Good morning, ladies and gentlemen. Welcome to Mphasis Limited Q3 FY 2022 earnings conference call. Please note the management would be showcasing a presentation that is available on the webcast link shared in the invite, as well as on the Mphasis website, www.mphasis.com. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shiv Muttoo from CDR India. Thank you, and over to you, sir. Yeah, thanks. Good morning, everyone, and thank you for joining us on Mphasis Q3 FY 2022 results conference call. We have with us today Mr. Nitin Rakesh, CEO, and Mr. Manish Dugar, CFO. Before we begin, I would like to state that some of the statements made in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. Detailed statement in this regard is available on the Q3 FY 2022 results release that has been sent out to all of you earlier. I now invite Nitin to begin the proceedings of this call. Over to you, Nitin. Thank you, Shiv. Good morning, everybody. Happy 2022 to all of you. Thank you for joining our earnings call this morning. If 2020 was a year of resilience and accelerated digital adoption, 2021 was a roller coaster with great business momentum, yet the year had its dark moments. As a leader, this has also been a year of many personal learnings and tectonic shifts. Some of them being the employer-employee relationship has changed forever, with a future of work that will be very different, requiring a very different engagement model as well as a very modern take on management. Mphasis recently announced a hybrid first work model with work from anywhere collaborate in the office as the core theme. We will continue to embrace this hybrid model in active participation with our clients. We are also reconfiguring our office workspaces where possible to create collaboration workspaces to foster the culture of collaboration with clients as well as within our teams. Secondly, empathy, inclusion, and ESG are here to stay, and we must continue to reinvent every part of our value chain to be able to become more inclusive and diverse, starting of course with diversity of thought. The past year highlighted beyond all doubt the importance of making your business resilient to weather any storms that come our way. Building this tenacity, sustainability and social responsibility have always been the foundation of Mphasis. Our efforts are underpinned by a four-fold approach aimed at reducing our environmental footprint, building sustainable supply chains, inculcating a diverse and inclusive professional culture, and adhering to the highest standards of ethical governance, as well as leveraging the power of technology for solving societal challenges. I'm happy to report that Mphasis has moved up from 37th- 69th percentile year-over-year in the S&P Global Dow Jones Sustainability Indices Corporate Sustainability Assessment annual review for 2021. We showed major improvement across all areas, environment, social, and governance. The company scored high in the corporate governance areas of code of business conduct, privacy protection practices, board diversity, and identification of emerging risks. Human capital development and talent retention are categories under social performance that scored high. Mphasis climate change strategy as well as management of scope greenhouse gases has also scored well above environment-related performance criteria. Being early adopters of renewable energy, we have set up a year-on-year target for the reduction of energy consumption and carbon footprint. Finally, acceleration in tech adoption is a great tailwind, but it brings with it a higher risk of obsolescence. Metaverse, crypto such as decentralized finance, also known as DeFi, NFTs, AI and so on. This is something that will continue to push the boundaries, and 2021 has turned out to be a breakout year in terms of these trends, much sooner and much bigger than expected. As 2022 is kicking in, clients show an increasing focus on investment to counter the threat of startups in NFT and DeFi space, especially. For example, the CEO of one of the largest banks has just announced a huge tech spend increase to beat fintechs. This is not an isolated incident. Today, we also announced a partnership with CrossTower, one of the world's leading crypto exchanges, to build a CoE, a center of excellence, focused on Web 3.0 and a series of blockchain-based products that will be launched and traded on the CrossTower platform. The partnership between Mphasis and CrossTower will accelerate and scale the Web 3.0 talent within Mphasis, providing new avenues of application of innovative blockchain-based solutions in public and private industries, including financial services, supply chain, healthcare, life sciences, insurance, logistics, retail, and so on. Moving on to our performance. Our direct business growth continues to accelerate on larger revenue base. In the third quarter of FY 2022, our overall gross revenue was $414 million, which represents a dollar growth of 7.5% sequentially and 24% on a year-over-year basis, and 7.8% sequentially and 24.2% year-over-year in constant currency terms. This is a quarterly decade-high annual growth. Direct segment continues to power our growth, growing 9% sequentially and 36.1% in constant currency terms. On an organic basis, direct has grown at 6.3% sequentially and 32.4% YOY in constant currency terms. The trajectory of our direct annual growth is consistently rising with YOY growth topping 30% for the third straight quarter. Year to date, direct growth stands at 33.5% YOY in constant currency. This is the highest recorded YOY constant currency growth for direct in a quarter. For the first time, direct absolute quarterly revenue has increased by way of INR 100 million on a year-over-year basis. The contribution of direct is 93%, continues to rise, and we continue to prioritize our growth and investments in the direct business. This showing has helped us manage the decline in the DXC channel, the contribution of which is now reduced to 5% of revenue. DXC revenue declined 10.4% sequentially and 49.2% YOY in constant currency terms. This is in line with our guided commentary of DXC dropping to within mid-single digit as a percentage of revenue by end of FY 2022. Given the overwhelming contribution of direct to our business, which now exceeds 90%, we expect that our overall revenue growth will continue converging with growth in the direct business. Geography-wise, all our markets fared well. Our core market, the U.S., grew 36% year-over-year for direct. EMEA grew 26% year-over-year. Our pipeline in Europe continues to be strong as well, especially with new clients. As mentioned before, we continue to expect this region to be a growth driver beyond FY 2022. From a service line perspective, application services, our largest service offering, grew 39% overall and 55% year-over-year for the direct segment, sustained by the themes of digitization and cloud-powered transformation of apps. Specifically, I would like to call out our constant growth performance in the direct business. Market share gains with our top 10 clients and beyond have helped drive growth here. Growth contribution from our key clients has been consistent, reflecting increasing depth of key relationships and share gains. While our top 10 clients as a block has grown at 20% last 12 months, what's equally heartening is the consistent growth coming through from the beyond top 10 clients, including new clients, a theme that we have highlighted in earlier calls, and we'll double-click on that shortly. Thanks to our broad-based success with clients across tiers and our year-to-date consistency, we reiterate our industry-leading growth stance in the direct business for FY 2022 on top of industry-leading growth for direct in FY 2021, in line with our FY 2022 guidance articulated at the start of the fiscal year. With our tech-led