HCL Technologies Limited (HCLTECH) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to HCLTech's Q2 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Mohta, Head Investor Relations. Thank you, and over to you, sir.

Thank you, Darin. Good morning, and good evening, everyone. A very warm welcome to HCLTech's Quarter 2 FY '27 Earnings Conference Call. We have with us Mr. C. VijayKumar, CEO and Managing Director at HCLTech; Mr. Shiv Walia, Chief Financial Officer; along with the broader leadership team to discuss the performance of the company during the quarter, followed by a Q&A. In the course of this call, certain statements that will be made are forward looking, which involve a number of risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those in such forward-looking statements. All forward-looking statements made herein are based upon information presently available to the management, and the company does not undertake to update any forward-looking statements that may be made in the course of this call. In this regard, please do review the safe harbor statements in the formal investor of these documents and all the factors that can cause a difference. Over to you, CVK.

Thank you, Nitin. Good day, everyone. Thank you for joining us for HCLTech's Q2 FY '27 Earnings Call. We delivered a solid quarter, and I would like to begin with the key headlines of the quarter. First, our advanced AI services continues to scale rapidly and is becoming a key growth driver for HCLTech. Number two, new bookings were the second highest in our history and the strongest first half of any financial year. Number three, margins expanded significantly through disciplined execution and higher-margin advanced AI revenue. Before I go through the numbers, please note that all growth rates that I mention are in constant currency, except for bookings and ARR. Our services business, which is more than 90% of our business, delivered a strong performance. Services grew 3% sequentially and 4% year-on-year with organic growth of 2.3% sequentially. IT and Business Services grew 2.7% sequentially and 4.4% year-on-year, while Engineering and R&D services grew 4.1% sequentially and 2.1% year-on-year. Growth was broad-based across verticals and geographies, reflecting how closely our portfolio is aligned with the clients -- with what the clients are prioritizing today, be it AI, cloud, data, cybersecurity or application modernization. Advanced AI revenue reached $219 million this quarter, up 28.4% sequentially and 78% year-on-year. And the annualized advanced AI revenue is now $876 million. This quarter's performance validates our strategy and advances our ambition to become the leading AI solutions company for the global enterprises. You can also see that we are able to offset AI-driven deflation by gaining market share in our core services and through our advanced AI offerings, which is helping us capture a share of the rapidly expanding AI spend across the technology ecosystem. This is the growth template we aim to consistently replicate going forward. Overall, revenue grew 2.3% sequentially and 2.6% year-on-year. Software revenue declined 5.8% sequentially and 11.2% year-on-year, and this weighed on our overall growth. HCL Software's ARR stood at $1.132 billion, up -- $1.134 billion, up 7.6% year-on-year. which is the best measure of the health of this business, and it is growing. A little later, Shiv will share more details on the factors driving the software performance this quarter. Our EBIT margin was 18.2%, an improvement of 131 basis points sequentially and 71 basis points year-on-year, and it came ahead of our expectations. This expansion was driven by higher margins in advanced AI and gains from AI across our operations. We achieved this while continuing to invest in AI capabilities, IP and talent. Let me now turn to bookings. New deal bookings reached $3.3 billion, up 27% year-on-year and 35% sequentially. This is the second highest bookings quarter we have ever recorded and gives us our strongest first half bookings. Clients are working with us on more strategic programs and are choosing us to shape their technology agenda. AI was a central theme in every large deal we won. I will discuss them when I go through the pillars of our AI strategy. Our people count stood at [ 2,30,339 ] as of the end of last quarter, a net increase of 6,450 sequentially. Attrition was 12.8% on an LTM basis. Revenue per employee improved 2.4% year-on-year, a clear sign that our AI strategy is improving productivity across the business. I would also like to touch upon another topic. Over the last many years, we've ramped up our in-country recruiting efforts to build a significant local talent base. This is part of our talent strategy, and we will continue with this. In the last couple of years, the number of firm applications we have filed is a very small number. Hence, we do not expect the U.S. Department of Labor decision to sustain the [indiscernible] program to have any material impact on our talent plans or client engagements. Turning to our AI strategy. We continue to execute against the 5 pillars of our AI strategy. And this quarter, we saw them contribute as 1 integrated growth model. Pillar 1 is proactively transforming our services where we are systematically embedding AI across our delivery model and as AI adoption expands from targeted deployments to enterprise-wide transformation across engineering, operations and modernization, we have seen 3 clear benefits. Our first AI is improving productivity, quality and client outcomes. For example, for leading private banks complex core banking migration, we built an agent AI solution that converts functional specifications into validated