Ladies and gentlemen, good day, and Welcome to the Tech Mahindra Limited Q2 FY 2025 Earnings Conference Call. We have with us today Mr. Mohit Joshi, Chief Executive Officer and Managing Director, Tech Mahindra, and Mr. Rohit Anand, Chief Financial Officer, Tech Mahindra. 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 an 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. Mohit Joshi, MD and CEO for Tech Mahindra. Thank you, and over to you, sir. Hello, everyone, and thank you for joining us for our Q2 FY 2025 earnings conference call, and we're delighted to speak to you again as we discuss our financial performance and strategic achievements of the past quarter. We continue to progress on our strategic improvement efforts, even as the overall IT services industry has remained soft. We are focused on strengthening client relationships and expanding the partner ecosystem. All this with a sharp focus on operational excellence through Project Fortius, which has resulted in an expansion of margins for the third sequential quarter. For Q2 FY 2025, our revenue increased by 2.2% year-over-year and by 1.9% quarter-over-quarter. By region, Europe achieved a 4.1% year-over-year growth, and the rest of the world achieved 9.7% year-over-year growth. The Americas growth was soft at a 2% year-over-year decline. We see weaknesses in the communications vertical, which posted a decline of 1.7% year-over-year, as our key telecom clients continue to prioritize cost savings, and their spending on discretionary projects is constrained. The manufacturing vertical had a soft quarter with a moderate growth of 0.6% YoY, as the outlook for discretionary spending in this vertical continues to be conservative. Among the other verticals, a mong our focus verticals, BFSI reported 4.5% year-over-year growth. In this vertical, our existing clients and continue to see new logos signing on. We are focused on better utilization of existing capabilities, including those of portfolio companies, which is helping to build the foundation for longer term growth in the sub-segments of insurance, asset management, and payments, among others. All the other verticals have also seen positive momentum, with the tech, media and entertainment reporting a 2.4% YoY growth, healthcare and life sciences reporting 4.5% YoY growth, and the retail segment growing by 4.7% YoY. New deal win TCV for the quarter was $603 million and was broad-based across our key markets. We opened a new logo with one of the largest U.S.-based cards and payment services providers for an AIOps-based production management for the bank's applications, in addition to a tech modernization program across application development and maintenance services, data and cloud, and infrastructure and migration, making Tech M the change-the-bank partner for the client as well. We were chosen as a partner to a European bank for a Temenos T24 implementation program to modernize the current core banking platform and provide ongoing support of core banking systems post-implementation by leveraging our strong capabilities in core banking transformation. Tech Mahindra was selected by a leading European communication services provider for an autonomous operations program, enabling them to provide the best customer experience and transform into a highly digitally mature and innovative operator by leveraging TechM's network services, application development and maintenance services, and AI capabilities for its business, IT, and workforce transformation. We were also selected by a leading telecommunications company in Australia to deliver customer experience services and to support their journey to achieve industry-leading digital and customer service. We are excited to announce several new partnerships that will enable us to broaden our service portfolio and deliver enhanced value to clients. For example, we launched a collaboration with Microsoft to modernize modern workplaces with Copilot for Microsoft 365 for our customers and employees across 15 locations. The collaboration positions Tech Mahindra as a leading global systems integrator, adopting Copilot for Microsoft 365. We are partnering with Temenos to provide a core banking offering on their SaaS platform, specifically designed for Europe, for electronic money institutions in the U.K. and Continental Europe. Tech Mahindra and Google Cloud announced a partnership to boost GenAI adoption and digital transformation for Mahindra Group entities. In close partnership with the International Chess Federation, FIDE, we successfully concluded the second season of the Global Chess League in London. This collaboration significantly strengthens our brand, aligning it with the qualities of intellect, rigor and strategic thinking, which are central to both chess and our broader vision. Operationally, we made further progress in our efforts towards cost savings and efficiency. We posted an EBIT margin of 9.6% for the quarter, an expansion of 110 basis points sequentially, enabled by savings achieved under Project Fortius and with support from currency tailwinds. The free cash flow for the quarter is $157 million. And in line with our committed capital allocation policy, the board has approved an interim dividend of INR 15 per share. Earlier this year, we had called out areas where we would make above normal investments to drive improvements to achieve our FY 2027 targets. We will report progress on our key investment areas annually, but we'd like to share updates on some of them today. We have invested in strengthening the capabilities of the focused service lines by developing the leadership, investing in technical specializations. We continue to invest in strengthening our fresh graduate hiring program, building the right mindset and future skilling our associates by building capabilities in AI-first and cloud-first skill sets. We have created a next-gen skill framework for all of our IT associates, which would fuel career mobility among our workforce. We will continue to invest in creating and sustaining an outcome-driven learning organization and cultivating a high-performance culture based on the pillars of simplify, clarify, innovate, and drive a performance orientation. It's also heartening that our commitment to excellence and purpose has been recognized. For instance, Navistar honored us with the 2024 Supplier Excellence Award for the fifth consecutive year. Tech Mahindra received this award for its performance, strategic alignment, and innovative ideas in sustainable mobility. We won the prestigious Diamond Supplier Award 2024 from Bombardier for the third time. This award is a testament to Tech M successfully achieving Bombardier's operational performance standards in quality and delivery. We are proud to have won the 2024 Oracle Best-in-Class Innovation Partner Award for App Services Partners. Tech Mahindra has also been recognized as one of the world's top 50 most sustainable businesses at SEED 2023 Business Sustainability Awards, and we are among the Financial Times Asia Pacific Climate Leaders 2024. I'm proud that Tech Mahindra is also one of the Most Preferred Workplaces for Women, 2024-2025, recognized by Team Marksmen, and we ranked as a leader in Avasant's Telecom Digital