positioning, we are replicating performance in our flagship verticals, banking and financial services, in other verticals as well. BFS growth has accelerated to 29% YOY in constant currency for this quarter, representing the sixth straight quarter of over 20% annual growth. Direct BFS grew 8.9% quarter-on-quarter and 31.6% year-over-year in U.S. dollar terms. This growth is broad-based across our segments of BFS. We continue to enjoy market share gains with our key banking customers. This quarter also has seen robust growth in the T&P vertical and the logistics and transportation vertical within direct, with T&P growing at 24.2% sequentially and 112% year-over-year, and logistics and transportation growing at 5.2% sequentially and 35.7% year-over-year. Insurance is also tracking double-digit YOY growth trajectory. Our client stats reflect this company's position with several top clients post-Merlin consolidation. We continue to believe that our wallet share gains originate from our competency-driven positioning. As our top clients prioritize and execute their spending plans, our preferred partner status places us well to capture additional market share, especially in new areas of tech spend, as articulated in the earlier parts of my remarks. Notably, we continue to see strong growth from the lower half of our top 10 clients, as well as robust growth beyond our top 10 clients. Our top five and top 10 clients have grown consistently, registering 25% and 30% growth, respectively, on a third quarter trailing twelve-month basis. The average contribution of our top five clients is $130 million per client on a trailing 12-month basis as well. Our top six clients are all $75 million or plus on a trailing 12 -month basis, with top four at $100 million plus, and we have $500 million plus customers on a quarterly annualized basis. We believe these client-related data points are unique for a company our size. Top 6-10 clients have grown at 48%, and this represents an average growth of 6-10 indicates strong growth diversification among our key clients beyond the top five. Our clients in the 11-20 buckets have also grown at 21%, with the quarter-over-quarter year-on-year growth for this year much higher at 35%. Notably, all our seven top clients over $50 million grew sequentially for the third straight quarter. In short, our strong client performance across the board supports our industry-leading growth in direct. Our new client revenue continues to grow rapidly, growing at 80% YOY in Q3. We recorded TCV of $335 million of net new deals in third quarter of FY 2022. This marks the eighth straight quarter of $200 million-plus net new TCV, not including renewable deals. Our TCV is up 25% financial year to date. Despite strong TCVs over the last few quarters, our pipeline is still up, suggesting that our pipeline generation engine is firing well. We generate a high percentage of our TCV through proactive deal pursuits, where win rates are materially higher than in the competitive RFP situations. As we report our TCV on a net new basis, excluding renewals, we find the correlation between our direct TCV and revenue growth to be high, exceeding 0.9. The correlation is also improving as we are able to substantially retain our deals that come up for renewal. Coming to our client metrics. Our track record in migrating clients from one revenue bucket to the next continues to be healthy. Specifically, our conversion ratio of clients in one revenue tier to the next is solid and improving at well over 50%, representing one of the best rates in the industry, as mentioned before as well. The count of $75 million and above at six is significantly up with two new clients in this category on a YOY basis. $50 million plus client count at seven is up by two from the five clients we had in this category a year back. On a quarterly run rate basis, we have five clients in the $100 million dollar plus bucket. I'm also pleased to report that in this quarter we have closed more large deals than normal. We have won 4 large deals vis-à-vis 1 or 2 large deals on an average every quarter. This is marked by increasing deal sizes, as the slide indicates. The average deal size on a trailing 12-month basis is $71 million, well over twice what it was two years ago. As mentioned in our pre-prior calls, our large deals are increasingly multi-tower, transformation-based and longer tenure, touching multiple parts of the digital tech value chain. The growing size reflects this capability evolution, as mentioned before. As an example, one of the largest U.S. banking clients entered into a more comprehensive multi-year deal with us to replace a shorter duration contract. This contract is over $300 million estimated TCV with both renewal and net new components. Our Tribes-led pipeline addressing the change imperative of clients' tech program is up by 7% sequentially and 10% year-over-year, despite pipeline to TCV conversion of $1.3 billion over the last 12- months. Our pipeline is well distributed among our eight tribes, indicating attraction across various digital tech stacks. It also comprises an increasing portion of pursuits and opportunities in smaller verticals. For example, it's encouraging for us to see a pipeline progression in sectors like airlines and healthcare, non-mainstream verticals for us, but giving us good growth now. Blink, in its first full quarter post-acquisition, has enabled large number of leads for our core client base. We already have two deals won through this thanks to Blink, with momentum building from smooth initial integration. Q3 FY 2022 also witnessed the highest ever fresher addition in a quarter by far. In FY 2022, we are likely to close with the highest ever fresher addition in a year of over 5,500. This hiring is concentrated in the second half of this fiscal. Over the past few quarters, we have worked through substantially utilizing the internal workforce capacity created by the DXC downsizing. With this behind us, we are now expanding our muscle in campus hiring and have increased our targets going forward. Our improving pyramid, together with our initiatives on pricing improvement, subcontracting overhaul and other optimization initiatives, will provide us cost leverage in the coming quarters. We are also pleased to see scaling up of the digital competencies of our talent with our well-established key learning resource platform, TalentNext. This has seen rapid adoption since its inception three years ago. TalentNext provides Mphasis with the skill muscle to enable execution on the next gen positioning at scale. It's well positioned to develop and strengthen digital competencies of incoming freshers as well. With growing emphasis on obtaining relevant certifications, the certification to learning participation ratios on Talent Next is also consistently rising. Talent Next suitably identifies the roadmap for employees to higher positions and promotion. Of the record 12,700+ employees trained on Talent Next in this quarter, more than 40% have obtained certifications. In addition, we are also aggressively actioning our plan to expand in non-metro tier two cities in line with the hybrid first work model. Our margin philosophy allows us the flexibility to manage our profitability in an environment of rising costs of talent in a heated market. In this quarter, we were able to increase our headcount 8% sequentially with a strong hiring at junior and trainee levels towards capacity creation. This reflects in the higher bench and lower utilization in this quarter. Despite the strong hiring numbers and much larger than usual bench, we improved our overall gross margin sequentially by 60 basis points and on an organic basis by 120 basis points. Notably, we incurred RSU and ESOP stock charges in this quarter as well as we executed on our stock grant plan subsequent to our shareholder