review-ready code for the target platform in about 10 minutes per [indiscernible] with engineers approving every output. It averaged 87% accuracy for an estimated 9x productivity day. Second, it is deepening client relationships and driving larger engagements. Guardian Life Insurance selected us to accelerate its AI-driven technology transformation and deliver seamless customer experience. In this multiyear partnership, Guardian will use HCLTech's AI Force, our service transformation platform, to drive innovation across the enterprise. The third benefit we are seeing is AI-led transformation is now a key enabler of almost all our large wins. For example, a leading global industry technology company selected us to modernize its mobile application ecosystem. Using AI Force and through a smart migration factory, we will deliver AI-led assessment, disposition, conversion, upgrade and testing. This Platform-as-a-Service outcome-based model is expected to enable rapid and largely touchless modernization and support the transformation of 7,500-plus applications. Pillar 2 is building differentiated AI IP. As AI becomes universal, we believe differentiation will come not from models and compute, but from platforms, agents and engineering IP that lets enterprises deploy AI securely, responsibly and at scale. We have matured AI Force into a platform supporting software engineering, legacy and product modernization, data engineering, [indiscernible] migration, business operations and IT operations. We released a new version this quarter, and AI Force agent store now offers 900-plus agents, enabling reuse of proven capabilities and greater autonomy across enterprise workflows. Legacy and product modernization is emerging as an important growth vector. By combining AI Force with our engineering expertise, we apply AI across code analysis, documentation, remediation, testing, migration and support, lowering the cost, risk and time these programs are traditionally required. This opens a substantial pool of client spending with adjacent opportunities in cloud, data and operations. Our IP is also gaining recognition. HCL DevOps loop from HCL Software powered by AI Force was named a visionary in the 2026 Gartner Magic Quadrant for DevSecOps platforms. We've built more than 20 industry AI solutions, moving us from horizontal capabilities to industry-specific processes and outcomes. And in physical AI, Vision X 3.0 introduced a fully agentic architecture with new releases for oil and gas and mobility industries. Finally, in our software business, we announced our intent to acquire roboticiQ.ai, a Croatia based enterprise RPA platform provider, to strengthen orchestration across AI agents and interpret applications in HCL [indiscernible]. Pillar 3 is expanding our AI services. This is an important growth engine and a strong area of momentum. The opportunity spans the full enterprise AI life cycle, defining strategy and governance, building compute foundations, our software IP and deploying an operating agentic AI, physical AI and industry solutions. Our agentic AI offerings has crossed $100 million per quarter this quarter. Clients increasingly want a partner that can integrate infrastructure, data, models, applications and operations. Our AI factory proposition answers that need and enables HCLTech to participate across the AI value chain from compute infrastructure through to applications and business outcomes. Working closely with NVIDIA AI factory specialists, our AI factory specialists were among the first and had built, validated and benchmarked complete rack scale GB200 NBL72 systems end-to-end. Our AI factory proposition grew 64% Q-o-Q and is a meaningful growth driver. An AI research company based in the U.S. selected HCLTech as its strategic partner for a large AI factory program. The company is focused on radically improving AI data efficiency and making AI models mirror human cognition. HCLTech will leverage its expertise in networking, cybersecurity, HPC infrastructure and AI software -- AI platform software to integrate and operationalize a production-ready AI factory. This win reflects an emerging category in which clients want a single partner to integrate, operationalize and ultimately manage highly complex AI environments. A U.S.-based neo cloud provider selected HCLTech to build and scale its AI [indiscernible] architecture and infrastructure capabilities that enable hyperscalers and enterprises to unlock the full potential of AI at scale. A year of based financial services provider selected axial Tech to deploy an agent solution to provide commercial relationship managers with real-time portfolio insights and proactive covenant monitoring, increasing capacity, reducing manual effort, strengthening risk management and unlocking new cross-sell opportunities to support up to 2x revenue growth. A U.S.-based health care provider selected HCLTech to deploy ChatGPT Enterprise and establish a governed AI operating model that enables secure integration of AI capabilities across enterprise applications, delivering context aware experiences that enhance employee productivity, while maintaining enterprise-grade security, risk management and compliance. A U.S.