Services 2024, and were placed in the leadership zone in Digital Engineering and ER&D Services overall by Zinnov. We were placed as a leader in Contact Center Customer Experience Services 2024 by ISG and as a challenger in Gartner's 2024 Magic Quadrant for Public Cloud IT Transformation Services, among other analyst recognitions. We were ranked among the top five providers in the 2024 IT Sourcing Study by Whitelane Research. Underscoring our commitment to sustainability, Tech Mahindra was recognized among the world's most sustainable companies by Time Magazine. Remarkably, we achieved the prestigious number one position among all Indian companies. I believe that we are on the right path for a long-term, sustainable transformation. Our leading indicators are moving in the right direction, and our scale and speed narrative is resonating in the market. This year, as I have mentioned in the past, could be volatile as we are in the turnaround phase. I'm confident that the platform is being set up for a long-term valuable franchise, thanks to a high caliber and united leadership team and a clearly articulated strategic plan. We look forward to diving deeper into these topics and answering any questions you may have during the Q&A session. I now hand over to Rohit to elaborate on the financial performance, and thank you again for joining us today. Thank you, Mohit. Good evening, everyone in India, as well in U.S., good morning. Let me begin with an overview of the company's financial performance for the quarter. We ended the quarter with revenue of $1.589 billion, a growth of 1.9% quarter-over-quarter and 2.2% on a year-on-year basis. On constant currency, it is a growth of 0.7% QoQ and 1.2% YoY. Translating this in rupee terms, revenue was INR 13,313 crore, a growth of 2.4% QoQ and 3.5% YoY. This quarter, if you see the growth, was led by communication vertical, growing at 2.7%. As Mohit mentioned, it was a YoY decline of 1.7%, but sequentially, the communication vertical grew for us after five quarters. Followed by TME business at 5.7% and BFSI at 2.4%. Manufacturing declined by 4% as we see softness in the auto sector. We posted EBIT of $150 million, or INR 1,280 crores, which is 16.2% increase over our previous quarter, and the resulting EBIT margins is 9.6%. Of the 110 basis points QoQ expansion in operating margins, about 40%, 40 basis points is contributed by Forex movements, and the balance 17 basis points improvement is due to operating efficiencies and savings as pointed out by Mohit under Project Fortius. Other income was $62 million or INR 521 crores, including gain on sale of land of approximately $54 million. The effective tax rate for the quarter was 26.6%, and we posted a profit after tax of $149 million, which is in INR terms, INR 1,250 crores. The PAT margin for the quarter is 9.4%. The free cash flow generated in the quarter was $157 million, excluding the land sale, which translates to 105.4% of PAT. Cash and cash equivalents at the end of the quarter was $784 million or INR 6,566 crores. Based on the cash flow generation and our capital allocation policy, the board has approved an interim dividend of INR 16 per share. DSO, including unbilled, was at $94 million, which is an increase of one day on a sequential basis, but an improvement of three days on a YoY basis. The total hedge book stood at $2.3 billion versus $2.2 billion last quarter, and based on our hedge accounting, our net mark-to-market loss for the quarter was $3.6 million. New deal wins TCV for the quarter was $603 million, and as Mohit mentioned, the highlight of the deal wins this quarter are the strategic wins in the communication space, coupled with an expansion of our BFSI portfolio, with the onboarding of two new logos, one each from the U.S. and Europe. While we continue with spend margins, we've also made significant investments for long-term sustainable growth. Some areas of investment include opening a new center in the Baltic region, boosting our presence of service offering in Europe. Expansion of partnerships in the AI, BFSI, and manufacturing segments to strengthen domain-specific capabilities. Investments towards strengthening our capabilities in high growth service lines. We've also invested in modernizing learning and upskilling infrastructure to enable advanced skill development for our associates. The total number of employees at the end of the quarter was 154,273, including 2,000+ freshers that we onboarded for the quarter, which is a part of our strategy, and we're on line to get more than 6,000 for the year. So to summarize this quarter, we see consistent performance around increasing deal wins, revenue growth, cost optimization, and steady free cash flow generation as we continue our journey towards FY 2027 stated targets. With that, I will take a pause now and hand back to the moderator for Q&A. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. 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. Our first question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah. Hi, good evening, and congrats on a solid execution in a tough environment. I had a couple of questions. So the first is, in terms of Project Fortius, of the 150 basis points kind of investments that we were seeking to do in the first year, how much would have been baked in, in the first half? The second, what are your thoughts on how you're seeing furloughs and the demand environment going forward? And, any thoughts on wage increases, broadly? Yeah, sure. Well, I'll take the Project Fortius investment question first. On the demand environment, I'll pass it to Mohit, including the wage hike question. On the Project Fortius, you know, as you rightly mentioned, we've said that we will broadly invest 1.5% of our margins for long-term investments. And we are kind of accelerating that moving into Q1 to Q2, as we screen all these investments, and the benefit that we'll get out of that. I think from a pacing perspective, you should see second half being slightly heavier than the first half, but every quarter we are getting towards all the investments, as I gave examples to you on some of those, to make sure that we set the right platform for our FY 2027 goals. Because it's important that while we drive short-term metrics, which are, you know, you see in the financial staff reduction, you see improvements around C&B as a percentage of revenue, but at the same time, we also got to make sure that we are making these investments for long-term mix change in the business, long-term change in terms of the composition of the organization, you know, right? So I think just coming back to your answer, it's equally spread out through the years. Second half might be slightly more, but not materially different. Okay, thank you, Rohit. And hi, Nitin. So I think on your question on the furloughs and the demand environment first. You know, look, I think we all know that Q3 is a seasonally weaker quarter because of lower working days and because of the furloughs as well. We see the same pressures of furloughs as we have in the past, but I also reckon it's a little bit early, and we'll probably get a better visibility on the furloughs over the next four to six weeks as the customer expectations start