approval at our recent AGM. Our reported metric included the M&A-related charges of 30 basis points for the quarter. Adjusted for M&A-related charges, operating profit grew 9.5% sequentially and 22.4% year-over-year to INR 4,956 million in Q3 FY 2022. Adjusted operating margin increased 10 basis points QOQ and declined 50 basis points YOY to 15.9% in Q3 FY 2022. This is in line with our stated operating margin band of 15.5%-17%, which remains unchanged despite increased stock grant costs as alluded earlier. To reiterate, we retain our stated organic operating margin band despite stock grant costs starting this quarter. Our adjusted EPS for the quarter at 20.3 grew 16.4% YOY. Our DSOs also improved to 55 days, a multi-year low DSO position achieved despite strong growth. This has resulted in record collections. Third quarter operating cash does not fully reflect record collections as there has been some lumpy annual statutory payouts made in this quarter. This will normalize in fourth quarter. To sum up, I will leave you with three points. One, our strong direct growth is consistent, and for the third straight quarter we've grown at over 30% year-over-year in constant currency on an organic basis. Financially to date, direct growth is at 33.5% in CC terms. This performance has helped us mitigate the declines in DXC, the contribution of which is now reduced to 5% of revenue in Q3 2022 basis. Secondly, all KPIs are moving in the right direction, namely our growth is getting broad-based with Europe, TMT, logistics and transportation, aiding growth in addition to the anchor verticals of BFS and anchor geography of the U.S. We continue to drive market share gains with our key clients. Our client mining metrics across revenue buckets continues to strengthen. As mentioned before, the average of top five client contribution is $130 million per client. Our 6-10 client category continues to grow well above our direct revenue growth, with 48% growth trailing 12- months, as was the top 11-20 client category also growing at strong growth rates on a YOY basis. Our robust people addition in this quarter is due to record fresher and trainee intake, which will provide us the pyramid leverage in the coming quarters. Our cash flow generation as a percentage of EBITDA stays healthy. Our DSO position is at a multi-year low despite strong growth enabling record collections this quarter. YTD operating cash flow is at $147 million, representing over 71% of our EBITDA in FY 2022. Thirdly, we are investing for growth by using operating leverage and operating in a stated target operating margin band. We believe that our margin stance ensures stability and critical workforce retention through stock incentive plans in an environment of supply headwinds. How revenue growth translates into sustainable EPS and PAT growth and consistently rising free cash flow generation complemented by improving DSO. In summary, our growth strategy envisages us making sustained investments in line with our client activation team along the four vectors. Geography expansion, leadership breadth and depth expansion, build-up of digital competencies in, you know, including by M&A and new account scale-up. Together with the increasingly diversified nature of our client base and metrics and pipeline buildup, we believe this will help us sustain the magnitude and drive consistency of our direct growth. Our strong performance in the first three quarters of our FY 2022 reinforces our confidence in retaining our guidance for the industry-leading growth in direct for FY 2022 on top of industry-leading performance in FY 2021. We also expect to see greater convergence of our overall revenue growth through direct growth. On that note, I request the operator to open the line for questions, please. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question may please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah. Hi, good morning, everyone, and congratulations on the quarter and the deal wins. Just couple of questions. One is, so good to hear on the fresher additions. I think that's something we were looking out for. I just wanted your thoughts on how we should think about margins, considering, you know, relative to the industry, we are little, you know, later in the cycle in terms of fresher additions. Do you think that in the near term there'll be some pressure on margins versus, and then sort of pick up later? That's one. Second, if you think of all the headwinds that have come through from the acquisition this year, what are the one-offs out there that you think will not possibly repeat next year? Those are two things on margins. Then I had one more after that. Yeah. Hi, Nitin. This is Manish here. You know, as we had stated earlier in all our conversations, margin for us is something that we want to operate within a narrow band of 15.5%-17%. Blink acquisition did translate to some charges because of amortization of intangibles and the retention bonus. We are expecting the impact of that to be near the 1%. As you would see, we have been able to contain it to 0.55%-0.6%. This quarter it is at its peak at 0.8%. Taking your second part of the question first, these expenses are going to remain constant or actually reduce going forward in absolute terms quarter on quarter. As the revenue grows, their impact on the margins are going to be lesser and lesser. As we have indicated in our Blink announcement, this over a period of time will get neutralized, and we should get back to, you know, our reported numbers, you know, as it relates to the impact of acquisitions. From a cost of stock grants perspective, we, you know, we just want to call it out saying we have made an investment which helps us in retention of key talent, like we have done in fresher hiring. As you would know, over the last two years, we have had significant reduction in our DXC revenues, and that led to a significant number of global employees coming out of the execution, which we needed to kind of retrain and then deploy back. That not only increased the cost as we were training them and maintaining them on the bench, it also meant our ability to onboard freshers was limited to that extent. As that gets lesser and lesser and as we are able to now kind of push our pedal on the fresher hiring, we have decided to kind of make sure that we take advantage of that position and build our trainee bench as it was reflected in the training utilization. Going forward, you know, as the impact of DXC costs keep coming down, the cost of redeployment and the fresher pool gets into billability, it will reflect an improved utilization as well as lower cost of execution. I guess these will help us in terms of tailwinds that we can then decide whether we will use that for reported improved margins, or we will use that to continue investing in growth, which is what our stated philosophy has been. As we get to next year, we will give you better visibility to what that range of EBIT margin you should look forward to. However, at this point in time, we believe, We have made investments in almost every bucket that you can think of, whether retention of key talent, whether with investing for creating talent pool, which will help us grow at good cost structures. Our TalentNext platform, which is where we primarily depend on for creation of talent rather than depending on lateral, is helping us in terms of, you know, when we look at the throughput that we have got from what it was before. Overall, I think it's a very positive place to be. Sure. Perfect. That's helpful. The second one was on the broader deal wins and things. I think we have done very well there. I just wanted to understand in terms of you mentioned the deal sizes have increased. But can you throw some light in terms of the deal tenures right now? Has it sort of come off a bit? Has it reduced, or it