G ood afternoon. My name is Puneet Jain. I'm from JP Morgan's Payment Processing and IT Services team. Glad to have here with us WNS, Keshav Murugesh, CEO of the company, and Dave Mackey, SVP Finance and Head of Investor Relations. Welcome, both of you. Thank you, Puneet. Thank you. We appreciate you joining us. So the format of this presentation is going to be fireside chat. I'll start with a few questions, and then we'll open up the floor for questions from the audience. So, Keshav, like, for the benefit of investors who may not be as close to WNS, could you talk about the company, your positioning, and why you've been in the BPO marketplace? Sure. So first and foremost, we are a company that has a legacy of more than 25 years, created as a captive of British Airways many years ago, but over the last few years, have focused completely on business transformation services for clients across, you know, four or five key verticals, with very strong horizontal capability, like finance and accounting and analytics, embedded, you know, into the offerings. We operate from 16 countries, about 60,000 employees at this point in time, and our focus is really domain-specific, kind of differentiation, around which we've built a very strong tech capability. And, you know, what we've achieved over the past many years is revenue momentum, industry-leading operating margins, industry-leading, and very strong focus on differentiation around domain, data, technology, and analytics. That's great. The top question like that we've been getting since your last quarter results is like around defensiveness of BPO. You cut your annual guidance, which is rare, and you attributed the cut to client-specific delays in decision-making, reduced volume in some cases. Can you talk about like give us more details as to what happened, which clients were weak, and what gives you confidence that it was not like a macro-related issue, but like a client-specific headwind? So let me start with the second part of that question first. As you are very well aware, our business is a very high visibility business. So at this point in time, for example, we are providing almost 97% visibility to the midpoint of the our guidance range for the rest of the year. So as a company, visibility is, you know, something that we focus on very, very strongly, which means our clients are able to give us volume commitments early in the year and able to maintain those commitments, you know, across the year. This is a business and this is a company that has actually seen significant changes in terms of world events as well as technology disruption across, you know, the last 25 years or so. So we've lived through Y2K, we've lived through the financial crisis, the Asian crisis, COVID, Brexit, the robotic process automation, you know, paradigm at one time, AI, and now generative AI. And if you look at every one of these events across the years, you will see that clients, not clients, but at least the world, assumed that this would be the end of the business model for all of us. And we've always been super confident based on our investment psyche and, and the way we've run our business, that all of these would actually be tailwinds, which actually has been borne out by the success of the company, over the years. generative AI is something that is still hyped up, very much emerging. We are taking a lot of, you know, actions around it at this point in time, and it's a very exciting event for us for the long term. Specific to the second quarter, you know, we there were one or two events and clients that caused that. I'll ask Dave to, you know, talk a little more about that. Sure. I mean, I think when you look at the reason at the end of the day for the reduction in guidance, which was 2% on the revenue side, we had a large client relationship in the insurance space that related to a captive carve-out that we did. The second phase of this carve-out and the relationship was pushed out of this year and into next year. The reasons that the client delayed this phase two have nothing to do with macro, because these services actually save the clients money. They have nothing to do with AI or generative AI. They have to do with the client getting their internal house in order, in order to be able to manage the behavior change associated with these kinds of services and solutions. So essentially, at the end of the day, the client wasn't ready for this when they thought they were gonna be ready. We had to push a meaningful piece of business out of this year and into next year. It's still contractually committed with the client. The client still has every incentive in the world to do this, because it not only makes their business more efficient, it saves them money. And the client has a five and a half year committed spend with us, that they still need to hit. So at the end of the day, all this delay does relative to our business overall is create a need for them to spend more with us in years three, four, and five of this relationship. So, obviously less than optimal in terms of having to reduce the guidance, but outside of this one event, outside of this one item, we had some pluses and minuses relative to the quarter. Had this not happened, we would have maintained our guidance in this last quarter. You know, that's, that's good to know. That's good to know. So you talk about, like, facing pricing contractual commitments and related headwinds beginning of the year, which are unusually high this year. Given everything that you just said, like, how should we think about that