to flow in. As far as the demand environment is concerned, I would say it's largely unchanged from what we had said the last time. We don't see any significant difference. The one thing that we have mentioned, and which you see in our results as well, is a slight softness from a manufacturing perspective, especially for auto, where we do have a significant exposure in Europe and in the U.S., but overall, I would say the demand environment is broadly similar to what we saw coming into Q2. On the wage increases, again, this is something that, we have kept in mind, and we have shared, in the previous quarter as well. After the conclusion of the Q2 results, we're going to assemble together as a leadership team and discuss both the, sort of, expectations from a salary hike perspective, as well as employee, as well as the affordability question, and we expect to close it out, you know, over the next few months. So that is what we're thinking about from a wage hike, perspective. Hopefully, that answers your question, Nitin. Yes, it does. That's very helpful. If I can just squeeze one quick one in as well. From a offshore mix standpoint, I think there's been a pretty good sort of improvement on a year-on-year and sequential basis. How are you thinking about your targets on that, where you think you'd be pretty comfortable longer term? And that's all from my end. Look, I think. Yeah, look, I think it should be stable and obviously, you know, both from our perspective as well as from a client's perspective, there are certain benefits towards going offshore. But I don't think there is any major trend shift that we're expecting over the next couple of quarters, at least. Got it. Perfect. Thank you so much, Mohit and Rohit. All the best. Thank you, Nitin. Thank you. The next question is from the line of Rod Bourgeois from DeepDive Equity Research. Please go ahead. Great, thank you. Hey, so as you execute your transformation plans and investments, I wanted to ask if you're seeing additional early signs that you're making underlying progress toward your fiscal 2027 targets, so I guess I'm asking, are you seeing underlying signs of more improvement progress, either in the organization or also in Tech Mahindra's positioning with its clients? Thanks. Thank you, Rod. So look, Rod, as we had shared in April, right, and we went through a fairly elaborate process to figure out what our long-term metrics should be and how we're thinking about transformation. And if you will recollect, we had stated that the transformation would be on the three pillars of our strategy, which is growth, margins, and organizational transformation. And we'd also defined the long-term metrics that we expect to use to measure our progress, right? So, while we are not publicly sharing, you know, the progress across all the metrics, maybe we can give you a little bit of a flavor about the change that has already happened. So first, on growth. On accounts with revenues greater than $20 million, we have grown 1.5x the pace than the rest of the company. And this is the result of the focus that we have on our top accounts under the Turbocharge program. And as we've shared previously, you know, we are investing in dedicated client and delivery partners for our top accounts. We have, you know, a significant program of work to develop account-based marketing for our top accounts. There is training for our top teams, an infusion of deep technical and architecture talent for these accounts. And we are seeing the early results of, you know, this investment in terms of accelerated growth for our top accounts. So that's the key metric from a growth perspective. From a margins perspective, you know, we are working on both short-term and long-term measures. On the short term, we can see a reduction in, you know, C&B, including subcon costs, as a percentage of revenues, as we are adding and at the same time, we are also adding more resources to the company and investing in the long term, right? So from a short-term perspective, there is the reduction that you're seeing, including in subcons, and from a longer-term perspective, it's the infusion of fresh graduate trainees and the investments that we're making in training to make sure that they can be, you know, absorbed into the workforce, you know, at a rapid clip. From an organization perspective, one of the key things that we were working on was the area of cultural transformation, right? So keeping the intrinsic strengths of Tech Mahindra but initially simplifying, clarifying, innovating and driving performance management. On the innovation track, for instance, we are tracking our progress on GenAI skilling and how we're embedding that into our deals. So for instance, only 1/3 of our IT services workforce is now using GitHub Copilot, right? Which we think is ahead of our peer groups. And in addition, obviously, there are people using the AWS and the Google solutions as well. We are also seeing the percentage of GenAI-infused deals go up every quarter. I do feel that across the three elements of our strategic plan, growth, margins, and organization, we are seeing progress on the long-term metrics that we had shared with you know, all of you in April. Hopefully, that answers your question, Rod. No, that's great. And just a quick follow-up on the transformation plan. To what extent are you prioritizing large deal wins in your plan? I guess I'm asking because large deals can definitely boost your bookings results, but they can also sometimes require margin sacrifices and contract risk, right? To win those large deals. So I'd like to ask how you're thinking about large deals in the overall plan. Yeah. So, Rod, look, we have clearly identified large deals as a key factor that will drive our growth, right? And we have invested in creating significant large deal capability within the organization. The way I think about large deal TCV in any given quarter, right, is that it's a function of the size of the pipe that you can build and your conversion rates. Now, to build the pipe for large deals, and we do get invited to almost all the deals in the market. We have invested in creating a sales force that is focused on our must-have accounts, the investments that I already referenced earlier, that we're making in our top accounts from our Turbocharge program. We've also, under our Chief Marketing Officer, built out extensive program of work to build on the relationships that we have with the deal advisor and the analyst community. And so we see a constantly broadening pipe from an invite perspective. And then equally, we're working on improving our conversion rates, which we track very closely. And for that, we are ensuring that the quality of our technical solution and our commercial solution is very robust. So we have invested in deal architects, technical architects, as well as negotiators. We're also constantly working on the commercial elements of our offer, and we are seeing the results through coming through. You know, you saw a healthy clip of deal wins for this quarter as well, and you know, and a predictable quarter-on-quarter improvement. However, we have also been very clear about the fact that we will prioritize margins over, you know, large deals at