Saksoft Limited (SAKSOFT.NS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Saksoft Limited Q3 FY '26 Earnings Conference Call hosted by Monarch Networth Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Menon from Monarch Networth Capital Limited. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. On behalf of Monarch Networth Capital, it's my pleasure to host the senior management of Saksoft. We have with us Mr. Aditya Krishna, Promoter and CEO; and Mr. Niraj Kumar, CFO and COO of the company. Now I'll hand over the call to Aditya sir for his opening remarks. Thank you.

Thank you, Vinay. Hello, and good afternoon, everyone. Welcome to our earnings call to discuss the performance of the third quarter and the 9 months of financial year '26. Let me start off by briefing you on the key business highlights for the quarter, after which my colleagues and our COO and CFO, Mr. Niraj Ganeriwala, will brief you on the financials. The technology services environment today is marked by cautious enterprise spending and longer decision-making cycles, particularly for discretionary projects. At the same time, clients continue to invest in initiatives focused on efficiency improvements, automation, platform modernization and practical adoption of AI, where there is clear business value. Against this backdrop, we delivered a steady performance during the first 9 months of FY '26, supported by healthy year-on-year revenue growth and stable operating margins. Even as near-term demand remains selective, we have continued with our planned investments in strengthening front-end sales capabilities and senior leadership. These investments are aligned with our long-term strategy of positioning the company as an AI-led digital transformation partner and building scale in the business. We remain confident of progressing steadily towards our Vision 2030 goal of achieving USD 500 million in revenues. From an operational standpoint, we made good progress across our verticals during the quarter. In the logistics segment, we secured a multiyear digital transformation engagement with a leading U.S.-based carrier focused on enterprise modernization, AI adoption and cost optimization. In commerce vertical, we partnered with a leading technology distributor to establish a joint AI innovation lab, enabling AI-driven initiatives across sales, IT and finance functions with a clear path from pilot programs to scaled implementation. In our emerging verticals, we have started working with a leading telecom operator in the European region to deliver quality and process maturity transformation program across core operations. These engagements reinforce our role as a trusted long-term technology partner for our clients and give us confidence in our ability to grow wallet share as technology spending conditions gradually improve. While Niraj will update on the operational metrics and the financial highlights for the third quarter, and 9 months ended FY '26, let me apprise you of what gives us the confidence and clarity that we are steadily progressing towards our 2030 goal of USD 500 million. We mentioned now and in the past that we are expanding our long-term outcome-driven digital partnerships, expanding wallet share and building annuity-led revenue streams through AI-enabled engineering, platform modernization and managed operations. For us to do so, we have identified certain strategic long-term growth drivers basis which our annuitized revenues would multiply and margins would improve. Some of these growth drivers are scaling AI-led engineering, data operations and intelligent operations, expanding the managed services and platform-led delivery models, investing in agentic AI and industry accelerators and lastly, increasing multiyear engagements and vendor consolidation wins. The long-term and perpetual benefits of these will be felt in the years to come. Now I would request my colleague, Niraj, to give you the financial highlights for the quarter under review.

Thank you, Aditya, and thank you, everyone, for taking the time and joining our earnings call today to discuss the results of the third quarter and the 9 months of the financial year 2026 under review. For the third quarter of financial year '26, revenues reported at around INR 250 crores, representing a growth of around 11% year-on-year. The EBITDA stood at INR 45 crores, which grew by around 19% year-on-year with the EBITDA margins of 18.1%. On a sequential basis, revenues declined sequentially by around 3%, primarily due to a temporary slowdown in spending from 2 of our large customers. This was driven by timing and reprioritization of budgets rather than any project cancellations and our engagement levels with these customers remain unchanged. Margins were impacted due to revenue softness during the quarter, along with the continued investments in growth initiatives, more feet on the ground in our key geographies of U.S. and U.K. and capability building for the future. The net profit for the quarter stood at around INR 29 crores, which grew by 7% year-on-year, whilst the PAT margins stood at 11.57%. The net profit for the quarter is after making an exceptional provision of INR 4.86 crores towards the new labor code requirements. For the 9 months ended of the financial year '26, the operating revenues were reported at around INR 758 crores, representing a growth of nearly 18% year-on-year. The EBITDA stood at INR 142 crores, which grew by nearly 29% year-on-year with the EBITDA margins being at 18.7%. The net profit was at INR 97 crores, which grew 24% year-on-year with the profit after tax margins at 12.8%. Now coming to the revenue split by geography for the 9 months period. The Americas contributed 50% of our total revenues, whereas Europe contributed 29% and the remaining 21% came from Asia Pacific and other regions. For the current 9 months period under review, we have ramped our customer location -- we have remapped our customer locations basis the global location of the master service agreements with the respective customers. The on-site revenue mix was 44% and offshore is at 56%. The revenue split across verticals remain diversified. The BFS contributed 31%; the emerging verticals around 47%; logistics, around 14%; and commerce around 8% of our total revenues. Now coming to some of our customer metrics. We have around 16 customers of USD 1 million plus in revenues. The total employee count at the end of the quarter stood at 2,673, out of which 2,454 were technical with the utilization level of the employees, excluding trainings -- excluding trainees being at 83% for the quarter 3 FY '26. This concludes the updates on the quarter, and we can now open the floor for the Q&A session.