continues to be in the you know close to four-year kind of bracket? Second, in terms of the I think a lot of players are benefiting from a lot of short cycle flow of business. Are you seeing that in meaningful measure within our business? Do you think that correlation chart which you have shown, do you think that dot will sort of remain at the higher end of the line? Was the second question. Thanks. Sure. Nitin, I think on the deal cycle, deal duration, I think this quarter was an interesting one. We had four deals. The largest deal though came from a new customer in the multi-year transformation deal in healthcare segment. I think that is very interesting to you know to watch as well. We also have I know we mentioned that we signed a large deal with an existing banking customer, where the total value of the deal, including renewal, is INR 300 billion. There is a large component that came out, and that's a three-year deal. The other two deals that we announced in the large segment are probably much more shorter cycle, you know, quick consumption deals because they require ability to deliver product and software in-year. I think for us it's an interesting mixed bag. There is definitely some sense of urgency that is leading to short cycle deals, but they're still pretty chunky. But there's at the same time there is also need for multi-year transformation deals, especially the ones that relate to application transformation using cloud, or data platforms we build. They are not gonna get done in short cycle bursts either. I think it's really a you know, some of them are getting broken into short cycle deals with a multi-year program in mind, but we're still getting, you know, multi-year deals in the mix here as well. I think that's kind of the way we are seeing the business develop. Do you think the follow can be 10 years versus how it was running? There is a little bit more short cycle deal in the recent last couple of quarters because the sense of urgency was high. That doesn't mean that there are no longer term large deals either. I think the fact that the largest deal is $90 million was multi-year deal, you know, also means that there are still those 3-5-year deals that you can find. You know, on average, I don't think the division would have shifted radically, you know, lower, even though, you know, we are seeing some short bursts in year spend cycles. Sure. Thank you so much, and all the very best. Thank you. We'll move on to the next question. That is on the line of Dipesh Mehta from Emkay Global. Please go ahead. Yeah. Thanks for the opportunity, and congrats for a very strong execution. A couple of questions from my side. First, just want to understand how we manage talent supply, because if I look our employee addition, we added around 2% quarter-on-quarter B levels. Subcon added expanded 50%, and overall revenue is around 7.8%. If I look your utilization, it dipped 300 basis points quarter-on-quarter ex-training. I just want to understand because 2% organic business headcount addition and 8% and still utilization decline. If you can help us understand what played out, from a utilization perspective and overall talent supply management perspective. That is first question. Second question which I have is about onsite BPO headcount. If BPO is showing steady decline, whether anything to read into the Digital Risk business there? Thanks. Hi, Dipesh. Good morning. This is Manish here. First of all, as we explained in our earlier comments, this was our quarter of making sure that we push the pedal on getting fresher onboarded, get them trained. You would see in subsequent slides, in one of the slides that Nitin talked about how our throughput on TalentNext platform has almost doubled. Talent creation is what we were focusing on with DXC redeployment behind us. That is what has caused the utilization, especially the training utilization, number looking that lower. It's an investment which will yield results going forward, both in terms of our ability to scale and in our ability to make sure that we are able to deliver, scale at profit. To your question on BPO, as we had mentioned earlier, the Digital Risk business has now been completely, you know, transformed in terms of complementary services and a different go-to-market cross-selling, you know, to those customers, which is what has got to, you know, large scale clients. What you see as headcount reduction on site in BPO is all, you know, the phase of the project, and it is not reflective of any specific, unidirectional movement either because of interest rates or because of business. I'll just follow up on both parts. I was referring to utilization ex-trainee only, so I don't think it has implication because of fresher addition kind of thing. Obviously pre with training, utilization drop is even higher. If I explain it, 300 basis point decline is there. Whether anything to reduce then campus. Sorry. I would say it's partly investment for, you know, growth plans. You know, as you scale accounts, you need to make sure that you give time for the deployment of people. At the end, it's, you know, in my mind, it is just an investment so that we can make sure revenues are not let go on the table. It is not to be reflected or seen in any other way. Oh, Manish, I will try to get a sense. Employee addition anything to do with higher attrition? Because 2% seems to be lower than, let's say, the way we expect business to grow. Whether anything to do with attrition which might be a little higher than what we might have planned and those kind of things. Nothing specific. Most of this, yeah, Dipesh is really people who have been hired, but they're going through onboarding process. I don't think this is a linkage to attrition. I think the attrition backfill planning obviously happens in advance as well because we have a pretty decent lead time to plan for that. I think that the combination of the fact that we are in some cases hiring ahead of demand, in some cases we are waiting for onboarding background check, ID creation. Also keep in mind this was a Q4, so that also sometimes has an impact because what you're seeing is period end. Average utilization will give a different number as well. I think there is not much correlation between utilization number ex-trainee and attrition. It's really a reflection of how many people do we have that are onboarded and waiting to be absorbed into the equation. I think the same thing will apply to the trainee concept. That's clearly under deployment training for billable projects. I think that will give us the fuel over the next two quarters. Our dependence on that fuel will be lower than in the past. The last question from my side is, I think, you indicated one large deal from healthcare. If you can help us understand, because now we are doing very well on BCM side and now even high tech side consistently. We are creating new growth engines. If you can provide some update on the healthcare and other part of emerging industries, how the traction is, if you can provide some details. Thanks. Yeah. I think, Dipesh, that is the reason I provided the detail that this $92 million deal is actually in the healthcare segment. It's a re-platforming deal where we are entering into a contract with a customer with an intent to re-platform their core system and restructure the operation that runs on that core platform. It's a transformation deal that will run over three years. As you know, again, it's early days. Our healthcare business is roughly around 5% revenue right now. We do expect this to be a turnkey deal, you know, as we can replicate some of the learnings. I think our pipeline of new logos in healthcare also is pretty interesting because... We'll give you more updates as we go forward, but it's definitely one of our chosen areas, and we've talked about it for the last couple of