headwind for next, next year as well as over the next few years? Yeah, look, I think if you look at our business over the last 10 years, this management team has been here 12, 13 years in total. The headwinds in our business on an annual basis have been as low as 8% and as high as 15%. They average 10, 11% every year. And it's a combination of the productivity commitments that we give to clients, the fact that there's a component of our business that's project-based in nature, and then there's the fact that things tend to happen one way or another in any given year in terms of clients going bankrupt, companies getting bought, the potential for clients to have strategic changes that affect our revenue streams. So, you know, we expect a 10, 11% headwind in our business. That's what the average has been. As you mentioned, this year, we actually had an 18% headwind to our business, and it was primarily driven by two one-off items. One, we lost a large healthcare process in the middle of last year, which we talked to the street about, that had, again, nothing to do with the macro environment. It had to do with this client looking to help with an investment that they had made into a tech platform, where they had taken an equity stake. And then the second challenge that we had this year, again, that we knew about walking into the year, was a very large on-site centric procurement client who decided to move a meaningful portion of that relationship from on-site to offshore. Still with us, higher margins, they've increased the volume of work with us, but from a revenue perspective, created a headwind in this year. So excluding those two items, our organic constant currency growth this year would have been about 12%. So the comfort and confidence in our ability to grow at a more normal rate next year is about the ongoing health of our core business, which is transformation, automation, cost reduction, and the fact that we do not have visibility into abnormal headwinds heading into next fiscal year. So, Keshav, like you mentioned, like, the industry has gone through various cycles. You've been at WNS since 2010, I believe? Yes. I remember I moved back then. So how has, like, and obviously, like for BPO, one of the reasons clients outsource is better processes, but also cost efficiency, right? So how has, like, BPO vendor's ability to provide that cost savings to customers on year-on-year basis changed over the last 12, 13 years? And if you think about next four or five years, could Gen AI just replace, like, what some of the mechanisms through which you used to offer price discounts in the past? So I just want to mention that if you look at the transformation of the business, Puneet, across the last so many years, you will see that this business was originally created because of the wage arbitrage advantage that was available between the West and the East. You know, some of us called it the more for less model in the good old years, and that allowed this industry to stand on its feet. But over the years, as we moved up the value chain, we added, you know, other elements to the business, because of which we went into the second phase of the industry evolution, which is what I call value beyond cost, where we added much more technology, a little bit of business analytics around data, things like that. And then over the past few years, we've been driving the third phase, which is much more business transformation. Business transformation is something that is top of mind, top of mind of most, you know, leaders across our client, you know, companies. That is something that is not gonna go away, you know, very, very soon. And in fact, we're seeing that most clients and prospects that we interact with are looking to us to dramatically change the transformation impact of, you know, the services that we provide for them, so that they can start interacting with the next age customer in a different format. So that's what we really stand for, and because of that, we invest very strongly in solid knowledge of business domains, solid, you know, talent. We are constantly upskilling and reskilling talent. Any technology that is strategic to us, we invest in the IP ourselves inside the company, and other than that, we, you know, we are all the time bolting on new technologies as well as business partnerships with technologists so that we can deliver the ROI, you know, to our customers. But what we are seeing in the recent past is, with all the, the way the macros are being, you know, playing out, conversations are also starting to emerge on the cost-saving side. So for us, we think this is gonna be a tailwind for the long term. Business transformation will always be, you know, top of agenda, but at the same time, you know, we're gonna see many more conversations taking place and more companies work with their FTEs in order to stay resilient, you know, during the next, you know, couple of years or whatever. And therefore, that's a new pipeline that is also emerging for us. So I must say, at this point in time, the pipeline of sales has never been as strong. And in fact, Dave was, you know, mentioning this morning that our increase in the headcount on sales talent alone has been 21% in this last one year. We've not seen that, you know, kind of revenue growth, but, you know, clearly there is that momentum out there. And what will drive, you know, some of the agenda, as you mentioned, is the fact that, you know, we are a safe pair of hands. We are investing constantly in great people, great technology. We are the people who understand