-based global power technology company selected HCLTech to build an AI-powered digital threat that combines agent I and intelligent orchestration to connect engineering, manufacturing, supply chain and service operations, enabling faster decision-making, accelerated time-to-market and enterprise-wide AI transformation. There are several other deals in the investor release. Physical AI continues to deliver encouraging revenue growth across robotics, IoT and [indiscernible] AI, building our engineering and building on our engineering and operational technology heritage. We're also continuing to find strong traction with our semiconductor propositions. A global semiconductor leader picked us to run a turnkey silicon development program from design through delivery for high-performance compute workloads in the AI market. AI advisory is gaining traction, which enables us to help our clients at the start of the AI journey and then extend into helping clients transform their operating model and change management for an AI-native world. For example, this has been a key role in the large deal that we won with a global retailer and is currently under execution. In sovereign AI, demand is shaped by data residency, regulations, security and national capability. In India, we announced our plans for our first AI data center in [indiscernible] in partnership with [indiscernible] and Government of Odisha. It marks a significant step in building the infrastructure layer of our full stack AI strategy. Our fourth pillar is scaling strategic partnerships, combining leading technology innovation with our engineering depth, industry expertise, IP and global delivery. This quarter, we achieved OpenAI advanced partner status and joined its cyber defense initiative, jointly developed AI factory deployment and validation capabilities with NVIDIA, announced a family of Gemini enterprise offerings and a joint transformation program with Google Cloud and the scaling enterprise AI with ServiceNow and signed a partnership with Cohere, focused on Canada and Germany. Today, we announced a global premier partnership with Anthropic to accelerate enterprise adoption of agentic AI with a focus on safety, cybersecurity and governance. We will establish a dedicated Anthropic business unit and a center of excellence to accelerate deployments of Claude in enterprise environments. HCL Software will become an anthropic ISV partner embedding Claude and Plato into select enterprise products with frontier safety guardrails. We are utilizing all our ecosystem relationships to develop engineering capabilities and new offerings that create new sources of growth. The fifth pillar of our strategy is developing talent at scale, AI talent at scale. This pillar enables the other 4. We believe leadership in AI will depend on combining AI skills with deep engineering, solutioning and industry expertise. We continue to enable our employees to become AI builders, AI super users and AI operators. We are scaling a differentiated forward-deployed AI engineers capability that combines deep AI engineering with customer discovery, solution architecture and rapid prototyping, taking opportunities from use case to production. We are developing a centralized FDE academy with tracks aligned to open AI, Anthropic, AWS, Google and NVIDIA. We are also investing in the next wave through an applied research program with MIT, focused on safety and agentic systems and working with Microsoft to build a frontier transformation engineer program that further strengthen specialized talent aligned to strategic ecosystem platforms. Our focus now is to leverage these 5 pillars to create long-term growth through deeper adoption in existing accounts, new relationships through advanced AI and participation in large transformation programs. Beyond these pillars, we made several other moves this quarter that will support our future growth. We launched HCLTech Pulse, a dedicated business unit for fast-growing enterprises with an annual revenue of $500 million to $5 billion, a segment we believe is and is served. It brings together our AI competencies to help these clients modernize and unlock value faster. We completed the acquisition of HPE's Telco Solutions Group, adding differentiated IP across voices and 5G subscriber data management. We also expanded our India footprint. Alongside our AI data center in [indiscernible], we announced a global technology center there to deliver AI solutions for global enterprises. We opened a new global technology center in Gift City, Gujarat, focused on financial services clients. And we launched our advanced semiconductor lab in Bengaluru with an investment of INR 185 crores, providing post silicon engineering, testing, validation and failure analysis aligned with the stick to part business. Each of these will contribute to our future growth. Now coming to the pipeline and the demand environment and outlook. Our pipeline remains strong and is quite balanced across service lines, verticals and geographies. We saw healthy demand towards the end of the quarter. However, we know that the environment has been fluid and very dynamic and the demand is influenced by various factors so we remain cautious. As we see today, clients are prioritizing AI data and operating model transformation whenever there is a clear case for efficiency, innovation and business deciles. We have strong propositions to address these. As we look ahead, we are optimistic driven by record first half bookings, strong demand for our advanced AI propositions, improved margin performance and our full stack AI offerings that is being built incrementally. We will continue to invest the gains out of our operational efficiency to expand our AI advantage by investing in capabilities, IP and AI talent. Our FY '27 growth guidance is now 2.5% to 4% and the EBIT margin guidance remains at 17.5% to 18.5%. Services revenue growth guidance is 3% to 4%. Our revenue guidance includes impact of our acquisitions, and Shiv will provide you more details. Our confidence in this guidance rests on our strength of booking, our healthy pipeline and sustained momentum in AI-led services. With that, I would now request SHiv take us through the detailed numbers.

