Ladies and gentlemen, good day and welcome to the Persistent Systems earnings conference call for the second quarter of FY 2022 ended September 30, 2021. We have with us today on the call Dr. Anand Deshpande, Chairman and Managing Director. Mr. Sandeep Kalra, Executive Director and Chief Executive Officer. Sunil Sapre, Executive Director and Chief Financial Officer, Head Investor Relations. Please note this call is being recorded. I now give you Sandeep. Good afternoon, good morning, good evening to all of you, depending on where you are joining from. It is good to be with you once again, and we hope all of you are doing well, staying safe and healthy. Before I go to the financial and business updates, I would like to thank you all and our team members and customers for their continued trust in us. This quarter also marks the completion of one year for me as the CEO and about nine quarters as a part of team Persistent. I'm happy to report the continued progress through this time with yet another strong quarter across all major business metrics. I'll begin with giving you a color on the financial updates. The revenues for Q2 came in at $182.32 million, giving us a growth rate of 9.3% quarter-on-quarter and 34% on a year-on-year basis. In rupee terms, this translates into a growth of 9.9% Q on Q and 34.1% Y on Y basis, respectively. This is the best Q on Q and Y on Y organic growth delivered by us as an organization yet. Our EBIT for Q2 came in at 3.9%. This translates into an EBIT growth of 12.5% on a sequential quarter basis and 53.8% on Y on Y basis. Now let me give you this quarter's performance from an industry segment perspective. On a sequential quarter basis, this quarter's growth was broad-based. It was led by healthcare life sciences industry vertical, which grew by 3.5% on a sequential Q-o-Q basis, followed by BFSI and software and high-tech segments, which grew by 8.6% and 8% respectively. On a Y-o-Y basis, all these three segments clocked heavy growth rates, with Healthcare life sciences growing at 47.9%, software and high-tech at 31.9%, and BFSI at 28.7% respectively. Now coming into the order book details for the quarter. The total contract value for the quarter came in at $282.5 million. The annual contract value component of Q2 is to the tune of $201.1 million in ACV terms. In terms of new bookings in the quarter, the new business TCV was $149.3 million, of which the ACV component was $108.8 million. As you may already be aware by now, these numbers, both on TCV and ACV side, include all bookings, small and large, renewals, as well as new bookings across existing and new customers. On the people front, we brought in 975 new colleagues, bringing our total employee base to 15,879 at the end of September 2021. The new addition was a healthy mix of lateral hires and fresh graduates, and this should help us continue our growth in the coming quarters. We are happy to report the progress on the utilization side. Utilization for the quarter came in at 82.8%, a 2.7% improvement QoQ, backed by deployment of a number of our hires over the last few quarters. Attrition for the quarter was at 23.6% compared to 16.6% in Q1 on a trailing twelve-month basis. As you would have observed, attrition has increased across the industry given the shortage of digital skills, coupled with the overall increase in demand. This definitely is a focus area for our management team. We have taken many proactive measures with an aim to bring this under control. To give you some color on a few of the initiatives, we reverted to our normal wage cycle earlier this year in July, just about eight months of having our last pay hike. With the quarter. The current quarter seeing the full impact of the hikes awarded to most of the eligible employees. Sunil will give you more color on the financial impact of this. Apart from this, we continue to undertake other measures, including developing our own talent, both from fresher intake and lateral hiring, upskilling, helping our people with long-term career planning with active L&D, learning and development interventions. We also doubled down on enhancing engagement levels with our employees with a series of global employee events while respecting the social distancing norms, bringing back in-person employee engagement in a major way. Another major highlight for us in the quarter on the employee front was the launch of a broad-based employee stock option plan covering 80% of our total employee base. This is unprecedented in the IT services industry, and we are very proud of the support from our investors and our board of directors. Our employees have been foundational to the company's success, and this significant shareholder returns that we have been able to deliver are on the back of contributions from each one of them. This ESOP will reward them for the resilience they have shown during the last two years and help them participate in the shareholder returns as stakeholders and partners in our growth journey over the next multiple years. There are a few other highlights from this quarter that I would like to share with you. First, on the acquisition side, we have been talking to you about our inorganic strategy over the past several quarters. We have been talking about how we want to go deeper in certain verticals or in service lines or expand in the geographies that we are focused on. I'm happy to report the progress on the same with the acquisitions of SCI, Fusion360 and Shree Partners. We had organized an analyst call to discuss the relevant details post the acquisitions in late September, and here we'd just like to refresh everyone's memory on the same. SCI is a North Carolina-based company with significant payment domain consulting and implementation capabilities in North America. While Shree Partners is a New Jersey-based company with capabilities in cloud infrastructure and data. The acquisition of SCI deepens our client portfolio and relationships with 10 market-leading banks, with many of them categorized as among the top 20 banks in North America. The SCI acquisition will be foundational to the dedicated payments business unit that we announced alongside the acquisition and the future expansion in core solutions and applications of a bank's technology architecture. With time, as we integrate SCI, we'll look to see if we can do bolt-on acquisitions to further our foray into different streams and payments and associated areas. Shree Partners consolidates our position in a strategic account and is a part of a large vendor consolidation deal we won in Q2 with one of our existing customers. Furthermore, SCI helps us extend our footprint in Charlotte, one of the largest banking hubs in the U.S. While Shree Partners adds a new point of presence for us in the national capital