years. Awesome. Thank you very much. Thank you. The next question is from the line of Vibhor Singhal from PhillipCapital. Please go ahead. Yeah. Hi, Manish. Thanks for taking my question. Congrats on great quarter yet again. So even just a couple of questions from my side. One is just wanted to basically understand our growth trajectory going forward for the Direct to Core business. We did do really great. I think this year we should at least do north of 30% kind of a growth, which of course comes from a low base of last year. How do you see maybe, you know, let's say the next few quarters panning out? The demand, I mean, of course, there would be a high base of FY 2022 which will come into play. Do you believe that the demand environment is strong enough for us to be able to deliver strong growth going forward as well? I know it's not possible to quantify that in any manner, but just a subjective outlook would be good enough. I think, I'll give you two data points that you can think about as you construct the Sure. Viewpoint on future and sustainability of growth. Number one, I think while YOY number you may think is skewed because of low base effect, remember, we actually only had one quarter of decline in FY 2021, which was the June 2020 quarter. After that, in September quarter, we had a very sharp recovery, and from there on, we've constantly grown, you know, in high single digits sequentially. In addition to that, each quarter this year, this financial year also, our sequential growth has been very strong. I think for us, the constant currency sequential quarter-on-quarter constant currency revenue, you know, organic revenue growth is the baseline that we live and die by. I think that has been very healthy, and that should give you a sense of the fact that on a run rate basis, there is a very strong, you know, momentum and tailwind. Second data point is on the TCV and pipeline. I think in this business, pipeline is the biggest lead indicator, followed by TCV, followed by, you know, TCV to revenue conversion. Of course, all the other operating metrics come from there. The fact that we've closed $1.3 billion TCV in the last four quarters, the fact that we are still sitting at a pipeline that is 10% higher than this time last year, and the fact that we have a very decent order book position with a strong TCV flow even in this quarter, at least gives me the confidence that, you know, we have the momentum and the growth doesn't seem to be, you know, fading away anytime in the short term. If I then triangulate that with the data points we're hearing from customers, where they do expect elevated levels of tech spending, as referenced by some of the very public big bank announcements, particularly their announcements in the last couple of weeks since the start of the new year. That also gives us the confidence that we are in a, I would say, a fairly strong secular tech-spending growth environment and should give us the opportunity to continue to grow at elevated levels. Got it. That's really heartening to hear that. My next question was on the pricing front. So if I were to, let's say, take a cue from the data that the earlier participant just shown, it seems that our headcount addition is significantly lower than our revenue growth, despite T&M being almost 60% of our revenues. So are we seeing some kind of a pricing positive development in our business? Is there some kind of, some semblance of a pricing power coming into the business proposals of the, i t might be quite small in nature as well. But do you think there is something like that which you are able to call out right now? If yes, how sustainable is that going forward? Almost two quarters ago, we actually proactively called out the fact that we are seeing pricing leverage and the ability to actually right-price the deals, not necessarily having to bid with, you know, below-market prices. That has continued to play out in the last two quarters, and I think the environment currently also is fairly conducive for right pricing. Of course, we cannot, you know, do across-the-board price hike on an overnight basis. What we're doing really is making sure that we are able to price for value, and wherever we have an opportunity, we can price, you know, based on, you know, not just pure, you know, headcount, rate card basis, but create, you know, other unique pricing constructs as well. I think the environment for pricing is tailwinded. There is appetite for us to continue to see that right pricing. Of course, we are in long-term relationships with customers, so we will have to continue to do the right thing to ensure that we do price to value and not just, you know, price hikes. I think we've seen good price increases in existing business, as well as, you know, on a new business basis as well. I think it's a good environment for pricing, and we've seen some benefit of that, as you pointed out. Right. If I could just drill down a bit more on that. Any specific service lines or specific part of business where do you feel there is more pricing power than the other ones? I think, again, you know, keep in mind the highest demand for skills will drive the highest mismatch between supply and demand, and that's where we have the highest pricing power. By definition, almost all things digital transformation, whether it happens to be, you know, cloud competency, you know, cloud, you know, public cloud, hyperscaler-certified, you know, capabilities, ability to apply application transformation using hyperscaler platforms, data. Of course, you know, a lot of work is getting done on newest platforms such as Snowflake and Salesforce. I think that's really where the pricing power is. It's not gonna be in maintenance contracts. It's not gonna be in testing deals. It's really a combination of where can you find unique solutions, construct those unique deal archetypes, and then of course, price them in a way that it gives you little leverage. Got it. Thanks a lot. Thanks for taking my questions, and I wish you all the best. Thank you. Thank you. The next question is from the line of Manik Taneja from JM Financial Limited. Please go ahead. Thank you for the opportunity. Mitchell, I wanted to pick your brains around both the industry's move as well as your move to essentially expand to tier three, tier four locations and go where the talent comes from. Do you think this at some point of time helps the industry manage its cost much better and thereby different margins in the wake of, some supply side headwinds in general? Sorry, I'm not very clear. You're asking about going to new locations? Manik, can you repeat the first part of your question? Is it about going to new locations? Manik Taneja, we're not able to hear you. Hello? Yes, sir. Please go ahead. Am I audible? Manik, yeah. Yes, sir. Yeah, now you're audible. Can you repeat what you said in the first part? You broke up a bit, like. Yeah. I wanted to understand from you, given the expansion in tier three, tier four locations, that is being happened across the industry, do you think this is a lever that helps manage the- Yeah. Cost of talent given whatever one has been hearing about the salary increases in the last 12-18 months? Absolutely, Manik. I think it's a very concerted effort, of course, at an industry level, but more importantly at an individual company level to go find, you know, areas of next tier, non-metro tier two, tier three towns where, you know, in conjunction with educational infrastructure that is available, local, state, and city governments, and of course, there's a very concerted effort even by the central government to promote this. I think net new talent creation across the entire, you know, value chain is the only way we'll sustain this level of growth for the industry. Of course, each company will have a different strategy. We are also following, you