[Operator Instructions] Our first question comes from the line of Anand Bhaskaran from Ksema Wealth Private Limited.

Congrats on good set of numbers. My question is for the FY '26 and FY '27, where do you see the segment revenue going forward for this current financial year and the next financial year as well? Where would be BFSI, logistics, emerging and commerce as a share of revenue would be?

We would expect it to be approximately at the same level as it is today. Only thing to note is, BFSI is not our focus area. It's BFS. There's no "I". So we are not focused on the insurance sector.

Okay. Okay. Okay. So you're saying like for the next 2 years or so, where it is now today, the revenue diversification would be around the same as it is today?

Yes. Mix would remain about the same.

Our next question comes from the line of Jyoti Singh from Arihant Capital Markets Limited.

Sir, I just wanted to understand that our top 10 client contribution 58% of revenue. So like how much of the recent slowdown was within the top 2 clients? And what is the -- what are our plan on the client dependency? And are we seeing any early sign of spending recovery from large clients? And how is the feedback on that side? And another thing, how strong is the deal wins for calendar year '26? And what percentage is AI and digital transformation led?

The disappointment in our quarter 3 results, we have had 20 quarters of quarter-on-quarter growth. So after 20 quarters, this was our first quarter of a 3% decline versus the previous quarter. So quarter 3 was 3% lower in revenues versus quarter 2. And it was primarily because there was deferment of spending by 2 of our top customers. Now this is the biggest challenge as you scale up because the focus is on growing revenues. It doesn't matter where it comes from. So even if our top customer gives us more revenues, we're going to take the revenue and not worry about increasing client concentration. So this problem will, over time, disappear as the business scales. It's not something that we can eliminate in the short-term. Now having said that, both the clients have started to spend or the spending is recovering. So it was just a temporary blip, and we're very hopeful that over the next few months, this will correct. Now in terms of deal wins, we are participating in many more large deals than, I would say, 12 months ago. We are being invited to many more RFPs. We are being invited to many more larger opportunities, some of them around AI, some of them around vendor consolidation. And not only is our maturity on responding to these large deals improving, but our win ratio is also improving. I cannot give you the win ratio as of today because the numbers are still small. But from 12 months ago, the traction on larger deals responses by us has increased considerably.

Great. And sir, I wanted to understand on the margin side, like are we expecting going forward will be revert to 19% to 20% as this quarter, like you mentioned, consistent performance, but blip in this quarter. So what our expectation on the margin front?

The year-to-date EBITDA margin is 18.7%. This quarter was 18.1% -- previous quarter was 19.6%. So I would say between 18% to 20% EBITDA margin is something that we would try and maintain.

Our next question comes from the line of Bharat Gulati from Dalal & Broacha.

Just a couple of questions from my side. Congrats on a decent set of results also. Just want to understand that how is AI getting implemented into our deal wins? Because what I understand in the industry that rather than AI just being used as a tool, now it's getting embedded into deals where it's helping bring in revenue. So have we started to also build some products or platforms that we license out to clients that are helping us get the same kind of recurring revenues?