region in India. We continue to scout for and engage with potential targets in our focus areas. We'll keep you posted as we make progress on these over the next few quarters. Now, coming to the IP side of the business. We are constantly working to optimize the margins. As a part of this exercise, we have optimized one of our long-standing IP contracts with conversion to a time and materials contract. This should help us on the margin side as we go along. Coming to ESG. We continue to make progress on the ESG front. We are working with a leading consulting company on refining our ESG strategy, and by the end of FY 2022, we'll be releasing a comprehensive report on our ESG roadmap and the status of our current initiatives against industry standard frameworks on the ESG side. With this, I turn the call to our CFO, Sunil Sapre, to give a detailed color on the quarterly financials and related matters. I'll come back after Sunil's comments to give you more details on key client wins, analyst awards, and other recognitions for the quarter. Sunil, over to you. Yeah. Hi. Thank you, Sandeep, and good evening, good morning to all of you. I hope you're all keeping safe and doing fine. Let me give you some details about the financial performance for the quarter. The revenue, as you have seen at $182.32 million, with a QOQ growth of 9.3% and YOY growth of 34%. In terms of INR, revenue, it is INR 1,351.2 million, reflecting growth of 9.9% QOQ and 34.1% YOY. On the industry verticals, as Sandeep mentioned, just to refresh those numbers, healthcare grew by 13.5%, BFSI grew by 8.6%, and technology companies grew by 8% on quarter-on-quarter basis. In respect of linear revenue, the offshore linear revenue grew by 12.4%, primarily on account of volume growth of 11.8% and growth in billing rate of 0.5%. The onsite linear revenue grew by 6%, comprising of volume growth of 8.9% and reduction in billing rate by 2.7%. This drop in billing rate onsite is due to lower revenue from Europe, essentially due to the seasonality and increase in revenue from Mexico, which has relatively lower billing rates. The number of customers in greater than $5 million category went up by one from 21 to 22, and the number of customers in greater than $1 million to $5 million category went up from 76 to 84. So far as the acquisitions that Sandeep mentioned about, these were announced at the end of Q2. Just to clarify, this quarter does not include any revenue or costs from these acquisitions, except the cost relating to the due diligence on the companies. As you're all aware, the annual pay hike was done with effect from July, and the impact of this on the margin is 230 basis points. However, the increase in revenue coupled with improved utilization of 2.7% helped us to absorb the impact of pay hike and yet have some small increment to the margin. The utilization improved from 80.1% to 82.8%, and with that the gross margin was same at 33.5%. With the additional hiring that continued during the quarter, as you would have seen the last several quarters, we have added significant number of employees to our account. You have higher recruitment costs, and that's where you will find that so far as G&A expenses are concerned, they reflect that higher recruitment cost. That is the main reason for G&A expenses increasing almost similar to revenues or slightly higher than revenues. In terms of the overall SG&A, the growth in revenue allowed us to absorb the overall SG&A costs, which came in at 16.9% as against 17.2% in the last quarter. The EBITDA was 16.6% compared to 16.4%. Depreciation and amortization has been in range, 2.7% as against 2.8% in the previous quarter. With that, EBIT was 13.9% as against 13.5% in the previous quarter. The treasury income for the quarter was INR 293 million as against INR 256 million in the last quarter, and the Forex gain was INR 10 million versus INR 109 million in the previous quarter. In terms of profit before tax, it was 16.1% at INR 2,176 million, a drop from 16.5% in the previous quarter, essentially because of the lower Forex gain. The ETR for the quarter was in range at 25.7% as against 25.5% in the previous quarter. With that, PAT for the quarter was INR 1,618 million at 12% of revenue as against INR 1,512 million in the previous quarter at 12.3% of revenue. Elevated employee attrition rate, you know, along with increased cost of new hires does pose a challenge on maintaining margins, but there are several margin improvement initiatives being undertaken. The fact that we have been working on utilization improvement, pyramid improvement with the induction of freshers, we have been in conversation with customers on increasing billing rates, and customers have been amenable to the discussions, and we find that they're receptive to the discussion. We hope to see this effect of all these initiatives coming through in the coming quarters. The ESOP scheme that we have launched to cover a larger, wider section of employees will have an impact of about 70-80 basis points. We believe that the positive outcome it will create from broader participation and the sense of ownership will largely offset this impact over time. The operational CapEx for the quarter was INR 143.1 million, which includes payment towards new office premises at Hinjewadi, Pune of INR 91.5 million. We have also provided a loan of INR 188.0 million, approximately $25 million, to our ESOP trust for purchase of shares from the secondary market. This is to meet the obligations under the ESOP scheme. Thus, with this, the cash and current investment on books was INR 1,870.4 million as at 30th September as compared to 1,995.5 million as at thirtieth June. The DSO came in at 55 days as against 54 days in the previous quarter and the cash generation was quite healthy. Forward contracts outstanding as on 30th September was $150 million at an average rate of INR 76.74 per dollar. Thank you all. I wish you a happy Diwali in advance, and I hand it back to Sandeep. Thank you. Thank you, Sunil. Now let me give you a color on the movement of our customer segments and key client wins from this quarter. We saw healthy growth across our top account categories. Top 1 customer grew by 8.6%, top 2-5 by 5.9%, top 6-10 by 3.1%, and top 11-20 customers by 8.1% on a sequential quarterly basis. All of this growth, as you would have noticed, is on basis of organic growth. The acquisitions, as Sunil pointed out, will start, you know, contributing to the growth from this quarter onwards. Our press release for the quarterly results carries a number of our deal wins across industry segments. Just to highlight a few of these. In the banking, financial services and insurance segment, we were chosen by a leading global third-party insurance administrator to establish a global