this point of time. And we want to be very clear, right? That in this environment, obviously, it is very tempting to do the sort of deals that can, potentially, come back to bite you later by making, what I would say are heroic assumptions about, productivity or making heroic assumptions about what can be accomplished. And we are shying away from that, right? So it is, as you can imagine, as a sales team, a little bit difficult. But we do feel that we are being incredibly disciplined, but at the same time, there is a huge will to win and to make sure that we are getting our fair share of large deals. I also feel that we are creating the institutional capabilities that will help us broaden the pipe and improve our conversion rates going ahead. Very clear. Thank you. Thank you, Rod. Thank you. The next question is from the line of Abhishek Kumar from JM Financial Limited. Please go ahead. Hi, good evening. Thanks for taking my question. Very encouraging to see second consecutive quarter of new logo win from BFSI. Mohit, my question is, you know, given your relationship and your leadership team's relationship, you know, opening new logos is while it's the right step, probably the easier one, given the competitive intensity in this sector. Two questions. One, how should we look at scaling these accounts, you know, given the competitive nature? And second, what kind of contracts have we got? Are these broader MSAs that we are signing, or these are, you know, smaller SOW kind of work to start with? Hi, Abhishek. Thank you for that question. Look, I think, you know, we have identified financial services as a focus vertical for us, just given simply the fact that this is where the largest spend pool is, right? From a tech services perspective. Now, I would slightly differ from you in terms of, you know, the ease of opening logos, in my own experience, right? And I would qualify that by saying that we are focused on serving the largest financial institutions across the globe. I do feel it is harder to get in. Once you get in, because the doors are closed fairly tightly, once you get in as a preferred supplier, landing and expanding is relatively easier, right? It is harder to get in, as opposed to other verticals, where it may be easier to be selected as a preferred supplier, but then harder to win business. So that's the first piece. The second piece is, we have clearly identified that we cannot be a me-too player, right? Or a cut-price player from a BFSI perspective. And so therefore, we've identified clear areas of differentiated strength from a Tech Mahindra perspective, that are coming from our own experience as well as the experience of our portfolio companies. And some of these areas are, for instance, in insurance, where we have industry-leading capabilities in Guidewire, among other things. It is coming from the focus that we have on asset and wealth management, where because of Citisoft and our own experience, we believe we have a depth of subject matter expertise. It is coming from payments, where we have experience working with, you know, with issuers, and with the networks. It is coming from core banking, where we have strong partnerships with a variety of, leading software, providers, and so we are focused on the must-have accounts and looking to open the must-have accounts through areas where we have differentiated capabilities, rather than being a cut-price player. Now, with regard to the wins, it is a mixed bag, so, for instance, we shared the details of one deal, which is a large, you know, maintenance and development deal with a card services provider, but equally, there are other clients where we have gotten permission to enter as a preferred supplier, and that has opened up all sorts of doors for opportunities in diverse areas of the business. There is a bit of a mix. I do recognize that, financial services is a hugely competitive, industry, and it is a space where all the players are very, very focused. But I do believe that we have the makings of being a credible challenger in this space, and we have a very well-thought-through strategy and really, a depth of, talent, that understands the industry, understands the key players, and is able to build the compelling solutions that allow us to be in the consideration set for our clients. That's. Thank you. That's clear. One maybe related question on demand in BFSI. Some players are calling out some discretionary spend, especially, capital markets, et cetera. Have we seen any change in customer behavior in BFSI? So I just mentioned two things. One is, it does seem that, you know, that there is, in the BFSI sector, that the spend levels seem to be slightly elevated compared to about a year ago. But equally, I mentioned that because the sector is so heavily concentrated, right? That, and a downturn in a single client can wipe away the benefits that you're seeing elsewhere. And finally, BFSI is also the sector that is most exposed to, furlough pressures, right, along with manufacturing. So there is that element to consider as well. But on the whole, I would agree that there appears to be a slight improvement in sentiment, but it's not a dramatic one degree shift. Great. Thank you, and all the best. Thank you, Abhishek. Thank you. Requesting all the participants, please restrict your question to one per participant. If you have any follow-up questions, you can rejoin the queue. The next question is from the line of Gaurav Ratheria from Morgan Stanley. Please go ahead. Hey, hi. Thanks for taking my question, and, congratulations on steady progress towards your long-term strategic objectives. My questions, you know, are on top five clients, continues to see weakness for last few quarters, where do you see this bottoming out? Secondly, where, is your current deal win trajectory enough to get you to industry growth rate next year? If not, then what should be the target quarterly win rate one should look at? And the puts and takes for margins in second half. Thank you. So, I'll answer the first part of the question and then pass it on to Rohit for the puts and takes on margin perspective. Now, if I look at our top five clients, right, candidly, there is a preponderance of telecom clients among our top five, right? While the top thirty is more diversified, for the top five clients, we do have, you know, a significant number of telco clients in that space. And over here, specifically, you know, specifically for, you know, for a couple of clients, we are seeing significant budget pressures that they're facing as a result of, you know, their own challenges as a result of high interest rates. And we have dug in quite deeply into these accounts to make sure that we are not losing market share. And so I'm quite comfortable based on the conversations that we've had with the clients that we are retaining market share, and any reductions that we're seeing are the results of their own budget cuts, and in some cases, a degree of insourcing that is, you know, that is happening. But I do feel quite comfortable that for our overall top account portfolio, we remain a strategic partner and a credible long-term partner, right? So I'm quite comfortable that there is no loss of competitive positioning from a tech