and ops. And that's the unique combination we bring to our clients. So it's not like you're selling them in a discrete manner.

We have next question from the line of [ Varun Bang ].

This is Varun from [ Bandhan Life Insurance ]. So a couple of questions. Firstly, one of the focus areas for us was to make business more predictable. How do you see progress on that front? And directionally, how it is evolving?

So, Varun, I think are we better off than where we were last time when we had lost the client? The answer is yes. As you know, I think in last year or year when we had one of the clients that rolled off, we were able to rebound back much more quickly than we have done in the past. So from that perspective, I think the predictability is increased. But as you know, this will take time for me to say that, look, will -- are we there where we need to be? Maybe not. But are we better off? The answer is absolutely yes.

Got it. And on the pricing perspective, incrementally, the pricing -- are we still pricing at some discount or lower rate to improve our win rate? Some thoughts on pricing would be helpful.

No, we are not seeing any like lower rate. We are competitive depending upon the deal, depending upon the market, depending upon the solution relevance. So it's difficult to comment on a deal-by-deal basis low or higher, but we are competitive in the markets and geographies and the services that we operate in.

Okay. And lastly, on capital allocation, would we continue with the buybacks or we'll focus on distributing cash through dividend now given that there's no difference between the 2 from a taxation perspective?

Yes. We will take a decision on that later in the year. But you as you correctly note, there is no difference.

We have next question from the line of Vikas Khemani. He's from Carnelian Asset Management.

Kapil, I want to understand slightly more, I mean, not from a quarter perspective, but more directionally. Basically, you considered KPO, but your margins are very much like -- so today, the companies like data analytics and those kind of companies. So do you find overlap in some sort of your business mix somewhere with those companies, likes of Latent or Fractal or something? Or do you see any kind of overlap or cost -- how do you sort of -- I'm just trying to get direction of the business future here. And secondly, how is it sort of use of role of AI is going to add or create an opportunity or threat to your business? Those are 2 broad questions.

So I'll take the first one. And yes, we do come across pure-play analytics companies once in a while, especially when we are pitching our analytics services in the technology and analytics space also in and around Martech, market intelligence. So there is some overlap of the services that we provide. But...

So how big that business would be in that sense currently for us and how would that growth profile would be there in that direction?

About 20% is what it is. I think 18% or 20% is worth what we report in analytics and automation, I would say, is broadly overlap.

That's where you will see a lot of -- and is that a fast-growing area for us?

In this year, it has grown. The year before, it was -- I think it contracted a little bit.

Because Vikas, I think this is a discretionary spend, but we have high focus on growing this area, and we have made some investments also at the front end, as well as at the back end on this area, data and analytics. So if the market continues and there is discretionary spend, I think we are optimistic that we will see growth. The second question that you asked that GenAI, Agentic AI, do we see this as an opportunity or threat? I have -- in the previous calls also, I have said that I see this as an opportunity because of productized services. We are enhancing our product maturity and ingesting GenAI in all our products. We are not shying away from cannibalizing our revenue and passing on the benefits to the client as and when required. So I see this as an opportunity and not a threat.

No, as you see, like you said that you are passing on benefit to the client. So let's say, if a client was using INR 100 of services from you and that today you are delivering at INR 80, does that benefit come back to you in form of additional business, either on data analytics or some other side? Is that also you're seeing as a trend?

So, Vikas, it's like -- that's what I'm saying, we are looking and building a medium- to long-term franchise. It may not happen that INR 100 becoming INR 80 and in the same quarter, INR 80 will become INR 110 or INR 90 or INR 100. But over a medium- to long-term, absolutely, if either -- not with that client, but with some other client because you have a very good use case where you have said that you are delivering it for $100 and you pass on the $20 benefit to the client. That's the trust you are building and building a medium- to long-term franchise. So absolutely, like I said, we don't -- wherever required and it's there, we will not shy away in cannibalizing our revenue and passing on the benefits. And there are different models depending upon who is investing in driving that efficiency, driving that productivity between the client and us and depending upon how do you do the gain share and so on and so forth.

What explains to some of these leading data analytics companies, margins so poor vis-à-vis yours, any sort of perspective on that would you have? Because, of course, they have decent revenue, but margins are like pathetic.

I think, Vikas, I can't comment. You should ask them.

No, no, I'm saying would you have some perspective on that? I'm not asking on it, like is that -- I mean, I don't know. I'm just trying to -- you're also building that business and you are damn profitable, right? You deliver the margins which are like exceptionally good, better than IT companies.