We don't build any products. So there is no license revenue from any products that we build because we don't have products. But where we use AI is to deliver more efficiency to our clients, both existing customers as well as prospects. So very simply put in testing or application development, in digital engineering, what could have been done by a 50-member team can now be done by a 30-member team or a 35-member team using AI. And that's what customers expect. So the software development life cycle has become more efficient using AI. Now if we don't use AI, we don't become relevant to the deal or to our customer. So it's a must-have. It's not a nice to have, it's a must-have. So that's in terms of using AI to deliver the services that we do to our customers as well as prospects. Now is there spending on building an agent or using agentic AI, building an agent? I would say most customers are curious, but they're not really spending much on building AI agents because they don't see great value in 1 agent or 2 agents. They see value if the entire workflows of the business are made more efficient using AI. So the entire transformation of work is where we see value and long-term revenue as well as annuity revenue, not in one-off projects to build agents.

Got it, sir. Got it. So can we say that the recent margin improvement is because of the use of AI and our utilizations have gone up? Or is it that we've started to just win higher contract deals? I mean, what is -- what can we attribute to the higher margins in the recent quarters? And also just how will these margins trend going forward? Will we see an upward trend? Or is this where stabilized at the 18% to 20% range?

I'll ask Niraj to answer that, please on the question.

Yes. So Bharat, in terms of margins, last couple of quarters, we have seen a little higher margin. I think there's been a constant question on whether we'll be able to maintain this 19%, 20% margin. I think this is at a slightly higher end the steady state would be around 18% or so, considering the investments which we are doing both on -- in a number of areas in terms of capability, feet on the ground and a lot of other avenues. So I think 18% would be a more realistic margin. The reason for the improvements, yes, when we bring in our frameworks of AIs and bring in some efficiencies in the short-term, it is definitely helping in adding on margins. Added to it, I think the rupee factor has also been for the year, the rupee has been depreciating significantly. So that has also helped in adding to the margins. But I think from a mid- to long-term, 18% would be a more realistic margin base to be considered.

Got it, sir. Fair enough. And just one final question. Our road to like $500 million. So is that going to be more -- are we going to diversify our revenues? And is our top 10 customers' revenue is going to fall from 58%? Or are we going to continue to see growing wallet share within them? And just if you can elaborate on how are we going to get to that $500-million mark? Is it going to be through new clients or existing clients increasing wallet share? And also, what kind of an inorganic element will we see in that $500-million vision?

The revenue growth will come from, I would say, 80% to 85% will come from existing customers. And there is enough runway with our top 20 customers to make that happen. We will obviously get new clients. Today, we have 16, $1 million clients. We will definitely add to our client base to get to 4x where we are, 4.5x where we are. So scaling up will not happen with just one customer. It will happen across the board, multiple customers, growth in wallet share. So it will be and strategy, not an or strategy, but it will be more, I would say, more prevalent towards increasing wallet share.

Our next question comes from the line of [ Vikas Srivastav ] from [ RBC ].

My question more on this $500 million Aditya. Did I hear it right, right? It's 2030. So I'm saying approximately, we're talking about financial year '30-'31. And you also mentioned that it will be 85% organic. So we are looking at a dollar revenue growth of about -- to get there in this period with 4.5x, we should be looking at a 26%, 27% organic growth year-on-year. My first question was on that, that in terms of our past and how well cleared are we? Is it -- again, I'm sorry, I'm repeating this question. I asked this last time. Is it within the realm of possibility? Or is it just a little ahead of our targets, our realistic targets? That was one question. My second question was on the 3 contracts. In your investors' note, you had -- you have mentioned the initiative and the 2 new contracts. If you could just without naming the client, throw some light in terms of what these contracts are and what kind of visibility do we have with these 3 new client stroke initiatives. Fourth is there is -- in the big clients, the top 2 clients, what I'm hearing is that there is no structural change. It is a short-term aberration, which would kind of -- we'll catch up in the coming months. And on EBITDA, I hear that last calls, I think you were more on the 17.5%. Now you are on 18% to 20%. Just a reconfirmation of that.

Let's start with the last one, Vikas. I stand corrected, we will be around 18%.

Okay. Which is a little higher than what we have done, you have promised in the past or you had guided in the past.