Thank you, CVK. Good morning, good afternoon and good evening to all of you. Thank you for joining our Q2 financial year '27 earnings call. Let me walk you through our financial performance for the quarter. Starting with the revenue performance, please note that all growth numbers quoted are in constant currency unless noted otherwise. Total revenue for the quarter is $3,724 million, a growth of 2.3% quarter-on-quarter and 2.6% year-on-year. Services revenue for the quarter came in at $3,442 million, a growth of 3% quarter-on-quarter and 4% year-on-year. Our ITBS services grew by 2.7% quarter-on-quarter and 4.4% year-on-year. The ERS segment grew by 4.1% quarter-on-quarter and 2.1% year-on-year. [indiscernible] software revenue for the quarter is $294 million, representing a decline of 5.8% quarter-on-quarter and 11.2% year-on-year. Let me provide some additional context on HCL Software revenue performance this quarter. At the beginning of financial year '27, we had anticipated a softer performance in the software business, allow to explain the reasons behind it. This year, and particularly, in Q2, we had lesser multiyear licenses that were due for renewal compared to last year. The [indiscernible] is visible in the additional disclosure in the investor release this quarter. You would notice that the revenue recognized from multiyear subscription license has gone down from $81 million in Q2 FY '26 to $39 million in Q2 FY '27. As you would know, the revenue recognition for an on-premise term license very based on the term of the licensees. Typically, offered revenue recognition is around 80% for a 1-year license and as much as 60% to 70% of the entire term for a 2 to 3 years license, with the balance recognized over the contract term. The reported revenue decline does not accurately reflect the underlying health of the software business. The same is evident in the healthy ARR growth that we have witnessed even in this quarter. Now let me break out the inorganic revenue contribution in the quarter. HPE Telco Solutions were consolidated for 2 months in Q2 and contributed approximately $21 million in venues, helping services sequential growth by 62 basis points. [indiscernible] was consolidated for the full quarter, giving us approximately $15 million. Total inorganic contribution in the quarter stands at $35.6 million, which added sequential growth -- revenue growth by 97 basis points. In terms of geographies, during the quarter, the USA grew 3.5% year-on-year. Europe declined by 0.3%. Rest of World grew 11.4% and India grew 21.8%. Moving on to vertical performance. Our Q2 growth was broad-based with 5 out of 7 verticals registering year-on-year growth. Growth was led by retail and CPG and financial services, which grew 14% and 7.1% year-on-year, respectively. In terms of clients, our continued focus on deepening customer relationships has helped us expand the numbers of large client relationships. On a year-on-year basis, we added 1 client in the USD 100 million plus category, 8 clients in the USD 50 million plus category, 10 clients in the $20 million-plus category and 33 clients in the $10 million-plus category. Let me now share the details on the profitability. Our EBIT is at $377 million, representing 18.2% of revenue. Adjusting for restructuring expenses of 84 basis points, during the quarter, our Q2 EBIT margin was 19% compared with 17.5% in the previous quarter. Net income for the quarter is $538 million, representing 14.4% of revenue. In terms of EBIT margin walk, there is a sequential improvement of 131 basis points in the company margin in Q2. The margin [indiscernible] excluding the same is as follows: Project Ascent, including AI-driven efficiencies gave us 73 basis points, superior margin of services offering under our advanced AI revenue gave us 32 basis points. Operating leverage at SG&A level due to growth acceleration gave us 50 basis points, and ForEx gave us 23 basis points. On the headwinds, there was 22-basis-point impact on account of higher restructuring costs in this quarter compared to previous quarter and 25-basis-point impact due to HP Telco Solutions acquisition. Moving on to return on invested capital, ROIC. Our ROIC continues to remain strong, supported by our ongoing focus on profitability and efficient capital management. The last 12 months ROIC is at 41.2% for the company, up 261 basis points year-on-year. Services ROIC is at 49.4%, up 411 basis points year-on-year. HCL Software ROIC is at 19.2%, down to 64 basis points year-on-year. In terms of cash generation, over the last 12 months, free cash flow is at $1.78 billion, representing operating cash flow at -- whereas operating cash flow is at $1.96 billion. Operating cash flow to net income conversion is 95%, while free cash flow to net income conversion is at 87% for the last 12 months. Our balance sheet remains strong with gross cash at $2.66 billion and net cash at $2.56 billion as of 30th September 2026. Total DSO, including unbilled receivables is at 84 days, representing a decrease of 2 days quarter-on-quarter. And now for our shareholders, normalized diluted EPS for the last 12 months came in at INR 70.22, representing growth of 5% quarter-on-quarter and 12.2% year-on-year. Including the onetime impact of new labor codes, diluted EPS was INR 67.56. The Board has declared an interim dividend of INR 12 per share for the quarter. The report date is October 16, '26, and the payment date shall be October 26, '26. This brings our last 12 months payout to INR 60 per share effectively distributing 88.6% of our net income. Now an update on our guidance, FY '27 guidance. For FY '27, constant currency revenue growth is expected to be between 3% to 4% for the services business. And at the company level, the revenue growth is expected to be between 2.5% to 4%. The full year revenue growth guidance now includes inorganic contribution of 62 basis points for services and 87 basis points for the company. This implies that midpoint of our organic growth guidance, both at services and company level is broadly unchanged. EBIT Margin is expected to be between 17.5% and 18.5% for FY '27. That is all from my side for now. And I would now like to hand over to -- this session to our moderator for a Q&A session. Thank you.