and perspective there. Rohit? Yeah. Also from a deal quantum perspective, your question, how do we kind of look at the range for us to drive industry average growth for next year? I think, we've said that earlier as well, from somewhere around 600-800 is a kind of a range for us to look at, from an industry average. It obviously varies given the tenure of the deal, you know, so there's variation around it, but that's broadly the range you should look at. We've, you know, the last couple of quarters we were below that, now we've crossed that threshold. I think, as we move forward, that's the enabler for us to be in, from a, next year perspective, right? So that's kind of the way to think about it. In terms of, margins, I would say, short term, you know, we're working on everything possible. We can see it in the subcon reduction, the percentage of revenue that's come down sequentially over the last few quarters. We'll continue to drive that even further. We've mentioned that we feel we can get to single digit on those, so that will continue. Our governance around project management and execution is a big focus for us to drive change requests, automation, deliver the benefit that we can drive on the fixed price program. So that will be a big, big focus area for us as we move forward. We're focusing a lot on pricing as well. I think there's a lot of tools and analytics that we're driving internally. There are dedicated program, which is rolling up from a governance standpoint to Mohit, and just to ensure that we're getting the right entitlement from a pricing perspective. So I think it's spread out across various factors to give us the balance that we need from a short-term perspective. And as I mentioned, we're also investing in the business, so it's very easy to look at short-term gains and forget about that. And I think we're very clear on our strategy from April that we articulated. So we're continuously focusing on that investment, because that's what's gonna give us benefit in year three, right? Year three, year four, year five. So that's the way we think about it. Thank you. Thank you. The next question is from the line of Sandeep Shah from Equirus. Please go ahead. Yeah, thanks. Thanks for the opportunity, and congrats on a good quarter. Mohit, just wanted to understand, with your recent talks with the communication clients, the rate cut creates some hope in terms of recovery in the demand, may not be immediate, but next year in CY 2025, and if more rate cut comes, this could be also a growth driver for Tech Mahindra going forward. Yes. So clearly, rate cuts will offer a degree of relief to many of our telecom clients because they're carrying heavy debt loads, and will therefore allow them to maybe spend more, from a, you know, from a tech perspective, right? I also think that as you look at this quarter itself, if you look at our performance from a Q2 perspective, you will see that we've had QoQ growth from a comms perspective. And that is coming from the fact that we have actually seen stabilization and growth in our Asia Pacific comms portfolio and in our Europe portfolio, right? We continue to see stresses in the U.S. portfolio. But again, we are also hopeful that this will turn around next year. When I think about our telecoms practice from a longer term perspective, I do feel that we have a significant range of capabilities that we offer to these clients, broadly under three buckets, right? The first is under the simplify bucket. That is an opportunity for OpEx cost transformation by really impacting operations. And one of the deals that we spoke about in this particular quarter, for instance, has been about, you know, autonomous operations for a leading European telco. We also feel that we have a great set of solutions around modernizing the tech stack, which really impacts our telecom clients in reducing their time to market and improving the customer experience. Over here, you know, working with ecosystem partners like a Salesforce or like a ServiceNow, we believe that we have a, that we have a great set of solutions. Finally, in the longer term, we feel like we have the opportunity to help our clients monetize their assets and to drive their revenue growth. When I take it all together, right, our opportunities to work with clients on the cost perspective and the modernization perspective and on the revenue growth perspective, as and when the industry does come back to growth, we will be very well positioned given our expertise and a very clear strategic vision for how we expect to, you know, to help the industry leap forward into its next phase. Okay, thanks. And just last two questions. In terms of BPO being 16% of your top line, Mohit, are you worried because of the GenAI may disrupt BPO higher than most of the other horizontals? I would be worried if we were standing still, right? But we are not standing still. I believe that we have among the most forward-looking and agile teams from a BPO perspective, and our teams have really worked to reshape the portfolio over time. If you look at our portfolio, you know, maybe a few years ago, it was heavily weighted towards contact center, but we have now replaced that with a huge amount of analytics work, for instance, that is being done with you know, with the high-tech companies. It's been replaced by specific vertical solutions that have been built. It has been replaced by crowdsourcing platforms, for instance, that have been built. So I do feel that we are reshaping and you know, moving up the value chain from our BPO business perspective. And so I remain very optimistic about the future of the business, given the strategic direction and the leadership team that we have within the organization. Obviously, we will always be paranoid. We are always mindful of the impact that GenAI could have on contact centers, for instance. But I do feel that we are well positioned compared to our peer group, and the opportunities continue to expand. We feel that there is a whole host of opportunities, for instance, in the high-tech sector, in financial services and healthcare, that we have not fully exploited so far. And it's also to add, while it has really helped us balance off, right, the risk there, but even in the contact center, we see more and more deals surprisingly come through, right? And the team has been quite nimble and agile to get a fair share of that, so I think. Yeah, I think the AI-enabled contact center is really a winning story for us and really differentiates us from maybe the pure play contact center players who do not have that deep AI capability that we have built as an organization with you know with really a preponderance of technology talent. Okay. Thanks. Thanks. Rohit, just last question on the offshore headcount mix for the IT services. It is up by 300 basis points on a YoY basis. So does that also mean the offshore revenue mix is increasing? And if yes, why we are not calling out as an immediate margin tailwind as well? I think that's been a consistent effort YoY. Yes, it is a factor as we've really called out, and we called out that we will continuously be driving more offshoring, and that's a function of every quarter efforts that we're doing. Yeah, there is a continuous