That's right, yes. And coming to the first question of $500 million, it looks an uphill task considering where we are and our historic growth. Now the way I look at this is, at this point, it's aspirational. Can we get to $500 million? Now let's say we can't get to $500 million. At least we'll hit $400 million, which is 3.5x, 4x where we are today, which is not bad. I'm not for a minute saying that we will not aspire to hit $500 million. All the effort will be to hit $500 million. But if it doesn't happen, we'll be at least better than where we are today significantly because we are growing 15% to 20% year-on-year. Now we have learned how to grow 15%, 20% organically. If we can tuck in a couple of reasonably sized acquisitions, let's say, we tuck in a INR 300 crore acquisition, INR 250 crore acquisition, we can really sort of improve the growth rate. And historically, we have always done these acquisitions through internal accruals, and we will continue to do that. So do we have a strategy? Do I have any identified targets? The answer is no. But opportunities will come, and we are ready for them. We have the management bandwidth to evaluate and integrate these companies if it was to happen. So we are operating on in sort of in multi sort of multi -- not multidirections, but multichannels towards the goal of $500 million. I still remain very hopeful that we will achieve the target, if not $500 million close to that. What doesn't help us in meeting the target is that the rupee keeps depreciating, but that helps us in other ways in terms of EBITDA targets. So coming specifically to your questions around the 3 contracts, the first one, which was with a U.S. carrier is very interesting because this was a customer of ours who had multiple vendors or multiple suppliers, and they floated an RFP to consolidate suppliers. We won that RFP. So our team size grew from 50 people to over 100. But to win that RFP, we had to give a 20% discount on our rates. Now that is the name of the game. So we -- to get this business and to win this, we had to give a discount, which we will make up with efficiency over the next 3 years because this is a 3-year contract. And once we are wedded into the customer, the incumbency sort of -- and we don't -- we do a good job, there is no reason why we should not be able to renew it after 3 years. The second contract is where we are building an AI innovation lab for one of our new customers. This is also very interesting because the customer is keen to not only build this innovation lab, but also to grow the innovation lab and use it to improve their business workflows in different parts of their business. So we see this as very sticky and long-term nature. The third one was the telecom operator in Europe, where we are doing business transformation from an optimization perspective. That's a new customer. It's a small contract. We hope that depending on the quality of our work, we will be able to increase our revenues there and grow that account. But that's the smallest out of the 3.

Got it. Got it. And the last question was on this -- just a reconfirmation that the top 3 customers was more of a few months sort of 1 or 2 quarters aberration. There's no structural change in terms of consolidation or other reasons why we are -- the revenue from those 3 customers has fallen in this quarter.

Yes, yes. This is just a temporary phenomenon. That's how we know it today, Vikas. But we have to also keep in mind that we are continuing to invest because we need to invest to get to $500 million. Now when I say investment, it's investment in capability, it's investment in senior talent. My biggest challenge, we are now close to INR 1,000 crore company. The challenge at INR 100 crores was talent. The challenge at INR 1,000 crores is talent, okay? It's just the quality and degree of talent. If there is one thing that keeps me awake at night, it is talent. Now talent is becoming very expensive. And that expense comes before revenue. So there will be some compromise. Unfortunately, being a listed company, we have to live quarter-on-quarter. So there will be volatility in earnings. There will be volatility in the stock. But if our shareholders believe in the management and they believe in our goal and where we are headed, then we should be okay. I think that's really the bet people on this call have to understand and appreciate.

Aditya, one small housekeeping request. The investor presentation is never released with the quarterly result, which keeps us a little -- some of the information which you put out in the investors is actually quite relevant to the shareholders. And it's a little bit of a challenge to locate it and get it a few hours later. May I just request, like many other companies, if we can just release both of these together so that then we understand the results a little better and the reasons a little better. And that's the practice generally, the management commentary and presentation is released almost most cases together. And I'll come back in the queue.

Yes, okay.

Our next question comes from the line of Priyam Shrivastava from KC Capital.

So my question is similar to the margin trajectory. Can you describe how the nature of your work has fundamentally changed over 5, 6 years because we see the margins have moved from like 13%, 14% to 17%, 18% now?

Okay. Good question. And it's a question which you will find the answer quite interesting. Most tech services companies want to stay away from providing bodies or providing just staff augmentation because that is the lowest end of the value chain. Now how do you stop doing that? If customers want bodies, can you really say, I can't give you a body and lose the business. So it's a difficult scenario to overcome. The way we are trying to do it, and we have had -- I won't say great success. We had limited success, but we are getting better at it is to try and push it towards outcomes. And where the customer doesn't interview our resource, the KPI or the yardstick that we have started to measure is, is the customer interviewing the resource. If the customer is interviewing the resource, that means we are in the lower end of the value chain. We need to stay in the upper end or move towards the upper end. And that's how we have seen that from the early days 4, 5 years ago, it was predominantly providing bodies in some -- you can call them anyway. You can call it staff augmentation, you can call it consulting, you can call it whatever. But at the end of it, it's bodies. That has now changed to outcome-based projects or outcome-based contracts like the AI innovation lab, like the vendor consolidation, like some of the new projects we're winning and the more and more RFPs that we are responding to, which are around infrastructure, around helpdesk, service desk, desktop support, et cetera, et cetera. So the texture of our revenue has changed considerably towards outcome in the last, I would say, 4, 5 years. And our goal is to continue to move in the -- in that direction to get to the upper end of the value chain.