know, our own strategy that works for us purely based on, you know, the needs that we have in our business. That's one definite lever that will create net new talent that will effectively over a period of next three, four, five quarters start you know meeting the supply-demand mismatch. I don't think supply-demand mismatch is gonna go away any other way. Second lever also is, you know, you have to start looking at some global talent pools because that also gives you some leverage because, yes, we can create new talent pools in India, but there is also always need for certain onshore talents. We are also starting to see what we can do with the locations outside of India, whether it's nearshore, same time zone. You know, we did Mexico and Costa Rica. We're expanding into Canada. We've done some onshore Europe. You know, we are very interested in looking at what we can do in Eastern Europe in addition to what we already have there. We've done Taiwan. I think it's a combination of globalization and going down the value chain in terms of non-metro tier two, tier three towns, and that's really, really good news for the long-term growth of the industry. Sure. Thank you, and all the best for the future. Thank you. Thank you. The next question is from the line of Sulabh Govila from Morgan Stanley. Please go ahead. Hi. Thanks for the opportunity. I had a couple of questions. Nitin, you mentioned on Blink Interactive that we have won two synergy deals this quarter. This is within three months of closure of the deal in sometime in September. If you could throw some light on what went on well for you guys over there, and was this faster than your own expectations? I think a great question. This is definitely a high-need area. Most of our client base, you know, which obviously is enterprise Fortune 500, clearly is now pivoting towards what the big tech companies have done in terms of customer experience and design. There was a lot of you know initial excitement and interest generated by the field as we announced the transaction. I think we ended up creating a very long list, a prioritized long list of inbound leads through our channels. It was not a surprise to me that we had you know two early quick wins. There's an interesting list of clients right next to that that we're continuing to convert. I think right now, the need for the skill set is high. It validates our acquisition thesis that we will expand our TCV, our addressable market, our TAM. And of course, that will lead into increased pipeline in our TCV reports as well. I think that's the way it was conceptualized and that's the way it is playing out. Still early days, to be honest. It's only been three months. I think we have a lot of opportunity still ahead of us. Scaling that talent is not as easy as scaling some of the other parts of our business. There is a very concerted effort underway in terms of how we can actually create more scalability in that talent pool without diluting the quality of work, and at the same time, without diluting the brand that Blink has created in the market over the last 20 years. I think it's a good place to be in. Very pleased with the initial success because it's important to create early wins because that creates more momentum for us to do continued work. Got it. The other bit is on the growth within the segment. Applications growth versus BPO and ITO. BPO and ITO are clearly lagging the applications growth. If you could highlight the nature of business there and the mix of new gen services versus applications. Yeah. I think the bulk of it, again, it's one partly by design, partly by the demand pattern, that the bulk of the growth is in application, whether it's net new app dev or very large projects coming out of application transformation, right? Migration of data platforms, restructure and migrate to cloud, whether it's GCP or AWS or Azure. Restructuring, you know, legacy platforms away into colo cloud, private, public, hybrid. I think that's really what's driving a lot of that growth and pipeline as well. Again, not a surprise. I think very linked to the Tribe construct that we've created. I don't expect that to change dramatically going forward as well. Okay. Sure. One last bit from me is, you know, if you could highlight on the attrition rates, where are they for you directionally versus last few quarters, and any interventions for your plan. Fair. I think they're still elevated compared to historical levels. I would say in the very short term, they are probably stable at best, but they're still continuing to be elevated. We do expect that with some of the actions we just announced, you know, whether it was from a stock grant perspective or overall engagement that we are creating through our new work for future employee value proposition. Of course, you know, the quality of work that we are bringing to the team, we will potentially see improvement. You know, the environment is what it is. I think we are undertaking all the initiatives. That's why we broke out all the supply chain and talent initiatives, you know, in a little bit of a detail this time. But my expectation is that this situation will improve as supply catches up, and of course, you know, as we continue to invest in understanding what this new workforce model will look like. Okay. Got it. That's all from my side. All the very best. Thank you. Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Yeah. Thanks for the opportunity, and congratulations on a very great set of numbers. Nitin, just wanted to ask, as we scale up, we are also scaling up our average TCV win each quarter. Last year we were between $250 million-$275 million a quarter. Now this year we are comfortably above close to $330 million. Do you believe pipeline is enough and our efforts are enough that these numbers with the scale-up will continue to keep it up, and that will help us in terms of the momentum, in terms of sustaining the growth year after year? I think, you know, by definition, large deals are lumpy. It is, you know, some quarters you'll have one, some quarters, like this one, we had four. It's hard to kinda give you a number. I think the average trajectory in the first nine months of the year we've seen 25% growth in TCV sold. I think again, I will guide you back to the data that we gave on the pipeline. As long as the pipeline continues to stay strong, which means you're originating deals, you're creating new opportunities, and you're pricing them, and you're winning as many as you can, that will give us the best lead indicator for what will happen with the TCV win every quarter. We typically don't target a number every quarter. What percentage of the pipeline can we convert and how many more deals can we bring in? I'm very, very focused on making sure that the pipeline continues to grow and the conversion rate continues to be strong. I think that's the only way we can manage this. You said pipeline is up by 10% YOY, right? YOY, despite the $1.3 billion of that, you know, last year's pipeline having been converted in the last, you know, nine, you know, 12- months. Okay. It's also up about 7% sequentially. I mean, keep in mind, you know, the trajectory of both pipeline and TCV rates. Yeah, yeah. Great. Just on DXC, as you said, the target was to achieve at mid-single digit. We are already there. So do you believe worst is getting behind in DXC, where most of the remaining business is more sticky annuity-based, where further decline may not be that big? Yeah, I'll just take one second, Manish, and then I'll hand it to you. I think directionally we just said, you know, given the trajectory we were seeing in direct and looking at FY 2022, we think it'll be into mid-single digits. I think of course direct growth has, and of course the Blink acquisition helped there as well. We've, you know, achieved that 5.4-5.5% number this quarter. Yes, we