[Operator Instructions] Our first question comes from the line of Abhishek Pathak with Motilal Oswal.

Am I audible?

You are audible, sir.

CVK, can [indiscernible] Anthropic partnership. We also announced something very similar with open AI sometime back. My question is, are we seeing some sort of structure being formed on AI implementation taking a form similar to cloud migration where ecosystem partners kind of had some benefit? And how is the value being shared between frontier labs and managed services right now. And let's say in the steady state, how do you expect this value to be shared as we implement -- as we kind of integrate more and more of the AI center lapse products or services into our inter offerings. That's one. The second question is on RAI revenues. They seem to be accelerating quite handsomely. My question is who are we competing with here? I mean, are these deals kind of more consulting-led with existing clients where we're focusing our own proactive sort of initiatives? Or are they more completed a little bit on the market? And how do you see these deals going forward where their clients will have more and more vendors coming in to kind of gain their attention? And lastly, on the FCF bit, Shiv, there was some weakness over there. on a TTM basis. I understand there's a couple of one-offs in the past couple of quarters. So when can we expect to kind of get our cash in vers and back to our [indiscernible] average?

Yes. Thank you, Abhishek. Let me start with the first question. You mentioned about AI partnerships with OpenAI, which we established almost a year ago. And early days were a little bit trying to just understand and see how enterprises can leverage OpenAI. But now we are seeing a very good pipeline and deals for enterprise implementation of the enterprise ChatGPT and a number of other solutions that the OpenAI has. I think our value here is largely in the EFD motion, the services around it. And there is always a small piece of ongoing work because most of these platforms are still early days within an enterprise. So there is going to be a long tail of work that will come once we are inside an enterprise with 1 partner trying to scale. Anthropic is, while the partnership we achieved the premium -- global premium status, we've been working with them for some time. And Here, again, it is largely the services model. But I think the biggest -- the nonlinearity is coming from the fact that some of our products like AI Force is getting integrated and a number of AI software products are having native integrations into OpenAI and now we propose to build it with Anthropic as well. There, I think we have a pricing, which includes the token costs as well. So there, I think the equation will be a little bit not so much people centric, it will be nonlinear. So that's on the first question. And on the AI, advance AI revenue is scaling well. There are certain components of these advanced AI services where, in fact, the 2 of the largest deals that we won were all single sourced, primarily driven by our relationship with our partners. Now -- and where we have come across some kind of competition, it is with some boutique providers. And there are some other components of advanced AI like semiconductor, inferencing, chip design, where we see some of the service providers in the mix. The third category we'll be implementing an agentic AI solution, building an agentic solution. That will -- that is a place where we find a lot of service providers. And the fourth is all the IP platform that we build, we are very keen so we have been continuously focusing on monetizing the IP while there is always permission issue for a services vendor to go and monetize the IP. But I think we've crossed the turn. Many of the large deals that we've signed, we have specific line item for AI Force platform. And then there is this operating model transformation of trying to transform the application landscape. While the application landscape infusing AI is part of our regular AI business, but the change management associated with it and the operating model consulting, these 2 elements come under advanced AI, and we are building these capabilities as well and a couple of large engagements have that. And I will refer to Shiv for the ECF question.