Got it. Okay. That helps. One more question was, when you talk about this fintech and health tech, can you just tell a little bit about what type of clients these are and just some example, like in some successful projects with them?

There is no health tech. We don't have any health tech. So you're confusing us with some other company. So in fintech, it is really BFS. So fintech is a part of BFS. And projects are the same, digital engineering, quality assurance, infrastructure, cloud management, FinOps, CloudOps, DataOps, very similar to any other vertical.

Got it. Okay. That's clear. And why don't we work with banks? Is there any specific reason we don't have bank clients much?

Say that again, please? I didn't understand -- can you repeat that question?

Do we have clients in bank segment as well?

Yes. We have 2 large banks as customers, one in India, one in Singapore.

Our next question comes from the line of [ Mahima from Alpha Advisors ].

So just wanted to understand, during the quarter, we have seen exits -- sorry, that one is answered. Yes, just wanted to understand your current stance on inorganic growth. So are you planning any acquisition?

We're always looking, Mahima. At this point, we don't have any specific target in mind, but we're always open to something that will help us build capability or acquire a significant customer at a reasonable price.

Okay. Okay. Another question is, sir, during the quarter, we have seen a lower other income. So any reason behind that?

Mahima, this is Niraj. The primary reason for the decline in other income is the exchange factor. Almost 90% of that other income is the dollar-rupee or the pound and euro-rupee exchange gain. That was quite high in quarter 2 vis-a-vis what you are seeing in quarter 3. That's the reason for the decline in the other income.

Our next question comes from the line of Rohit from ithoughtPMS.

So just wanted to understand on this -- I think you answered this question earlier in some form. But just wanted to understand, given the whole AI thing that is happening. So just in terms -- I mean, so we are -- at the outside, a lot of different things are coming out in terms of the way the code is being written these days and how easy it is and probably in terms of there is a lot of outcome-based stuff that can get more and more challenge. So I mean, just wanted to get your sense given you are at the center of this -- so how are you doing this? You said that AI is not like -- is almost like table stakes you have to have, otherwise, you're not even relevant. So like how are you seeing this from your vantage point in terms of the kind of work that you do in terms of services? Will there be a case that a lot of the work that you are doing will probably get lack of a better word, automated or in-house? I'm sorry, I'm not -- I'm not able to probably set the right word, but I hope I'm able to articulate what I'm trying to ask in terms of the kind of cannibalization or the kind of work extension that can happen for you guys? Is that even something that you're worried about or that is not the case? Sorry for that long-winded question.

We're not worried about it for the simple reason that AI is not a nice to have. It's a must-have. AI has to be prevalent in anything that we do for our customers, whether it is application development, whether it is testing. If we don't use AI and the improvement in the workflows that AI provides, customers will no longer want to deal with us. So it's a necessary -- I would just say that it's like any other -- maybe there's a new language that has come in to disrupt the existing languages. So I would just say AI is a hygiene factor. It's no longer a nice thing. It's no longer a buzzword. People talk about it because there is a lot of unknown areas around AI, which the media likes, and it's a nice thing to talk about. For example, you would have seen the social media platform called Moltbook. That is an AI -- an agent social media platform. So no humans are on it. Only agents are on it. So now what is the business model? Don't ask me. I have no idea. All I know is that for our services model, AI is a must-have. It's a hygiene factor. And it helps us cement our relationship with our customers, make our services more efficient and more cost effective for our customers.

Okay. Got it. And you mentioned that in terms of the work that you're doing, a lot of it is getting transitioned into outcome-based kind of work. So can you give maybe a few examples of what kind of outcomes are these? And can you just maybe talk a bit more in terms of how these are priced?