are already seeing a little bit more stabilization compared to, you know, what the percentage decline was on a sequential basis, you know, early part of the year. I think, you know, all I can tell you is the focus for us really is, you know, preserve revenue as we can, but focus on growing direct as fast as we can. From that perspective, I think directionally the growth will still really come from direct. Okay. Just to add to that, I think the comment that we had made earlier that MRC is not the end of it and, you know, this is a relationship that goes way beyond that. This quarter's revenues reflect that. However, given it's not an investment category for us, and direct is delivering what we aspire to, it will continue to mean that mathematically DXC will become lesser and lesser as a percentage of revenue. Okay. Whichever DXC-led clients are coming off because of the decline in the business as a whole, contractually we are allowed to tap them directly, or we may be restricted to do that. If we do that, are we gaining traction out of that as a whole? You know, that's a question that I would like to keep away from going into details. We respect the relationship. We wanna make sure we do right by every client relationship, directly or indirectly. I think we follow that protocol really you know intently over the last you know many years of the relationship because you know it's just it's not in our DNA to really violate any of you know any principles, forget what's in the contract. I think that's a question that I would like to just avoid you know having a discussion on. No, no, fair enough. Just last question, Manish, this EBIT margin of 15.5%-17% is we are talking about organic margin excluding Blink, right? That's right. The guidance was 15.5%-17% before we did the Blink transaction, and Blink was expected to cost about 1%. You know, we are currently at 15.1% with the Blink charges, and without that we are at about 15.9%. That's how we are calling it well within the range. Okay. Thanks, and all the best. Thank you. The next question is from the line of Mukul Garg from Motilal Oswal. Please go ahead. Hey, thanks. Nitin, I think it's quite heartening to see the broad-based client growth which you have had this quarter. I just wanted to narrow down to, you know, your key BFSI client. You also hinted earlier about their, you know, increase in tech budget, which they have announced. If you can just help, you know, drill down to, A, whether you have already started seeing some benefit of that, come in your relationship with them, and B, how much of your business, you know, comes under their run the bank or change the bank category and, you know, how do you see the potential gains flow down to you? I think, without going into specific client relationship, all I'll tell you is that for the third quarter in a row, we had a sequential growth in all top seven clients that are over $50 million. By definition that should tell you know, the answer to what you're asking me. We are definitely seeing benefit coming out of the expanded tech spending. We do very little run the business type of work. You know, 90%-95% of it is really all change related. Primarily given the fact that that's where the spend is and that is where, you know, they would like help. Otherwise, many of our clients have their own large, you know, teams globally, and they wouldn't really need us if all we could do was, you know, execute day-to-day business. I think the focus really for us is to be thought partners, change partners. Our focus is for us to make sure that we are able to give them capabilities that they're looking to acquire new platform builds, new transformation projects, new modernization capability. This is not just for one client, this is across the board. That's the nature of the strategy that we follow with the Tribe construct. I think we are seeing, you know, of course, very strong share gains across all top 7 customers. That's the reason why we are seeing that level of growth with top five, top 10 and top 20 as well. Sure. Maybe like another way to ask this is, you know, if you look at the commentary which is coming out of big banks in U.S., do you expect that to kind of migrate down to other institutions as well in the banking space and the spend to, you know, materially jump or increase going forward as the competitive intensity kind of runs through the whole spectrum of the banking ecosystem and, you know, naturally that should help us accelerate our growth there? The short answer is yes. It's not just in retail banking, it is in payments, retail banking, wealth management, asset management, you know, stockbroking. Almost every segment is going through a very significant, you know, reinvestment, you know, secular trend. I mean, if you just look at the value that has been created with the new age exchanges and the new age trading platforms, that's really putting a lot of pressure on making sure that everybody in this ecosystem is able to step up and invest. Now, by definition, dollar amounts for large banks are much larger, so that's where the bulk of the incremental dollar spending is visible to us. That doesn't mean that this is not gonna percolate down to, you know, the next 10 or 20, you know, financial institutions. That's why, you know, one of the heartening thing for us is in the NCA reporting business. A lot of that growth is actually coming out of banks that we have acquired in the recent last 18, 24 months. You know, financial institutions, asset managers, wealth managers, that entire cohort is actually growing very, very strongly for us in the on the new business side as well. I think very, very pleased with the shape of the client pyramid. Very pleased with the fact that we have some very strong, you know, names in that mix. We gave out a breakup of in the last earnings call how many Fortune 500 names we acquired. You can assume by definition if 50% of our business is banking, 50% of those names would also be from that segment. I think it's really a broad-based approach to spend growth. The announcement we made earlier today around setting up a Web 3.0 blockchain CoE with a crypto exchange also goes further in capturing another spend area that is beginning to pick up because every large bank is starting to build infrastructure for actually managing this opportunity for their customers. Super. Congratulations again on a great quarter and best of luck. Thank you. Thank you. The next question is from the line of [unintellible] from Fairview Investments. Please go ahead. Thank you for the opportunity. My question is regarding the deal wins. It seems to be playing out a little differently from us. By different, I mean a positive different. Like, we've announced four large deal wins this quarter. I want to know what we are doing differently from the industry that we are still able to garner a good number of large deals. Have we started tapping into Blink's Fortune 500 clientele? Thank you. I think what we're doing is really. I mean, we are being very consistent and a little bit boring with making sure that we are taking the deal architect that works in one customer to the next customer because there is a lot of repeatability in those transformation constructs that have been created. I think we gave out a detailed, you know, explanation of the fact that we are not waiting for clients to define the problem. We're taking a very proactive approach using the Tribe-led construct, you know, investing in the customer to understand, you know, what their, you know, strategic direction is and how we can align with that. Really then, you know, creating a very high quality, you know, delivery infrastructure that delivers to those outcomes. I think high-tech, high-touch, high-trust is really the way we think about creating a client relationship. That really is the reason why the