technology center to deliver enterprise-wide digital transformation. This is an existing customer and one of the largest proactive deal wins in our recent history, including vendor consolidation as a part of the deal. The TCV of this exceeds $50 million over five years. We were chosen by a U.S. government and health savings facilitator to build and enhance a government savings platform to provide competitive advantage and accelerate revenue growth. On the healthcare life science, let me highlight two of the wins. The first win is with a contract research organization to aggregate clinical data sources in Microsoft Azure-based data lake. The second win is with a leading U.S. healthcare provider to develop a patient engagement platform using leading no-code, low-code platform-based solution. Software, high tech, and emerging technologies segment as well saw some good deal wins. We were chosen by a leading provider of employee engagement solutions to migrate its product from legacy platform to AWS and enhance the product roadmap. Similarly, we were chosen by a leading tax preparation and financial technology provider to transform and modernize its cloud-based product. Now moving to the awards and recognitions for the quarter. Q2 saw us get continued recognition from industry-leading analyst firms and associations. To mention a few, Forbes Asia named us on its Best Under A Billion list, which highlights 200 Asia-Pacific public companies under a billion dollars in revenue with consistent top-line and bottom-line growth. This is the first time we have been included in this list, and we are very proud of this recognition. For the seventh consecutive quarter, we were named a top 15 sourcing standout for managed services in Q3 2021 Global ISG Index Booming 15 category. ISG also named us as a leader in traditional archetype of outsourcing for hybrid cloud deployments and private cloud in the Archetype Report 2021 for ISG provider-led next generation private/hybrid cloud services and solutions. In summary, we delivered yet another strong quarter. We continue to see good traction for our services in the markets we serve, and we remain confident of our growth journey going ahead. With this, I would like to conclude the prepared comments. I would like to request the operator to open the floor for question answers. Operator, over to you. Thank you very much, sir. We will now begin the Q&A session. Anyone who wishes to ask a question may raise your hand from the Participants tab on your screen. Participants are requested to use headphones or earphones while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from Mr. Mohit Jain. Hi, sir. First was on account of on-site billing rates, while you alluded in the opening remark that it is probably on account of Mexico. But what I wanted to check was if you look at last four, five quarters, on-site billing rate is more or less steady. Some quarters it is up, some quarters it is down. How should we read it? Like, clients are really willing to give you a higher rate, and we should expect it to trend up over the next three, four quarters? Or do you think it will more or less remain stable with some billing moving to Mexico or other places if that is included? Sandeep, you wanna go ahead? Yeah. I mean, I'll give my perspective on that, and you can add. You know, Mohit, what is happening in this situation is that we are also, as we have talked earlier, looking at this nearshore delivery. So far as on-site billing rates are concerned, earlier they used to be only concentrated in the U.S. as our footprint in Europe has been small. But over a period of time we have been working on Europe business. So now you can say U.S./Europe is the more critical mass of that on-site footprint. Now, over the last few quarters, say three or four quarters, we have been working on adding Mexico, Canada as the nearshore delivery and few other pockets we have where we already have footprint like Malaysia and so on. So I would not read too much into this. We would only ensure that there's not too much of volatility. This time the main reason for this, as you know, the Europe business contribution has been slightly lower this quarter. The main reason for that being the vacation period in Europe. Post-COVID there has been a bit of opening, you know, globally. This is a time when people have been able to take vacations after a longer period. We have lost certain billing days over there because of which the Europe billing rates being higher, it has put further pressure on the on-site billing rates as a number that you see going down. Sandeep, any further light? At a high level, if you look at it, there is no pressure on the U.S. billing rates downwards or Mexico billing rates downwards, et cetera. The mix is changing, and as we go ahead, as the, you know, U.S. travel opens up next month, and similarly the other, you know, regions like Canada, Mexico, et cetera, open up bigger. We do have plans to go bigger in terms of our presence in Canada, in U.S., in Mexico, and we are seeing a good receptiveness for nearshore Canada and Mexico from our U.S. customers' perspective. You will see those numbers go up over a period of time in terms of volume. In terms of value, as I said before, the mix may change, so your average dollar value may change, but there is no negative pricing pressure on that. The second was on the TCV where the reported you mentioned $50 million deal is probably included in the TCV reported for the quarter. There are also some companies reporting higher ACV and lower TCV side of the scenario. Do you guys saw or are you also observing such a trend where larger deals are drying up and smaller deals are sort of picking up? Look, the nature of business for us versus, you know, some of our bigger peers may be slightly different. If we were to, you know, be in the infrastructure business or, you know, typical application support business, the number of deals in three to five years is much higher. The kind of business that we do, it is more digital in nature and where, you know, the number of those deals are lesser and the deals may happen in the one to three years period more, three to five years maybe lesser, and then they may get renewed with different scope and so on, so forth. We are seeing a very healthy demand. Demand-wise, we are not worried. The TCV may be slightly different for us given the nature of our business. In our case, TCV reflects or it is a fair representation of revenue growth ahead? Yeah, it is. We are confident, if you look at it, you know, if we were in the project business, we have now delivered I think 6+ quarters of sequential healthy growth. Right. If it was project-based, it would wobble. We are fairly confident. What we are doing is a longer term, you know, play, and