Yes. Thanks, CVK. Abhishek, the LTM calculation this quarter, FCF [indiscernible] conversion has 2 onetime impact. One is the [indiscernible] tax payment, which is the bilateral advanced pricing agreement where we participate in the government to government [indiscernible] pricing agreement. And linked to that, there was some tax payment. And the second is in the form of in-house -- the shift from in-house to an external rate trust, which contributed to some money being paid to the trust that required -- both these contributed to cash outflow in this [indiscernible] basis. So we should be able to see that this FCI to NI revert to maybe 100% plus table as these one-off rollover from LTM calculation. I just want to add also that we have managed our cash conversion cycle very well despite headwinds from expiry of met credit last year and lower noncash amortization is software business, which you would see -- you would have seen in the P&L also.

Our next question comes from the line of Ravi Menon with Axis Capital.

Congrats on strong growth and good margins. Shiv, you talked about a 32 basis point contribution to the margin improvement and AI services. We will look at it. It seems really high margin, so then it implies like high 30s EBIT margins for that segment on an ongoing basis. Should we think about it being that high? Or is this also due to, say, some investments that you had maybe in people that just you can think of as investments that now have got utilized and -- or maybe even investments in platforms, there was no corresponding revenue, but now you actually have the revenue and that's getting -- the cost are getting spread over a larger revenue base. How should we think about that going forward?

So yes, let me here are 2 components -- yes, please go, Shiv, go ahead.

CVK, please go ahead.

Yes. There are 2 components to this, Ravi. One is the services component and the second 1 is the IP and platform component. And IP and platform component the margins will be very high, very similar to a software business. So the gross margins will be upwards of 70%. And for the services component, I think the margins will be at least 7% to 10% higher than traditional services. That is how we are thinking of this at this point. And that's how we see this play out as well. At least so far in all the deals, we have been able to generally do this at a better realization and margin.

And just to clarify, this IP component is not classified as part of software product revenue, correct?

No, it's not.

And 1 follow-up. You have....

Just 1 clarification, just 1 clarification. All of AI Force and industry solutions, we still continue to classify them under services and then under advanced services as well. There are a couple of products in the software business, which are completely AI native like HCL [indiscernible], which is a universal operator platform and the Zinia data intelligence platform. These 2 are software products revenue, which are classified under the advanced AI.

Just closing on the I'd say carte guidance, I'll give the top end. I understand you wanted to maintain like a narrow band, and that's why the top end has been trimmed. But you're already at 4% year-on-year growth In your services business in [indiscernible] terms. And you have a strong pipeline and you're saying that it's also good generally in Q3 anyway seasonally you don't have the weakness that your peers have. So why not really raise or keep the top end the way it was at for now?

Yes. I mean, you are right. We have strong quarter on multiple terms. And obviously, 2, 3 will be a strong quarter due to the software step-up. But I mean, like the environment remains fluid. Like last year, in February, we thought we were in a normal situation, and I met a lot of investors, and the day after that is when the Middle East conflict happened, then a lot of things went in a different direction. So I think we are in a volatile world, and we don't want to increase our guidance and things like that. These things can change fast, both on the positive and negative side. We are seeing a good environment, and we hope it will continue. And the services, definitely, we feel confident to be slightly above the midpoint.

One last question. For some of these AI deals where you talked about how clients are trying to adopt maybe the OpenAI, I would assume that there is no real TCV attached to on all those and because these are more on an explorative basis and maybe on a time and material basis, would that be right?

I mean, it's a mix of both. I think the whole change management related OMT, which is operating model transformation, that we have signed a couple of engagements on a fixed price basis as well. And -- but agentic implementation on Google and other things largely comes as time and material.

Our next question comes from the line of Rishi Jhunjhunwala with IIFL Capital.

A couple of questions. One, our top client buckets across top 5, 10 and 20 still don't seem to be growing I know you had called out in the past that there were 3 clients where there were ramp-downs. But just trying to understand are they -- are those ramp downs behind us? And when can we expect these buckets to start growing?