Thank you, Vikas, and which is what I'm saying that everything we do, we try and leverage technology to amplify human potential and they are not discrete. Our ability to blend it and deliver services to the client is where we differentiate ourselves.

You referred products in your business. So is that high operating leverage kind of products you have, which you use for delivering to your client? I mean, what kind of -- could you give some ideas around that, some thoughts around that?

So we are not in a -- a, we are not a products company. So it's not we are selling our products as SaaS. But I think our ability like compliance manager in the area of regulatory and compliance, market 360 for competitive intelligence, these are some of the products that helps us differentiate and provide a compelling value proposition to our clients. And that's really what we are doing in terms of, a, taking our value proposition use cases to our clients and that's really what is making us stay relevant.

When you have those kind of platforms or whatever as you call, you replicate to other clients, but that would give you a bit of an advantage in getting the customer, but would that also a better margin profile? I mean, does that give any operating leverage in some sense?

Absolutely. See, like I said, on the pricing side, we are competitive in the industry we operate in. The operating leverage comes in from our ability to bring technology in everything and whatever we are doing.

We have next question from the line of Sandeep Shah.

Sir, just a strategic question. What percentage of our revenue would be voice-centric? And what percentage within voice-centric business where we have migrated from a traditional way of delivering voice-related delivery versus new way of delivering the same through automation? And do you expect this contribution to go up or go down in the next 2 to 3 years?

I think as we will grow like in terms of percentage, it's like in terms of -- it's difficult to predict where it will go, but we see relevance in our existing clients, both on voice and chat and also clients experimenting with us on technology or the new way voice is getting delivered. So we are part and parcel of where clients are doing some of these experiments and because of the trust that we have built on the back of our strong delivery. As I said in the opening remarks, with one of the large CMT clients, we won trusted Partner of the Year, and we won 4 other awards. So that's really what is helping us on our care programs on the voice, chat and our ability to give insights from voice, chat and the data that we have access to.

Okay. Srini, sir, in earlier quarters, you have described voice-centric being 6% to 7% of the top line. Do you believe that concentration is more or less there only or it has come down or gone up?

It should be about that. It should be part of the CMT business. So yes, I think that's about fair.

So 6%, 7% of the total business?

Yes.

Okay. And last related question, Kapil, sir, with that 6%, 7%, do you see a risk of cannibalization more in that piece of business versus the 90%, 95% of the business, which is not voice?

I don't -- Sandeep, I don't see cannibalization. Like I said, if their clients are leveraging technology, we are in the mix of what clients are doing. So I don't anticipate -- like with 1 client, there may be some shrinkage because of technology or because of new way of doing. But overall, at a portfolio level, I don't see it getting cannibalized because the market, I think, on the voice, as well as on chat is big enough.

We have a follow-up question from the line of Girish Pai.

Okay. Just wanted to understand how much is the discretionary versus nondiscretionary part of your business?

70% is nondiscretionary, 30% is discretionary.

Okay. I'm also curious about your setting up delivery centers in Lima and in Cairo. What drove this decision to you to set it up in a Latin American country and in Africa? Was it decided by demand? And how will margins pan out when we deliver from these particular centers?

So, Girish, it was a combination of client demand, as well as overall attractiveness of the location, right, in terms of -- it's not like we have set up a greenfield facility and then waiting for the client to come. So it was on the back of client and then we assess overall supply-demand situation, overall attractiveness of the location and basis that we make a decision. Like I said in the beginning, yes, in short term, there would be margin pressures as we have opened up new centers. Any new center will take time to deliver profitable growth, and which is why the range that we have given is what we have given, and we are not narrowing the band between 24% to 28%.

No. But at a mature stage, would the margins from these delivery centers be lower than that from India?

Yes, it may be lower. But at a portfolio level, we'll be able to balance the portfolio mix.

Okay. And just from the on-site offshore mix perspective, I think we had shifted more towards on-site over a period of time. Is that trend going to continue?

I'll take that, Kapil.

Yes, sure.

So I think if you're talking about from a longer-term perspective, let's say, last 7, 8 years, yes, in last 10 years, I think it has moved from 10% to 20%. In the more shorter term, it is sort of between 19% and 21%, and we don't expect any significant movement from this figure of around 20%.

As there are no further questions, I will hand over the floor to management for closing remarks.

Thank you, everyone. And once again, I think we are very excited, and thank you for the support and confidence that you have laid in us. And it's exciting times as we are celebrating our 25th year, and thank you all for your support. Thanks.

Thank you.

Thank you, everyone.