So for example, let's take the case of a customer who has a ticketing system. Now the customer will give us the ticket [ dump ]. They will give us, okay, over the last 1 month, they had 10,000 tickets. Now each -- they'll classify those tickets into different buckets, Level 0, Level 1, Level 2, Level 3, whatever. And they expect us to now manage that work for them based on SLAs. So response time for Level 0, response time for Level 1, Level 2. Now whether we use 5 people or we use 50 people, that's our problem. So now can we use AI? Can I -- can we use automation? Can we use a combination of both to deliver it efficiently, not only to the customer to meet the SLA, but to make margins for us. So that is what I mean by outcome based.

Got it. So the other question was -- so we've been talking about this $500 million and you've been consistently talking about investing in the sales and marketing. And I think in the last probably 4 or 5 quarters, you've hired a few people as well on the senior side. So from sales and marketing side, can you talk a bit about how has that initiative -- how is that initiative shaping up? And anything that you can sort of call out in terms of that is giving you more confidence or there is much more work to be done?

Yes. So our business model, let's take one geography. Our business model, let's say, in North America, what's our business model? How do we go to market? We have our customers and each customer has a client partner. Now one client partner could be managing either one customer or multiple customers. Normally, it's 1 or 3. In rare cases, it's 4 customers, yes? So now that client partner is responsible for growing wallet share with these customers. Now how does he do that? He does that by regularly meeting customers and regularly understanding from the customer what their business problems are, problem statements are and how we can use technology to overcome those business problems. The more he meets the more problem statements he's able to alert. Now as we move up the value chain, and I said this earlier, move up the value chain from providing bodies to outcome-based selling, the client partners also have to change their way of selling, okay? So they have to be mentored. They have to be trained. They have to evolve into now selling outcome-based services rather than bodies. Selling bodies was easy. Now some will graduate to be able to sell outcome-based, some will not. Our first job is to train them, mentor them. If they can't do it, we have to replace them. So that's an investment. The leader of the client partners is an investment. We have hired a leader in North America. We're in the process of hiring somebody in the U.K. and Europe. Now these 2 leaders will drive the client partners to grow wallet share with our existing customers. So most of our investment in sales and marketing will come in this form, either by client partners or leaders. And it's tough, not only to identify the right person, but also to work with that person to get him to understand the company. It takes time. Transforming from selling bodies to outcome-based is a transformation, which -- and it's a journey which you have to go through, and we're in the process of doing that. So it requires both time and money. So the investment is happening in that direction. That's on the front-end side. On the capability side, investment is also happening because we have 6 centers of excellence. We have testing, we have data, we have digital engineering. We have Salesforce, ServiceNow, cloud infrastructure and security, 6 -- there, we are building accelerators. You mentioned about AI. Now I gave you the simple answer of AI that AI is a hygiene factor. But how do we now bring AI into application development? Coding is becoming easier. Can AI do the coding? Yes. But for that, we need accelerators. We need frameworks, who builds that? These centers of excellence build that. That's an investment. So a lot of people think that tech services doesn't have investment. It's only in office space and laptops. No. The investment is really in people and building capability. And that's where we are also spending our money.

Our next question comes from the line of [ Vikas Srivastav ] from [ RBC ].

On the ROI on the investment in salespeople, Aditya, we had mentioned that in the last call that we did, there was attrition or we let go some salespeople, but you have had a few recent hires. Just wanted to know is our experience A, in terms of who we've hired and in terms of getting traction from them and stability? Are we a little higher on the curve now? Are we in a better position than what we were a month or a quarter or 2 back? And are we kind of -- is there traction? And is there more visibility in terms of our people are hiring and their probability of success and settling within our system towards outcome-based selling?

For sure, it is better, Vikas. But I just want to clarify a little bit that the team that got us to INR 1,000 crores is not necessarily the team that will get us to INR 5,000 crores. Now some will and some won't. Now the challenge is jettisoning or getting -- letting go the ones that won't and bringing in the new talent that will get us there. And that is not a switch on and off. It has to be done gradually. It has to be done in a nice manner because at the end of it, these are people. So we are on that process. We have made some big changes. So far, everything seems to be on track. I'm happy with the progress. And I would -- the only thing I would say is I need to accelerate it more, which I will do.

I was actually alluding to the new hires in the last 4 quarters. I was -- I understand the transition and the training. And in terms of new hires, is that experience now been good in the last 3, 4 quarters, but the other new incumbents kind of -- or have you had some attrition there also? Just some idea there on the new hires and their absorption in the system.