it's a good mix of short to medium to longer term deals. We are happy with the deal profile. Perfect. Thank you. All the best. Thank you. Thank you. Next question is from Mr. Sandeep Shah. Yeah. Can you hear me? Yes. Yeah. Congrats on a stellar performance quarter after quarter. Sandeep, just wanted to understand, in this demand scenario, which is high, also has a benefit of some bit of, the pent-up demand. Do you believe that your TCV wins, which is consistent now between $250 million and $300 million a quarter, can continue even beyond FY 2022, where we may see some amount of normalization of IT spend? Or you don't believe in this, trend of pent-up demand being there, it's largely a transformation demand which is driving the growth across sector? Sandeep, good question. Let's go a little deeper into this. The segments we play in, you know, on one side, we have the enterprise side, whether it is healthcare, life sciences, whether it is banking, financial services. There are those enterprise digital transformation programs, and a number of those are long-range programs. On the other side, we are also significantly, you know, playing in the product development side, where we are playing in the ISV slash tech company ecosystem. Now, a number of those are also impacted by people like private equity players. If you look at it, the dry powder, the committed money to private equities which is not yet put to use, is at an all-time high right now. Similarly, the VC funding is, you know, the amount of money available is at an all-time high right now. A number of that will be called over the next, you know, two to three years, if not more. What we are seeing is a structural demand, whether it is enterprise, whether it is product companies that, you know, provide the tools for the enterprise transformation. As far as we are concerned, for the segments we service, for the industry segments or the technology segments, we believe this is a multi-year segment, multi-year play, and this should continue for the next at least two to three years, if not more. From a demand perspective, we are confident that the demand is here to last for the next many years. Okay, great. Second, just, in terms of new restructuring, which you said in your opening remarks related to IT, will it be effective starting from 3Q, or it may be slightly ahead of that? One can assume this will have a positive impact in the gross margin. When you say convert it to time and material, is it fair to say from an IT classification, it may be classified now as a services business? Yes. The answer to most of what you said is yes. The timing is basically from 4Q for us, first calendar quarter of next year. As far as we are concerned now, it will move from IT bucket to time and materials. The revenue may be slightly lesser, but the gross margins may be much better. That is the overall impact there, and it should be, you know, positive in the medium to longer term, both revenue and, you know, the gross margins. Because we have enough demand to be able to redeploy any people that may be impacted or whatever else. Okay. Just the last question to Sunil, sir. If you look at the headwinds starting from Q3, Q4, we may have the inorganic pressure on the margins plus additional ESOP cost. You still believe there are tailwinds. Is it fair to say Q2 margins can be maintained on a going forward basis? In 2Q, is there any non-recurring expense or any non-recurring reversals in the P&L? Yeah. Sandeep, there is no one-off in Q2 except, you know, for the small M&A related expense, but that's very small amount in terms of the overall transaction that we have. The headwinds and levers that we are working on, the whole idea is to ensure that we are able to attract best talent, right? Engage with them. As you know, so far as attrition is concerned, it is not just one time pay hike that impacts the P&L. It is also the replenishment cost, which comes in at higher cost because of the situation we have in the industry. As a company and all our peers, you would find have been working on balancing this with significant addition of freshers to the system. Just about a year ago, nobody would have, I mean, our demand scenario is going to be so good and people could have actually onboarded much more freshers earlier, but that didn't happen. As an industry, kind of a situation, when more freshers get deployed, I am sure over, say, next two, three quarters, which is a time that is required to make those people, you know, you can deploy them on projects. This should help. One or two quarters, more stress will be there, and that's the time when we have to put all the levers to use to ensure that at least margins don't go south, right? The improvement in margins will take a little while to come because of this scenario we are in. We are also growing very fast, so we do need to carry the capacity for growth. While we have worked on the utilization from 80.1 to 82.8, we feel that 83%-84% in near term is what we would target, not something at much higher level because of the growth that we have to fulfill. I hope that's a clear answer. Directionally, we can maintain the margins at Q2 level? Yeah. Directionally, we will say we will be in the 16%-17% band. That is our attempt, while, you know, continuing to grow very well. That is the band you should expect, and growth is our focus. Okay. Thanks and all the best. Thank you, sir. Thank you. Thank you. Next question is from Mr. Nitin Padmanabhan. Yeah. Hi, good evening, everyone. Great quarter. A couple of quick questions. One is, I think there was an impairment of INR 74 million, and we saw a similar kind of number last quarter as well. Is this likely to continue in the next quarter? Or we have already had two quarters, so is it likely to end? The second question was on the IP business. Obviously there are a lot of end-of-life products in there. Do you think this will be, over the years, it'll be a gradual sort of, you know, decline there? Or do you think that there is scope for step drops, if you think take a longer term view on that? In relation to that, I think we have seen the effort in the IP business sort of improve over the last two quarters. Versus multiple quarters of declines that we have had. How should we actually think about it? Finally, on the new ESOP plan, how are you actually thinking about this? One, philosophically, is it over and above? Is it part of potential salary increases that you're thinking about as total comp, or this is over and above in terms of philosophically sort of sharing wealth? Is there any impact in the current quarter, and do you see further impact going forward? Thanks. Sunil, if you can talk about the impairment, I'll take the rest. Yeah, sure, Sandeep. I think this impairment is kind of done with