the data that customers provide, and we're able to provide them actionable insights around it. As a company, they have seen us help them navigate all the changes that I spoke about in the past. Therefore, for most of our customers, generative AI is another new trend or a new technology change that we will help them navigate over the near future. I must tell you upfront that in my conversations with a number of CEOs on the client side, at this point in time, what they're looking for is only comfort around the fact that Gen AI, you know, navigation of the uncertainty of Gen AI will be in our hands, and they get a lot of comfort. When they see the number of POCs that we are now, you know, working on, they see the number of the test cases we are actually working on with a number of customers, it gives them a lot of comfort. So I think actually the tailwinds for our business is very, very strong, one. Second thing is, I must say that Gen AI, uh, potentially is going to change the market penetration levels for this industry from the traditional 25%. Now remember, IT services is arguably 65 to- Yep 70% penetrated. For us, it's only 25% penetrated. But with Gen AI and the investments we are making there, we believe our ability to slowly start nibbling at the balance 75% is very high, and that is where the strategic conversations with clients have started to move now. The volume will benefit even if there is- Yes, absolutely like, a pricing, or that headwind that you start the year remains high, but will be offset by higher volume. Absolutely like we saw with the RPA wave. Absolutely. So with... So let me ask this: with RPA, like, I think your positioning and strategy was clear. Like, you were the company that brought RPA-based solutions to clients, helped them embrace RPA. Should we expect the same with Gen AI, and could, like, the co-competition—like, could there be more competition from IT services companies? Because this is a more technology solution than RPA was. Let me remind you that when RPA came to the fore, most RPA companies originally positioned themselves as companies that could actually take out the BPO companies- Yes if you remember. I remember. Right? In fact, their valuations were through the roof based on that premise. Over a period of time, we said that it'll actually be a tailwind for the industry- Yep and for us. We were proved right, because over a period of time, as customers bought these RPA tools, they realized that they didn't have the wherewithal to actually implement them, so they had to come to people like us. Today, if you look at it, all the RPA companies actually are partners to us. Yep. Right? And the same thing will happen with Gen AI, except that with Gen AI, customers will not make the mistake of trying to do it themselves, right? Because with Gen AI, you need to have very strong ability to manage data. You have to have very strong, you know, domain understanding. And you have to have, you know, a very strong digital capability. And I think all of it combines together very well with companies like WNS and the kind of relationships that we are building. Again, it's an emerging space. It's something that is, at this point in time, probably very hyped up, right? But I think it's something that we cannot ignore. Yep. As a company, one of the things that we are spending a lot of time on with our clients is to explain to them that this is probably RPA on steroids. It has huge potential, first and foremost, to, you know, allow operations that we run to run even better. Probably cannibalize some of our, you know, revenue in the short term, but to create the... as a result of that, a much stronger relationship and a much stronger and stickier revenue stream with our clients, which builds even more trust, right? And I think therefore, the fact that we are working on so many POCs and pushing these conversations at these conferences, at, you know, analyst conferences, advisor conferences, you know, aggressively with, you know, C- the CEO community on the other side, is, being received extremely well at this point in time, and we think it will be a tailwind for the long term. Yeah. No, I agree with you, like RPA on steroids. Internally, we call it intelligent RPA, which is essentially the same. So let me ask, so what are you doing today to prepare WNS so whenever clients are ready to invest in Gen AI and are looking for vendors? So, one is like the customer-facing, which obviously, like you mentioned you're doing a lot of work, a lot of effort there. But what are you doing, like, to prepare your employees, like the foot soldiers, that they are ready to help implement and manage, like, a Gen AI-based solution for their clients? So first and foremost, I think there's a lot of, you know, reskilling and upskilling taking place inside the company. There are thousands of people who are undergoing, you know, significant change on, you know, these new technologies and stuff like that. Lots of new partnerships have now, you know, been created by WNS with some of the platform, you know, kind of players. And the third thing is, you know, we're also, you know, working very closely with some of our other traditional partners, like Appian and others, to provide alternate, you know, solutions to clients that go beyond the traditional, you know, Google, Microsoft models, where clients may be uncomfortable with their data going into the open cloud. Yep. Right? So a combination of all of this really is actually helping us, you know, prepare the, the company much better. But ultimately, the proof