client metrics on the client pyramid have also improved. I think the real secret sauce really is in execution, but also is in building competency and leading with capability, design, architecture, engineering, which I think is the need of the hour, and that's a call we took 4-5 years ago, and that's paying dividends today. At the same time, we are also looking around corners to see which other areas to keep investing in. Another time I'll remind you of the partnership we announced earlier today. I think it's a combination of many such things. Okay. Just to follow up on that, so when can we expect it to, you know, start reflecting in the margins? Because, you know, last two quarters, we. I know, I mean, discounting the Blink acquisition, we don't see the, you know, the positive leverage playing out in terms of margins. Any comment on that? Let me just do the math for you again. You know, 15.1 reported 80 basis points impact from the Blink acquisition, 15.9. We also said we've actually taken utilization down significantly. You can assume that's probably 100- 150 basis points impact of that. In addition to that, we announced the ESOP refresh awarded stock grants, and that itself is another 80 basis points impact. You know, that is where the leverage is, right? Despite all of these increased expenses, you know, we are still actually maintaining and sustaining that margin and growing at 30%+ three quarters in a row on a organic basis. I think it's to me that itself is operating leverage right there. Okay. Thank you. Congratulations on a good quarter. Thanks. Thank you. Thank you. The next question is from the line of [inaudible] from TASC Investments. Please go ahead. [inaudible], your line is on the talk mode. Hi, sorry. Thank you for taking my question. It's around the TMT growth on a sequential basis. How much of the sequential growth is attributed to the Blink acquisition and the two new deals won in TMT. Please throw some light on the size of those. I don't think we announced the two new deals in TMT this quarter. I think the one new large deal we announced was in healthcare and the other deals are not in TMT. I think there's a. The impact of Blink sequentially is about $9 million. But even if you take that out, if you see the YOY number, you know, you will see a pretty significant growth in TMT almost to the tune of high 80%-90%. I think pretty broad-based growth within TMT as well. It has been growing for the last, I would say six quarters or so. We are at the back of deals that we won in FY 2021 as well as, you know, in the more recent past. I think it's while Blink has a role to play there, it is not only Blink that is driving that growth. Just to add to what Nitin said, the $9 million incremental in Blink is not all TMT. Only a part of that is TMT. Okay. Got it. That's very helpful. Thank you, sir. Thank you. Ladies and gentlemen, we'll be taking the last question. That is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah. Hi. Thanks for the follow-up. I just wanted your thoughts on our on-site offshore mix. Right. Where most companies have sort of seen a very strong shift, ours has been within the range and possibly driven by the last-mile strategy as well. Just wanted your thoughts on how we should think about the on-site offshore mix as we go forward. Nitin, hi, this is Manish here. You know, if you look at even the very long-term data points of Mphasis, it has been consistent in terms of the kind of work that we do and the on-site offshore mix. As you rightly mentioned, digital work, working on changing the business side of things, where we are consultative and where we do go beyond the RFP responses, do tend to have on-site centricity. I think the important thing to remember is, we look at the business with the customer first in terms of what adds the maximum value to the client and on-site offshore is an outcome of that. As long as the deal makes sense from the delivery of value to the customer perspective and our bottom line perspective, we don't necessarily want to push for offshore centricity, especially when, you know, we now see the talent pool quite a bit dispersed across the globe. Anything outside of India for us is on-site, right? Even if we were to take talent from other markets, it will get classified as on-site. The kind of work that we do and the talent pool diversity from a geography perspective, you know, I think we are quite happy with what we are at this point in time in terms of on-site, I'm sure. Sure. Just a quick follow-up. Yeah. The only thing I'd add to that, Nitin, is that if you look at the recent additions in headcount, you know, in the MD&A, as well as the fact that we've added you know, significant number of trainees and we'll continue to do that in Q4, should give you a sense that a lot of the incremental headcount addition will be offshore-centric. Of course, we wanna make sure that we invest in, like, you know, having the right talent wherever needed, purely because if the program needs it, we will have it. I think the tailwind for offshore adoption is a little bit higher than we've seen in the previous last five to six quarters or so. Sure. Just a quick follow-up. When you look at on-site headcount, right, and you think about attrition in those markets, and you think about the inflation in those markets overall, do you think that the whatever COLA is there and that sort of completely offsets these sort of headwinds? Or do you think that on-site cost inflation sort of becomes a bigger sort of a worry from an industry perspective itself? Anyway, you have been sort of diversifying geographically there. But I just wanted your thoughts broadly on on-site wage inflation, attrition, from an industry perspective and whether on-site cost increases are a big risk from an industry perspective or our perspective overall. Yeah, I think I wouldn't say that just the onshore wage inflation is an issue. I think the issue is really the talent demand-supply mismatch. There is definitely work to be done in creating this new talent both in almost every market that we're operating in. To me, I think the only answer I can give you is take you back to the pricing tailwind and the price to value discussion. I think we are gonna use that very effectively to continue to meet all, you know, headwinds on cost of labor and of course, you know, the direct costs. That's the reason why I'm quite pleased with the way the margins actually sequentially improved at a gross level by applying many of the same levers. I think it's a reality that we are all living with, our clients are living with it, and, you know, the ability to just continue to price to value is the only way we can manage. Thank you, and all the very best. Thank you. Thank you. Ladies and gentlemen, that was our last question. I now hand the conference over to Mr. Nitin Rakesh for his closing comments. Thank you, guys. You know, of course, we are very pleased with our performance and the strong growth in our direct business. Our operating metrics, core metrics and KPIs are all operating, you know, at very healthy levels. We continue to be very excited about the opportunity that the market presents, especially with the new expanded TAM coming out of, you know, new spend areas as well as the digitalization of the entire value chain for most enterprises. With that momentum, you know, we do believe, you know, we are you know, the industry as well as us are sitting with a fairly strong position. We look forward to talking to you next quarter, and we continue to deliver our responsibility well. Thank you for your continued interest in Mphasis. Thank you. Ladies and gentlemen, if you have any further questions, please write to investor.relations@mphasis.com. I repeat, investors.relations@mphasis.com. With that, on behalf of Mphasis Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.