now. There is no further impact that you need to expect. Right. On the other side, the IT business, I think it'll be stable to, you know, maybe a slight growth for some time and then maybe decline over a long term. Whatever decline had to happen in a bigger way, I think it is behind us. We have, you know, seen stability in that, and we are also repurposing the IT to derivatives, et cetera, and so on. We are relatively confident it'll be flat, marginal increase in the shorter run, decline gradually in the longer run. No, no worries on that. As far as the ESOP plan is concerned, look, here is what has happened and why we did the ESOP. We have grown very well over the last six, seven quarters, as all of you who follow us very closely would have observed. Now, with that we have seen a significant amount of shareholder value creation that has happened. Now, our employees, who are the people behind the shareholder value creation, in all our employee town halls have been requesting participation in this. It is only fair that we take them along as we create value for our stakeholders because of the efforts of all our employees. That is where we took our investor approval, we took our board of directors approval, and we did this, you know, fairly encompassing 80% of our employees are covered or will get covered in the next few months as they get eligible under this ESOP plan. This is to make sure we are basically creating an environment in which we are sharing wealth that our employees create for our stakeholders with them. It also helps us, on the other side, make our employee value proposition much stronger. So far, Persistent employee value proposition has been good brand, good work culture, good employee orientation, good content of work. If you want to work on the latest technology in a very friendly environment, which is very employee-friendly, come to Persistent. We are the, you know, best tech services company from a niche service provider perspective. Now with this, it is not basically this that it is a part of our core compensation. Core compensation will still remain very competitive. All the other things that I talked about will remain there. This ESOP plan will be a small thank you wealth generation for the effort that they do and they help us create wealth for our shareholders. Overall, we believe this should also help us in retention over a period of time, manage, you know, attrition over a period of time. It'll be beneficial for our employees, our investors, our customers, and the whole nine yards of our stakeholders. That was the philosophy behind the entire ESOP. We are pretty sure in the shorter run it may cost us a bit, but in the medium to longer term it'll be value accretive for our investors as well. That is the story behind the ESOP that we have. Great, helpful. Just one sort of clarification to Sunil sir is over the last two quarters, our stock comp has been roughly 1.4% of revenues. Do you think as this kicks in, it'll replace some of that to a certain degree and that number should sort of come off? That's the last from my side. Thank you. No, you are right, actually. The stock comp expense would stay in that range of 1.5%. It's not return. Great. Thank you so much, and all the very best. Sure. Thank you. Thank you. Next question is from Mr. Manik Taneja. Hi. Thank you for the opportunity. Sandeep, you made a statement about the restructuring of a large IP contract into a T&M into T&M billing going forward. If you could elaborate on that front and how that helps in terms of profitability improvement. That's question number one. The second was a much more broader question, and it is true not just for Persistent but for broader industry as well. While over the last 18 months we've seen a significant increase in offshore delivery of revenues, and typically what one used to see was that as offshore proportion of business used to increase, our utilization rates used to essentially moderate. In the current environment, what one has seen is that the utilization has continued to make new highs. What's driving that? Is this the underlying demand momentum because of which utilization continues to be very sticky and high? That's the second part of the question. Are you seeing customers looking at more innovative engagement models as they get used to greater work being delivered offshore? Thank you. Okay. I'll try and keep this brief because we have 25 minutes left. One of the largest contracts that we had, you know, it was basically to be renewed in five-year terms. Since we had seen depressed margins in that, we requested understanding from our customer and, you know, we have converted that to a T&M. What that means is it'll become a services contract rather than a revenue share contract. In a revenue share contract, our margins were getting depressed because the revenue on that product was not necessarily, you know, growing that heavily. Now, in terms of the revenue impact and so on, without, you know, going into too many details, it'll basically take our revenue down to maybe about 40%-45% of what it was. At the same time, the margins will become equal to the company gross margins for whatever business it is. On a margin perspective, it'll definitely be more accretive. On the growth perspective, the revenue profile, we don't expect an impact on this because today, honestly, we are hurting on the people side. If we add 1,000 more people today and anyone who's listening to this call and wants to be an acqui-hire, we are happy to do that. Any people that come off of this contract, we can easily redeploy them without missing a heartbeat. From a revenue perspective, not gonna impact. Margin perspective, going to be accretive. It's good for us, good for the customer, good for our employees. From that perspective, that is the story on the IT contract restructuring. Now, you talked about the offshore utilization. Look, we have been traditionally in the range of 78%-80% offshore utilization. We have cranked up the lever a little bit higher because obviously we are also in the same industry facing the same, you know, headwinds where we have, you know, issues, whether it is attrition, whether it is salary increases, et cetera. You know, a lot of our investors and people like you want us to maintain a healthy margin profile. In order to make sure that we are doing that prudently, we have cranked the engine. We had hired a number of people. Roughly, we have hired 5,000 people over the last four quarters. We have taken the, you know, utilization a little higher as we have been able to train and deploy the people. We are not cranking the utilization to the levels of 88%, 89% that some of our biggest peers are doing. We are happy, as Sunil said, maybe doing another 1% or 2% at max, and we will be in