of the pudding is in the eating, and that is specifically around running some of these POCs, right? Like we announced last call, 92 POCs are already, you know, operational, and about 16 or 17 of them are directly being tested with clients. As we speak, we are also running an internal incubation program inside WNS called Wincubate, which actually has already 50 entries coming from employees of WNS- to come up with new solutions and new test cases around generative AI, which can be taken to customers. So it is really, you know, not hyping it up, but actually creating a lot of interest, attention, and making those investments in technology and people that will ultimately help us prepare for this big wave that we see coming in the longer term. I think the other thing that's important to understand as it relates to the skill sets to leverage AI and GenAI is this something that we've been doing for five, six years. So it's not that WNS has to go out and create or build a capability that we don't have in-house today. We've got advanced analytics capabilities. We've got technology capabilities. So are we gonna have to scale this as clients look to implement more and more of these types of solutions? Absolutely. But in terms of needing to go create something that doesn't exist today, absolutely not. We have all of the capabilities in-house today to be able to, to deliver GenAI solutions for our clients. Got iT. So the last recession, like in 2008, 2009, coming out of that, we saw, like, a lot of clients sold their BPO practices, like the UBS sold to Cognizant, Citi, I think, sold to TCS back in the day. So, so there was a move away from insourcing, right? And the vendors were willing to do rebadging deals, right? You saw some of that, Dave, you mentioned earlier with one of your clients. Are you willing to do more of those deals, like employee rebadge deals? And are you seeing clients willing to sell their BPO operations, sell or, offshore or outsource their BPO operations, to, vendors? Look, I, I think depending on the industry, just depending on the client, depending on the nature of their business, you're gonna see in this environment certain clients that set up their own global captives. You're gonna see others that look to sell them. And then, this is normal course of business for the industry. I think from our perspective, we would always be interested in looking at a rebadge deal and looking at a captive carve-out where there's a, a fee associated with taking over those resources. If what we're acquiring creates a new capability for the company- It has to be strategic. We do not wanna write a check just to get a piece of business. We want people, we want process, we want skill sets that we can then integrate into our existing operations and leverage that to expand what we do for other customers. So the goal of paying an amount upfront, like we did for this insurance captive, was to acquire a unique capability for us. And by the way, this was something that many, many very large organizations were very interested in buying, to create a capability within WNS that we can go then sell to other U.S. insurers. So the reason we paid for this captive was specifically for that reason, and I don't see the company paying for a captive or doing a rebadge deal unless there's a tangible, quantifiable benefit for us from a capability perspective. Yeah. And, you have been winning, like, more of these large deals last 6 months, 12 months. Do you have, like, more deals like these in your pipeline? And, how should we think about, their conversion into sales? Like, whenever you eventually, when you sign those contracts, conversion into revenue, are you seeing any delays or any macro-related. Whether it's delay or whether it's a benefit, so are you seeing any changes in flow of deals, through pipeline, as a result of current macro environment? First of all, Puneet, as I said, the pipeline has never been as healthy as it has been at this point in time, and there's a good, healthy mix of traditional kind of deals and also some larger deals, including captive takeouts, right? At this point in time, I would say that conversations are very, very strong with every one of these, you know, potential prospects in terms of accelerating the pace. And, you know, some will move faster, some may move a little slower, because remember, whatever we provide in this area, and a captive takeout is disruptive to, you know, the other party as well. Yeah. As was proved by this other example of the- Sure client that we did on the insurance side, where they'd agreed to certain things, and now they couldn't complete something internally, because of which they've got pushed into moving it. It will be a tailwind for next year. Yeah. Right? So all I will say is, at this point in time, that the transformation agenda is strong. The cost-saving agenda is now emerging as very, very strong. Intuitively, I would expect that CEOs on the other side will move faster with, you know, the cost leadership kind of transactions, but ultimately, we have to wait for them to be comfortable with all of these things. So I don't see anything out of the ordinary in terms of anything falling off or being delayed at this point in time, but, you know, we'll have to wait to see, you know, when they actually, you know, take those decisions. Yeah. And I would just add on top of that, that when you look at our historical, you know, low to mid double-digit growth rate, that growth has never been predicated on having captive deals generating meaningful amounts of revenue in a