In the last 2 quarters, we have only hired 1 person in the U.S. geography and so far, so good. He's probably on this call also Vikas. So he'll be listening in.

Our next question comes from the line of Bharat Gulati from Dalal & Broacha.

I just wanted to get a clarification on one point, like we mentioned that we won an RFP where the vendor consolidation was taking place where we give a discount of about 20% of our typical price. So going forward, as we try to scale up and reach another -- reach the $500 million mark, I just wanted to understand, we need to get into more larger clients and we need to be cost competitive. So then do we see our margins tapering off? Or then how do we see us kind of fight off the lower cost in terms of maintaining margins, if you can explain how we're going to do that?

We will -- there is no question that we might have to buy some contracts. So if there's an incumbent, we have to go in with strong capability, automation. For example, we have an AI voice bot. It does any language. It does the work of a call center. Now we factor that in when we do automation for a prospect or a customer. That's an example of how we will drive efficiency, reduce cost. And we might have to buy that contract by giving in a lower price, but if it's a 3 -- and most of these contracts that you buy would be 3-, 4-year contracts. So over that 3-, 4-year period, we will be able to drive efficiency into the model to make sufficient margin. So yes, on a particular deal, we might have to compromise on the margin. We might have to compromise on the price. But we have to look at it from a perspective that if you're not in the game or you're not fighting the game, there is no way you can win, right? So it's going to be a little bit of mix and match.

So sir, just to understand that the deal that we just won, does that somewhat impact our near-term margins? Is that a headwind for us? Or do we see that these efficiencies will still help us maintain that 18% kind of EBITDA?

Think about it. There are 3,000 people in the company. We're talking about a 20% cut in 50 people. How will it affect margin?

Our next question comes from the line of Anand Bhaskaran from Ksema Wealth Private Limited.

I just want to ask about the deal with both U.S. and Europe. First, can you just say like how much we would gain from -- the company would gain from these 2 deals? And how will the company gain in specific detail, can you mention like what will be the impact of these 2 deals?

Can you repeat that question, please? It was very unclear the earlier part of your question.

Sorry. So India's deal with -- trade deal with the U.S. and Europe as well. So how would it impact the company? And what sort of way it will impact the company will be positive or negative? And can you explain that in some detail?

Are you talking about the FTA deal?

Yes, the FTA deal and the yesterday's trade deal with U.S., both.

Honestly, I don't know. I mean why would it affect us? I mean trade is more for goods, right? Services were not under tariff anyway.

Okay. What about the FTA deal?

Isn't that the same thing? Where was the tariffs with Europe?

So like in any of the contracts that you have, there is no benefits or impact that the company would not have at all?

No, I'm trying to think while you're asking me this question, where will it affect. In other words, I mean, is there any work that we have not done with Europe because of tariffs? I don't know. I mean services don't normally come under the tariff bracket. So -- but I would say -- the only thing I would say is it can only be positive because the fact that there is a deal means that there is an upbeat environment of spending with a partner like India. So I would say there will be more openness to use Indian suppliers as well as offshoring. So I'm just thinking about whether this will help. Can it hurt us? I don't think it should hurt us. Will it make European companies or European competitors to us more competitive vis-a-vis us, unlikely? So I think it should be positive. But honestly, I haven't given it much thought.

Okay. Okay. And my final question is like in which geography would you like focus more now in the next coming now? Currently, it is U.S.A. with 50 percentage, Europe, 29% and APAC is 21%. Next, let's say, FY '27, '28, would you focus on any specific geographical region or it will be more or less the same?

I would put maximum focus on the U.S. geography, huge market, lots of potential, the biggest market for the tech industry. So if I was to -- if I had INR 100 to put, I would put INR 95 in the U.S. market, just as an example.

Our next question comes from the line of Akshat Rohatgi from Rational Equity Partners LLP.

So we've been proud shareholders for Saksoft for the last, I would say, 6 months. So congratulations on what you guys are doing. So my question is that we actually hold a lot of small and microcap IT services company in India, and we do a lot of research in what's happening in AI in the U.S. And talking to a lot of promoters in the last 2, 3 months, we've been hearing that the theme of vendor consolidation is going across the board, like a lot of enterprises are consolidating their vendors. They basically -- so the thing that I'm hearing from promoters of Indian IT companies is they are consolidating vendors because they want to reduce the SaaS tools and basically get their data at a single unified place and then they want to invest more into AI and AI stuff. So what's -- what are you guys like hearing across your clients and all? I wanted to know that.