this range so that we are able to bring in the kind of, you know, technical people that we need as additional team members as we go along with time and have a healthy pipeline to back up the growth that we intend to have. That's the thing on offshore utilization. On the customers' innovative engagement models, look, there are definitely discussions that happen with customers on different models, whether it is fixed bid programs, whether it is, you know, taking over support for many years in different, you know, business models. Again, one has to be prudent in doing those business models. Revenue-sharing contracts and innovative business models can be tricky. Where it makes prudent sense, we will definitely engage, and we are seeing those discussions. I will stop with that and happy to answer any questions, you know, offline on this. Appreciate those inputs. Thank you, and all the best for the future. Thank you. Thank you. Next question is from Mr. Rahul Paliwal. Congratulations to the management, first of all, for taking this industry-leading initiative to share the wealth with the most important stakeholders, which is their employees. I'm sure it will have a boomerang impact, you know, in terms of profitability and stickiness to the organization. Congrats to Anand and the team and Sandeep, to you. My question is around when I compare with the peers, the margin front, we are lagging almost since 2015. Why this is the gap since so long and when the demand scenario is such high, how soon we can catch up with the peers? That's the question, sir. Look, on the margin front, yes. When you compare us with the bigger peers, there's a delta. If you were to compare with our competitors, who's the competitor for Persistent? Let's look at it. We are competing with the EPAM, Globant, Endava, and the likes. If you look at that profile of, you know, companies that we compete with, and then maybe in some places we compete with niche providers, some places we may compete with the larger peers. Now, if that is the competition, if you look at our margins versus that, you know, set of cohorts, we are pretty much in line if you were to study any of these competitors. Now, do we desire to go up from here? Absolutely. Our answer to you would be, give us next, you know, six to eight quarters as we build the company to scale. There is a number of things that will not proportionately scale from a cost perspective. There'll be a bigger leverage of SG&A, there'll be a bigger leverage of many other fixed costs or, you know, the proportion in which they will increase will not necessarily be in the proportion that our revenue will increase. With that, you know, our aspirations definitely are over the next six, eight, 10 quarters to go up by 100 basis points-150 basis points on the margins, but it'll take us time to go there. Definitely we have the eyes on the ball. Growth comes first. With the growth, margin will kind of follow. Have some patience. We'll get there sooner than later. Thank you, sir, and all the best. Thank you. Thank you. Next question is from Mr. Dipesh Mehta. Yeah. Thanks for the opportunity. Couple of questions. First, about the margin. Earlier I think, Sunil made a comment about 16%-17% EBITDA margin. Just want to get sense about it is after considering both the expected kind of thing, retention related cost between H2, H4 plus ESOP. On EBIT, there will be only incremental, would be the amortization. That is how right perspective from margin projection perspective for next couple of quarter. Second question is about the overall hiring and fresher related thing. How we look fresher intake plan for the next few quarter? If you can share some number about how we look fresher intake and whether it can act as a margin lever for FY 2023, considering pyramid-based realization related. Thank you. Sunil? Yeah, Dipesh. In terms of your question, I'll answer in two parts. One is with respect to the immediate near future and then as we go along in the next financial year. If you see the acquisitions that we have announced, when we had announced the acquisitions, we had mentioned about the fact that both the acquisitions are actually accretive at gross margin level. As far as the retention payouts and the money that gets amortized, that will have, you can say, some impact happening at the EBITDA and EBIT level. Overall, this will not have a huge impact, I would say, in the next two quarters. It would have an impact of 20-40 basis points, which we have to manage from various other levers. Over the longer term, yes, we have to work on these acquisitions, integrate them well, create synergy revenues and do a whole lot of those things to ensure that this is really not a worry for us to manage the amortization charge which comes out of the intangible from acquisitions. In terms of the ESOP thing, it will happen as we go along. I don't think, as I mentioned earlier, the overall expense will not be of you know much different percentage to revenue. It will remain in that 1.5% kind of a mark. On the fresher intake, we will target somewhere between 2,500-3,000 freshers over the next one year. If I look one year from now, that is the number that we are looking at, and obviously we have to execute on that, then train and deploy. Understood. Thank you. Thank you. Next question is from Mr. Hardik Sangani. Hardik, please unmute and ask your question. Okay. Next question is from Mr. Nagendra Morya. Hi, sir. Good evening, and congratulations on great quarter. I have just a small question regarding the employee costs. If you see, sir, you told there was a hike in salary during the July itself. If you see the ratio of the cost to revenue is more or less similar, about 60%, kind of ratio. Do you think from the next upcoming quarter, with the normalization of the attrition, the revenue, this cost ratio, about 60% will go up? Or it will remain in the same level? That is one question. Second thing, second question on the revenue goal or revenue vision you shared about $1 billion revenue goal or target. What is the timeline of this revenue goal and what additional effort company is doing to achieve this goal? Thank you. Sunil, if you can take the first, I'll take the second. Yeah, sure, Sandeep. You know what you mentioned about the employee cost as percentage of revenue. That's a very important direct cost that all of us always have an eye on to ensure that we are optimizing to the best extent possible. As you would have seen over the last several quarters, like Sandeep talked about, we added significant number of employees. When we have such a significant growth from 10,500 to about 15,800 today, along with the managing the attrition part of it, there is a significant investment that we have done to build the learning and development and the