improvement that we're having, and we will continue to drive that from it. At every quarter, you'll see a movement there, and you know, it's a little bit of a new deals as we keep on getting on-site offshore ratio, and with that, the transition happens over the period of two to three quarters. It's a result of that. Obviously, inherently, we have some opportunity to work with. As we continue to work around it, this will be a factor for us as well. Does it imply higher volume growth versus reported revenue growth because we are moving more work to offshore? Yeah, marginally. Marginally, it does impact, but I think we have, when we look at our overall revenue and volume, the differential with the movement is not that significant right now. Okay, thanks, and all the best. Thanks, indeed. Thank you. The next question is from the line of Kawaljeet Saluja from Kotak Securities. Please go ahead. Yeah, hi, and congratulations on a great quarter. A couple of questions for you, Mohit. First is that if you look at comms for Tech Mahindra, there has been market share losses till FY 2024 due to aggressive competition and maybe possibly a state of flat second. Do you think we have made sufficient interventions to clearly call for a turning of the corner in the telecom vertical? And related to this is the comment that you made on possibly challenges in the U.S. communications market. Is that something which is competition induced or is just basically with the kind itself being under stress? So that's the first question. The second question is that you made a comment on large deals, that you don't want to make heroic assumptions on execution. Now, is that Tech Mahindra being conservative, or are you seeing a lot of heroism from your competition on large deals assumptions there? Sure. Thank you, Kawaljeet. Thank you for the question. Look, I think, on your first question, right, I'm quite comfortable based on my detailed discussions with, our top clients, that there is no market share erosion. We have a unique and differentiated set of, capabilities, as I've shared in the previous answer, whether it is from a simplified, modernized, or monetized perspective, that we bring to the telco industry. And a unique set of capabilities, both from an IT perspective and from a network perspective, right? Also, as you look at our portfolio in the current quarter, but really over the past couple of quarters, you are seeing a degree of stabilization in the Asia Pacific, business and in the, Europe business. And I'm quite confident that over time, the stabilization and growth will come back to the U.S., portfolio as well. As regards to, you know, sort of, the specific, you know, large deal losses, again, I will go back to, you know, the answer that I've given to Rod, on large deals, is that we have to be at this current state of the transformation. We have to be laser-focused on what we are looking to do and what we have promised the market, right? Which is a significant and predictable expansion in margins to FY 2027. And so therefore, we have to be mindful about in telecom, but also in other verticals, about the deals that we are playing for and winning. I do believe that we have the right to win deals that you know that make sense for us. And I'm confident that as the sector itself comes back to a healthier spend level, that we will gain from that. Also, keep in mind that we are the only IT services player that has a unique, software capability as well, you know, for the telecoms business. And so when I marry the, you know, the Comviva software capabilities with our tech capabilities and our BPS capabilities, no other player has, the same, you know, offering set as us. But please be assured that we have been in detailed discussions with our clients, and our client relationships are strong. We continue to increase talent on a regular basis, to our comms business. Just to give you a couple of examples, we hired a very experienced, you know, senior technologist who's been a CIO for multiple telcos, you know, to our APJ business to supplement our existing team. We hired, you know, senior network talent, you know, for our U.S. business to supplement our network services capabilities, and we are in the process of hiring senior talent for our European operations as well, right, so it's a continuous add of capabilities to add to the already deep bench that we have in Tech Mahindra. To your question on large deals, right, look, I really don't know how our competitors are thinking about this, but I do know that for us, discipline and focus is very, very important. When I speak about heroic assumptions, the fact of the matter is, there is a level of productivity that we can see coming from GenAI. But from what I understand, and it is quite evident in the pricing, is when people are making assumptions about deals that could be, you know, have a five-year type tenure, they are assuming productivity in the out years, which is not visible to me just now. So I can only assume that they are making assumptions ahead of the capabilities, and it could be a reasonable assumption, right? At the end of the day, this is how the chip business works. This is how a lot of business works. But you assume productivity coming in from things that you can't see. We are just not in a place where I'm comfortable making those bets, because we have a margin target that we have committed, and that we have to make. That's very clear, and thanks for those very helpful responses. So if I can ask you a final question that I had, is more on the auto segment. And I just wanted to understand, the composition of that business in terms of programs between, let's say, engineering and IT services between tier one and OEM. And anything happening in the vertical, given the kind of state of flux which is there in the OEM, segment, auto OEM segment, anything, you know, that raises a red flag for you? Yeah. So look, I think, you know, auto has obviously been a significant portion. So if I look at our manufacturing business, for instance, you know, there are a couple of areas where auto is clearly one, but we also have Aerospace and Industrial, and then we do a lot of work on the process side and in the chemical and the extraction-related businesses, right? If I look at our automotive footprint, our automotive footprint is largely actually in the, you know, has a bias towards the Americas. But we do have a presence in Europe and the ROW region as well, and that gives you, if that gives you a sense. We also obviously have auto exposure because of our Pininfarina business. The business is almost equally split between the work that we do for the tier one suppliers and the work that we do for the auto companies directly. We have been working extensively. You know, we do feel that if I look at the auto business that we have a set of capabilities that we are creating across the entire value chain. And by that I mean, we are creating deep capabilities from an engineering perspective, as you referenced. But also supply chain is a very significant portion of the business for us, again, given our SAP capabilities, for instance, and capabilities in other packages. Manufacturing and quality, again, given the heritage of the group and the work that we're doing to build out the factory of the future. But again, a lot of the AI-driven interventions are coming through, right? Whether it is a paint defect detection or vision-based quality or, you know, digitizing construction or AI-based dynamic buffer management. On the manufacturing quality side, we have a unique set of capabilities. And then beyond that, in sales and marketing, you know, through Born and through a set of IPs that we've created and in the after-sales market. It's a very comprehensive offering that we have in auto, with 75+ s olutions brought under the auto portfolio. So it is comprehensive across, you know, engineering, you know, IT, and maybe, you know, some amount of IP-related work as well. And as far as the auto business composition is concerned, I'll give you a sense that it's largely the auto manufacturers, you know, some work with tier one suppliers and with a bias towards the Americas. So hopefully that gives you a sense of where we are. Thank you so much. All the best. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to one per participant, as your line will be muted after first question. Our next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Thank you for that. I just wanted to get an understanding of the revenue margin performance that is during the current quarter. Sorry to interrupt. Mr. Taneja, your line is sounding a bit muffled. If you can use the handset mode, if you're using the speaker phone. Is it better now? This is much better. Yes, sir, please go ahead. So I was interested to understand the moving parts when I look at your segmental margin performance. It seems that the IT services margins have expanded significantly over the course of recent quarters, practically, the highest that we've seen in several quarters, while there is some reduction in terms of the BPO margins. So it would be great to understand what is driving this segmental margin performance. Yeah, sure, so I think from a margin perspective, when you look at BPS, we did mention earlier also, we've done some portfolio reallocation, which rightly fit in the BPS segment. Example, Target, right, is one business, which is dilutive from a margin perspective. So that's impacting, of course, the BPS performance. And then beyond that, for the quarter, there's some large deal ramp-ups that are going on, which is negatively impacting the quarter. But as we move forward, we see that trajectory to improve significantly going forward. So I think you'll see an expansion there. From an IT perspective, you know, win themes will be talked about, so we'll be consistently working on that organically. Just for clarification on that part, historically, our segmental margins on BPO have been higher than IT services. Is that going to change on a go-forward basis? Because that's a trend from first half numbers performance. No, I think both of them, we will have an expansion mode. I think, clearly, BPO is 15%, 16% of our revenue. As Mohit mentioned, it's an area where we've seen significant demand, even though, you know, we're working on portfolio shifts, we're working on how GenAI impacts the business. So as we're shifting the portfolio, even within that, the growth opportunities are dramatic. So as we get that, it's important that the BPS business continues to expand margins in line with our portfolio expectations. So we see a path for us to deliver on that, and some of the portfolio companies that we've reorganized under BPO, we see an expansion happening there also over time. So I think BPO will expand margins and will flow through along with the portfolio average. I don't see a dilution coming from there. IT, as we rightly mentioned, given majority of the business from our 85% is IT. I think that has to drive the expansion across the organization, because that's what will reflect in the total company performance as well. Sure. Thank you, and all the best in the future. Thanks, Manik. Thank you. Our next question is from the line of Ravi Menon from Macquarie. Please go ahead. Hi, thank you for the opportunity. Mohit, you talked about how your large deals capability has been strengthened, you know, but when we look at it year-on-year, it just seems to have those deal wins have reduced, you know. If you were to think about the environment, I would think we are actually in a little bit of a better environment compared to where we were last year this time, you know, when in the aftermath of the SVB collapse and all that, things were a bit difficult, and similarly, when I look at your 20 million-plus customer tier as well, that's flat year-on-year, and your 20-50 million-plus customer count is down 1% year-on-year. And Rohit, your, the land sales that you mentioned, could you talk a bit about the rationale for this? Who was the sale made to, and why is it structured in a way where, you know, the payouts actually happening, right, only after four years or so, and you're getting a interest of just, 8%+, on the amount? So maybe I'll take the land question first, and Mohit you can answer about it. Yeah, so I think, the intent always, was to get an, university, Mahindra U niversity work as an autonomous body, right? And built, be developed and functioning like any other, big university. And when you look at that model, in that structuring, we, made that, transition from a, ownership, to get more autonomous. So that's the reason why the transaction happened, and it's an arm's length, from a value perspective. The consideration, while it's deferred over a period of time, has an arm's length interest, associated with that, which will be paid along with the rest of the consideration. So we've recognized the gain in the current quarter in differential between our book value and the market value that we've got, and that's reflected in the P&L. Yes, and then on your question on the large deals, right? Look, I think, there really isn't, i f I look at the past six quarters, for instance, from a large deals perspective, right? I'm just going to read out the numbers to you in dollar millions from Q1 of 2024 to Q2 of 2025; $359 million, $640 million, $381 million, $500 million, $534 million, $603 million. So there really isn't a pattern of reduction in large deals, if you look at it. We are certainly trending way above the six-quarter average. But having said that, I'm also mindful of the fact that as a leadership team, we have made a determination that we are going to focus on margins, that we're going to be very selective about the clients we go after, and that we've established a very clear must-have priority list of customers that we're working with, and sort of a discipline about pricing and about the deals that we take on, right? So you're seeing some of that being reflected in our results. Large deals continues to be a very important area for us, but I candidly do not agree that there has been a deterioration over the past six quarters. It's certainly not borne out by the numbers. Yeah, and, you know, maybe I'll add one more point, Ravi. As you think about our large deal number, it's you know, barely five million incremental deal wins, right? Which gives you an indication of how the growth is gonna flow through. And I've given an earlier range that we