Just if you can clarify, you said that they want to keep all the data in one place. Is that what you said?

So they want to reduce their SaaS tool. They want to reduce and consolidate data at like 2, 3 phases so that they can -- when they are able to do -- when they want to invest more in agentic AI, the integration becomes easy. The integration tax is reduced because having so many vendors, so many tools at their disposal.

Most suppliers work on the network of the customer. So it's -- I don't know how reducing vendors will make data more available to the customer because the customer anyway owns their own data. So I'm not able to understand the question. But if your question is, is there vendor consolidation? Yes, there is vendor consolidation in most customers who are using multiple suppliers. And we see this as a big opportunity because we feel we are rightsized. We have the right capabilities and we have the right AI frameworks to drive an efficiency in the process and win these longer-term contracts. I think what we are looking for is more opportunity and a level playing field. If we can get that, we are very confident that our capability as well as our agility will get us business.

Understood. So the follow-up question to that is SaaS and software in the U.S. sentiment is that it will be cannibalized by all these AI, agentic AI, automated SDLC platforms. So like what kind of revenues are we driving our platforms like Salesforce, Services or ServiceNow? And do you think that it will -- that if AI platforms or SDLC, there's a lot of companies that we track, start-ups that we track or we're tracking right now that are kind of cannibalizing some of the segments of the SaaS company, listed SaaS companies in the U.S. So would it affect us as well as the downstream IT services?

Is Salesforce in your mind or in your -- in this context of our discussion, is that a SaaS company?

Not Salesforce, I would mention it's ServiceNow.

Okay. ServiceNow to you is a SaaS company, right?

Yes.

Okay. Now tell me why will ServiceNow be cannibalized? Because somebody who's implemented sales -- ServiceNow is spending a lot of money on licenses. They will continue to optimize their workflows, business workflows using ServiceNow. To switch out of ServiceNow to something like a ManageEngine requires a lot of tech services, which is positive for tech services. If you stay with ServiceNow, it's positive for tech services. So tech services, whether you stay with ServiceNow or you move to another provider like ManageEngine as an example, will still provide revenue to a tech services company. Now can you do without ServiceNow, can you do without ManageEngine using agentic AI? As of now, you can't. So tech services is here to stay unless I'm missing something.

Our next question comes from the line of Vikas Srivastav from RBC.

My last question is, where do you see head count trends and onshore/offshore trends considering the increase in turnover, et cetera, and more outcome-based, just some kind of assessment of where are we headed on head count as compared to turnover and onshore/offshore head count?

As of this point, Vikas, it will be proportional as revenue grows. So if revenue grows 4x, head count will go up 4x I think that's the rule of thumb we can -- we have to work with. Now can AI can outcome-based reduce that? It probably will. But for example, shared services, as our proportion of shared services and our revenue increases, then that will reduce the number of people in relation to revenue. But the flip side is, as the company grows, you need more people in support, you need more people in presales, you need more people in sales. So I think it's fair to say that for our size, if we want to go 4x revenue, we will have to take our head count to 12,000. So that's on the first part. The second question was on-site offshore. We ideally want to do a little bit more on-site because on-site gives us 4x the revenue of -- so we need 4 people onshore -- sorry, offshore, which is equal to 1 person on-site. So our focus is to increase on-site for 2 reasons: one, revenue vis-a-vis head count. And second, if we are working on-site with a customer, we also have more intelligence on that account because that person can give us more intelligence. If we have 1 person today and we increase that to 5, we'll have 5 people on the ground with the customer to give us more intelligence. So that's the plan.

Okay. Just one question. And what kind of visas are we looking for? Are these -- especially if you are talking about the U.S. now? And what kind of challenge would you face with visas? I'm assuming these are not H1Bs.

No. H1Bs have become too expensive at this point. So these will be either L1 or local hires.

And what is the talent scarcity and availability for local hires here?

No problem of talent in the U.S. for tech services.

Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to the management for closing comments.

We thank everyone for taking out time to participate in this call and for their interest in Saksoft. I hope we've been able to answer your queries. In case of any other queries, please reach out to us or our Investor Relations advisers, Valorem Advisors. Thank you, everyone, for joining us.

Thank you. On behalf of Monarch Networth Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.