deployment kind of a framework to ensure that we get the best talent available to our customers. Having said that, the percentage of cost to revenue is a dynamic mix of three things. One is the onsite-offshore ratio of the business. The second is the utilization. Third is within the utilization, whether you are able to have a fair mix of lateral versus freshers. Directionally, yes, the whole idea about improving overall EBITDA margin in the earlier question that we talked about comes out of improvement in gross margin and also improvement by spreading the SG&A over a wider revenue base. It is hard to predict these things because attrition is something that is evolving, and how much attrition gives additional cost for the same capacity, you know, to be replenished is a factor that is not in our control. You can be rest assured that all of us are working very closely to ensure that this, you know, is optimized to the best extent. Sandeep? Sure. On the billion-dollar plan, our eyes are absolutely set on that. It is line of sight for us. If you look at it at $182.3 million, that gives us a run rate of roughly about $730 million. Over the past five to six quarters, we have been growing 6%+ in QoQ terms. If we look at it, you know, next six to eight quarters is where our ambition would be to hit the billion-dollar mark. Now, this would come from mostly organic growth. There will be some inorganic part to it, like we announced the acquisitions of SCI and Shree Partners, you know. We are looking at multiple different acquisitions as well, but these are more capability acquisitions, whether it is in the cloud space or security or data or Salesforce. You know, we are confident of the combination of organic initiatives, the larger deals that we have been doing, going deeper into service lines, going deeper into partnerships, et cetera. A number of these things are panning out well for us, as you would have seen over the last, you know, sequential quarters that we have delivered. We are reasonably confident next six to eight quarters we should be able to reach our vision. You know, obviously it is an evolving vision. When we are at one, we'll target three. When we are at three, maybe we'll target five or 10. It's an evolving thing and we are confident of delivering it. Thank you for answer. There's just one quick question on the travel cost side. It was like 2%-3%, odd percent of the revenue earlier, but current COVID time it has gone down. How you see up in the upcoming quarter travel costs will pick up? See, the travel has started opening up. It is already some small amount of 10, 15 basis points. In fact, it has already added this to itself, and we expect that trend to be like that. If you take about two to three quarters from now, if nothing materially changes, then it will have an incremental impact of about 15, 20, 25 basis points per quarter. It may move in that range, but today it is a little hard to predict. You are right, over a period of next three, four quarters, we should be seeing travel coming to about two-thirds of where it used to be. Okay. Thank you. Thank you. Next question is from Abhishek Shindadkar. Hi. Thanks for the opportunity and congrats on a solid execution. Couple of questions. The first thing is conversion of that IP contract into time and material. Would that end the seasonality that we have generally in Q3? I'm sure you said it will happen from next year, so we'll have this seasonality probably in this time. The second is more on the mix of geography. You know, India is almost now at a higher mix than Europe. So, you know, what is driving this business and, you know, what is probably not working in Europe? If you can just elaborate that would be helpful. Just a follow-up to that is India business historically, you know, the hypothesis is the DSOs are little higher. Anything that we should be aware of from a DSO standpoint? Thank you for taking my questions. Sure. Let me try and answer that. The conversion of the IP contract to T&M, the seasonality. Look, the seasonality-wise, October, November, December quarter is the highest in that particular contract or overall IP business that we do. January, February, March, which happens to be Q4, is the lower side. Every alternate quarter is the pattern that we see. From that perspective, you know, this quarter it is continuing the way it is in October, November, December. The restructuring is effective January. From that perspective, you should look to not have the major ups and downs beyond that. We had more or less as a company, if you look at it last Q4, we had overcome that any which ways. That should answer your question on seasonality. It is all positive for us. The other side of it, the India business being higher mixed than Europe. In India, what has happened for us is this. Our capabilities on certain service lines, including you know, service lines like Salesforce or our engagement with financial services customers, that's what is driving the revenue up. It's a healthy revenue that we are seeing in the BFSI segment that I talked about. Again, you know, some of the other customers which are multinationals, their Indian arms and so on. That is the positive side of it. Now, DSOs, I don't think it is impacting us. If you look at it, our DSO, we have been able to thankfully manage it because of our team's efforts very well. I think we are at a very healthy clip in terms of DSOs. We are at 55 if we were to not look at the unbilled part, and even with unbilled part, it's fairly healthy. Now, what is not working in Europe? I would not say what is not working in Europe. The last quarter, as Sunil pointed out, it was impacted because of vacations, et cetera. Otherwise, we would have seen some amount of good growth there as well. Now, can we do better in Europe? That is the question. I would not say what is not working. I would say how do we work better in Europe? We have stated very clearly as we look to our billion-dollar goal, we want it to be 10%-15% instead of the, you know, 8.5%-10% swing that we see in Europe. We are at it both organically and inorganically. The team is focused. Over a period of next, you know, several quarters, we hope to have that situation change in a positive manner and we'll keep reporting on that. That is the thing about Europe. Perfect. Thank you for taking my questions. Thanks, Abhishek. Thank you. Next question is from Madhu Babu. Yeah. Hi, sir. Sir, at least the perceived premium of the sector has increased in the last two years, the perceived importance. What is stopping us on the price hikes? I mean, because even the inflation has been substantial for us. Even not this sector, across other industries also input costs have increased even in other sectors as well. What is stopping on the price hikes