want to be in, right? So I think from that perspective, you know, we're looking in the right direction. Also, a lot of expansion that we do into the BFSI space, which is where our strategy is. As Mohit mentioned, and I mentioned in my commentary, that we've got into two large logos, and it's like landing and expanding there. So the growth that we see in those accounts are not really reflecting in the large deal, because those are volume that grows organically over a period of time. So I think as we do more of that, you would see a better, organic growth pattern also over and above the deal wins that you see. Thank you. The next question is from the line of Abhishek Pathak from Motilal Oswal. Please go ahead. Yeah, hi. Thank you for the opportunity. So, you know, Mohit, I think the first phase of the transformation, which was essentially the turnaround phase, seems to be, you know, admirably on track. So congrats on that. My question was, as we move to the stabilization phase, FY 2026 might coincide with a slightly liberal, you know, spend environment. And, you know, just like in your case, everybody's again reported probably a bottom attrition. We saw a slight inch up in attrition across the board. So, you know, in FY 2026, as attrition levels inch up, you know, the cost of backfilling employees again goes up. How easy or how difficult does it become, to, you know, fix the pyramid and, you know, get the average resource costs down? What are the challenges that arise in that margin expansion journey as you move to the next phase in context of the changing demand environment? Thank you. Yeah, good question. I think, look, if there is an overall pickup in demand, then I think that will really help us, because obviously, you know, resetting the pyramid is easier if you're looking at you know, a significant amount of growth. And as far as the attrition rates are concerned, we are also mindful of the fact that attrition will start to pick up slowly. We benefit hugely from the very strong Mahindra brand name that we have in India. That helps us from a recruitment and from a retention perspective. And we are organically building deeper relationships and linkages with the group to benefit from, you know, to benefit from the aura of the group. I also feel that we are working, you know, along with our chief HR officer on creating an employee, a strong employee value proposition. And we have already articulated a lot of the work that we're doing from a cultural transformation perspective, including simplification. Part of the simplification is things like expense reimbursements, for instance, that really make life simpler for our teams. So there is a multipoint attempt to ensure retention and growth will help us, you know, fix our pyramid to a greater degree than we can now. I also want to stress upon the fact that we have, you know, the most experienced workforce in the industry at this point of time, candidly, right? We have a diamond-shaped structure this time, and that also gives us unique strengths, right? And one of the things that our Chief Operating Officer has been very focused on, Atul, he is working to make sure that we're able to get the sort of realization that we should for such an experienced workforce. So, a number of steps are in place to make sure that we can fully derive value from the experienced workforce that we have, and then to reshape it over time. Part of it is also investments that we're making from a technology perspective. We have just implemented a new platform that allows us to fully capture the skill set requirements of our teams. There is a lot of work that is going on in sort of defining skills and capabilities and defining the sort of detailed architecture for that, that can be used both from a matching perspective as well as from a training perspective. So a comprehensive set of interventions in place to make sure that we have a, you know, that we have a robust and nimble workforce. Thank you. Our next question is from the line of Ashwin Mehta from Ambit Capital Private Limited. Please go ahead. Hi. Thanks for the opportunity. Just a follow-up to an earlier comment that the volume of the revenue growth for us is not materially different, despite almost a 5.5% shift towards offshore in terms of headcount. So was it underlying underutilization? Was it fixed price flexibility that's helped us, or there are other factors at play? Yeah. So as I mentioned earlier, there's various factors we're working through, right? So we've. As I mentioned, there's better price realization that we're going after the program. Mohit also mentioned about how do we better utilize the skills that we have, the diamond-shaped organization, while we keep on driving towards more pressures. But at the same time, I think how do we realize the true value from a pricing perspective? So that's all in motion. So that's seeing some benefit, and we'll continue to realize that benefit over the second half. As we look at, you know, the fixed price contracts, that's clearly articulated, that'll be a big focus for us. Atul and I drive a very systematic program around fixed price programs, which is driving more discipline around governance. The automation interventions that we drive on those programs, I think that's also helping us realize better value. And I think we're in a very early stage of that program from a value realization perspective. As we look at the next year and a half, that will be a key focus of our margin driver. So I think all those are helping us offset some of the shift that you see from a headcount perspective. Thank you. Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Yeah, so, you know, as we look at the second half and, Mohit, I'll let you summarize it, but I just want to kind of mention that getting into the second half, we're fairly confident this is the foundation we've set on the turnaround phase. So we'll continue to capture on that, both on margins and growth perspectives. I think specifically, for Q3 last year, we had one-timers of $22 million that we had called out around some of our product-specific revenues, which, of course, over year-on-year comparatives won't be repeated. But as we look at the second half, you know, looking at foundational inputs that we've given both on growth and margins, we're fairly confident that we'll continue the trajectory we've had in the first half. Mohit, I hand it over to you for the wrap and comments. Thank you, Rohit. So again, just to reiterate, you know, we're delighted by our performance within the quarter, and I also feel that, more importantly, we are living up to the strategy that we had laid out for, you know, for all of our investors in April. We are on the path to a sustainable long-term transformation, and I feel very confident that with the intrinsic strengths of Tech Mahindra, the high caliber leadership team that we have assembled together, and the solutions that we are creating and the client base that we have, that we are well set to meet the expectations that we have set earlier in April. Look forward to connecting with all of you on a regular basis, and thank you for your time today. Thank you. On behalf of Tech Mahindra Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.