short amount of time. That's good to know. Any questions from audience? So are we seeing upper cycle, the push towards cost cutting and procurement offices trying to deal with that, do you still feel that to be the case? I know, Keshu, we've seen a lot of different cycles in the past. Is the pipeline being filled because of that kind of commentary, or is it more driven by product and solutions? It's a combination of both. So I would say that, yes, your original statement is absolutely right, because this is a very resilient business in terms of business cycles, so it's, it's something where visibility is very, very high. But because of the changes that we have made in the business model over the last decade or so, the ability for us to also, you know, deliver on transformational projects is much higher at this point in time. And therefore, I keep, you know, hitting this point of transformational plus cost saving now as being the catalysts for growth for us, long-term one. Second thing is, you know, what we didn't speak about is our, you know, capital allocation program at the company. And if you see that we've been very disciplined about buybacks, you know, over the past few years, and even recently we announced 3.3 million shares buyback approvals for. But more importantly, we've also been very focused on capability-led tuck-in acquisitions, which are in adjacency, adjacent areas to our core business. Because of which we are also seeing, you know, more deals led by some of those acquisitions that came in, you know, whether it was the Vuram, which was a no-code, low-code company, or the procurement company or whatever. These are the new arrowheads that are now adding to new revenue flow as well. So organically, we should expect to see, you know, very strong, you know, kind of growth rates, led by transformation and cost leadership, but also some of these new acquisitions now leading to better conversations, after which we can penetrate and radiate an account, you know, much better. I think just to add to Keshav's comment, I think you touched a little bit on it, and to specifically address part of your question, Tingen. When you look at, for example, the four or five years prior to the pandemic and look at the acceleration in our growth rate in a healthy macro, what that shows you is that it was not cost reduction that was driving the improvement in our business. It was clients' need to digitize, to automate, to transform in order to remain competitive. The fact that we save money is a bonus. So we actually look at this environment and look at 90% of our business as having that transformative cost reduction basis to it, and say, "This is actually a really healthy environment for our core services." Is there gonna be a little pressure on volume? Yes, potentially. Is there gonna be a little pressure on the discretionary component of our business that's project-based? Yes. But overall, this is a great environment for the kinds of services that we provide to clients. Let me also quickly ask about margins. Like, given the evolving business model or delivery model, more GenAI, all the changes, macro-related, like some employee rebadge deals, how should we think about your margin profile, over not just like near term, but over the next three to four years? You've been operating at industry-leading margins for very long. Can you continue to operate at 20%+ margin levels, operating margin, adjusted operating margins? So the first thing I'll say is, you know, there continue to be very strong tailwinds for our business, and therefore, we do not believe that at this point in time, we should be reducing investments in our core areas. So sales, marketing, technology, talent, skilling, upskilling, you know, all of that we will continue to do and at an accelerated pace. But having said that, we also believe that there are enough levers inside the business, and with the new trends around GenAI and the others, emerging, there will be lots more of opportunity for us to get after the unpenetrated space, like I mentioned earlier. Therefore, because of the levers that we already have, as well as the fact that we are constantly automating large parts of our own delivery processes, our ability to hold and maintain, you know, margins, should continue to remain high. I mean, there will obviously be periods where we'll want to invest even more in order to grab faster a tailwind, but overall, we feel the margin stability is something that, you know, is very, very strong with WNS. I think just to add to that, if you look at the opportunity going forward, as we continue to de-link growth in revenue from growth in headcount and leverage more technology, and share in those benefits with the clients, and move away from traditional FTE models into non-FTE models, the opportunity for us to drive margin expansion increases, right? So if you look at what the real levers are gonna be, it's moving that mix of services from 70% FTE- 50% FTE - 30% FTE, to taking ownership and accountability for results where the client doesn't own the process, we own the process. And then to Keshav's point, using the multiple levers that we have at our disposal on that piece of business once we have ownership of the process. So I think as these services progress, as the industry matures, as technology advancements like GenAI force the need for clients to move away from FTE-based models, the opportunity for us to generate margin expansion goes up. On that note, we'll call it a wrap. Thanks for your time. Thank you much. Thanks. Thank you to JPM, JPMC as well.