when you're, you know, all-time high demand as well as most, the perceived importance has reached a new high for IT services. Thanks. Madhu Babu, there's nothing stopping us from price hikes. See, it is like this. The customers today understand, they're very empathetic. In customers' organization, there's an organization called procurement, whose job is to make sure that, you know, they are controlling the costs. Nobody likes to pay more. Even though they may be empathetic to you, nobody likes to pay more. You know, these things have to be done when the contracts are up for renewal. One is a sequencing issue. You just can't go arbitrarily and ask for pricing increases. You know, customers, some customers will not like it. Some customers may still, you know, work with you. We are, as we have the contracts coming up for renewals, we are working with them. You know, we are hopeful of, as you rightly said, demand is high. Whatever issues we are facing in India is global issues. I don't think it is, you know, relegated only to India, only to services companies. I'm pretty hopeful as we go along this will happen. We are seeing pricing-related positivity in newer contracts and even in renewals. It may take a little bit of time, but it'll, you know, happen. It'll happen in the right time. Okay, sir. Thanks and all the best. Thank you. We will take one question per participant as we have less minutes in hand now. Next question is from Girish Pai. Yeah. Sandeep, I had a question on the margin guidance. In the media interview you gave in the morning, you said that you're looking at 100 basis points improvement in margins over the next two to three years, which seems fairly conservative to me because, sitting 12 months back, you were saying that EBIT margins would be in that 12.5% kind of region, and today you're sitting at 13.9%. Are you being ultra-conservative on the margin front? Do you see... Could this be going up significantly, as you see serious traction in your revenues? Girish, there is two things there. Number one, look, we are building the company for the longer run. We are hunkered down. If we can do the margin improvement next quarter, rest assured we will do it. The point is, if you ask us for a forward-looking guidance, we have to give you a guidance that is, you know, practically doable while we will give it our effort to do it in the shorter term. The fact that, you know, we said whatever we said on the EBIT, and we are delivering much better than that, should give you the confidence that we are focused on growth, we are focused on operational improvement. Our profitability has, so far, if you look at the operational improvement, it has outpaced the revenue improvement that we have done. Rest assured, if we can do it better, faster, we will do it. From a guidance perspective, look, we don't want to guide something that we can't live up. We are at it. If we can do it faster, despite the challenges that are there in the industry, we will do it. There's nothing stopping us from doing it. If you ask us to commit to something, it'll take us that much more time. Okay. Sandeep, just one question more if I can squeeze this in. What I see is two sets of tier two companies like yours which are giving a TCV number and there is growth coming through, and there are companies in the tier two side which are not giving a TCV number but showing very strong growth. I'm just trying to understand the nature of business coming your way. Are these like really, really small contracts which do not appear in the TCV, which are strung together, so to speak, and therefore, you know, you see this growth in those companies where the TCV number is not being given? What are you seeing on the ground? Why are those companies not giving those TCV numbers? Look, I don't control those companies, so I can't say why they give or they don't give. We try to give you as much transparency into our system as we can and is practically possible. As far as we are concerned, our contracts are with reasonable-sized companies. We're the companies that we want to work with. Thus, contracts are increasing in size. We are happy with the kind of contracts that we have. The proof of the pudding is nobody can grow sequentially for six quarters if you're doing shorter contracts and they finish and then you are digging newer wells to find, you know, newer sources of revenue. There are some which are shorter term, some medium term, some long-term contracts, a healthy mix of all of this, and that's where we have been able to sequentially, you know, give the growth that we have. If you look at year-on-year growth, 34% growth doesn't come on back of smaller contracts come together. It definitely needs a lot of footwork to be done to get sequentially from, you know, last quarter was 27%, this quarter is 34%. We are happy with the kind of contracts. We have made good progress. If we can keep on this progress, I think as a company and as a team we'll be very happy with this. Thank you very much. Thank you. Next question is from Ruchi Burde. Congratulations on excellent execution. My question is on pricing again. In the prepared remarks, Sunil mentioned that clients today are more susceptible for pricing discussions. Are these conversations of equal ease for fixed fee contract and T&M engagement? If not, is it fair to imply that the margin pressure is relatively more acute in the fixed fee engagement versus T&M? I'll keep it short. We have one minute left in the call. Look, a significant amount of our work is on the T&M side, and customers are willing to look at that. As far as the fixed pay is concerned, it's more of the IT business, and that's any which ways we control. My question is specifically for IT services. Yeah. And. IT services, if you look at it, we have a fairly healthy margin on IT except for a few contracts which we have basically said we are optimizing. No concerns there. The margins there are more than the company average. Moderator, I think, let me get to the final comments. Yes. We will close the call because we are at end of the call. We sincerely appreciate all of you taking time and joining us for the call today. We would like to thank our 15,000+ team members, customers, partners, and investors for their support in our growth journey. We are bullish about our prospects for the future. We look forward to connecting back with you in the next three months to provide an update on our ongoing progress, and we wish you all good health and a very happy Diwali and season's greetings. Thank you. Moderator, you may close the call. Thank you very much to the Persistent management. Ladies and gentlemen, on behalf of Persistent Systems Limited, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines and exit the webinar. Thank you. Thank you.