LTIMindtree Ltd (NSE: LTIM) Q4 2025 Earnings Call dated Apr. 23, 2025
Corporate Participants:
Vikas Jadhav — Head, Investor Relations
Debashis Chatterjee — Chief Executive Officer & Managing Director
Vipul Chandra — Chief Financial Officer
Venu Lambu — Chief Executive Officer Designate
Nachiket Deshpande — Chief Operating Officer And Whole-Time Director
Manoj Shikarkhane — Chief Human Resources Officer
Analysts:
Sulabh Govila — Analyst
Abhishek Bhandari — Analyst
Sandeep Shah — Analyst
Manik Taneja — Analyst
Vibhor Singhal — Analyst
Abhishek Kumar — Analyst
Mihir Manohar — Analyst
Kumar Rakesh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to LTIMindtree Q4 FY ’25 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Mr. Vikas Jadhav, Head Investor Relations, LTIMindtree. Thank you and over to you, sir.
Vikas Jadhav — Head, Investor Relations
Thanks Rutuja. Good evening, everyone. Welcome to LTIMindtree’s Quarter 4 FY ’25 Earnings Conference Call. Today on the call we have with us Mr. Debashis Chatterjee, Chief Executive Officer and Managing Director; Mr. Venu Lambu, Chief Executive Officer designate; Mr. Nachiket Deshpande, President, Global AI Services, strategic deals and partnerships; and Mr. Vipul Chandra, Chief Financial Officer. We’ll begin by providing a brief overview of the company’s quarter 4 and FY ’25 performance, after which we’ll open the floor for Q&A.
During the call, we could make forward-looking statements. These statements consider the environment as we see today and carry risks and uncertainties that could cause our actual results to differ materially from those expressed in today’s call. We do not undertake to update any forward-looking statements during the call. I now turn the call over to DC for his opening remarks.
Debashis Chatterjee — Chief Executive Officer & Managing Director
Thank you, Vikas. Good evening, and good morning to everyone, and thank you for joining us today. To start with, I’m pleased to mention that on the earnings call today, we are joined by Venu Lambu, who has rejoined us as CEO Designate on 24th January. Venu has worked closely with me for over a decade in the past. Since joining, he has gained deeper insights into the company’s current operations and strategic planning. Venu will continue to focus on driving growth and enhancing stakeholder value.
While I cover the performance highlights for FY ’25, I would request Venu to provide his perspective on the business outlook later. In terms of yearly performance, FY ’25 was a period of consolidation, characterized by growth in our key verticals; growth across top customers, large deal traction and significant progress in AI leverage deals. Despite robust revenue growth in the first half of the year, momentum slowed in the second half due to macro uncertainties. Nonetheless, as a strategic partner, we maintain close relationships with our customers and supported them in their cost initiative programs, which further consolidated — while further consolidating our position with them.
Overall, we achieved constant currency revenue growth of 5% compared to 4.2% in FY ’24. Revenue totaled $4.5 billion, reflecting a growth of 4.8% in U.S. dollar terms. The strategic alignment with our customers have resulted in a robust order inflow this year. We recorded a Q4 order inflow of $1.6 billion marking the second consecutive quarter with U.S. dollars — with over $1.5 billion in orders. The total order inflow for FY ’25 stood at $6 billion representing a 6.1% year-on-year increase. This exhibits our capability to continue to enter our portfolio from a higher discretionary mix to longer-term efficiency-driven deals.
Operating margins for the year stood at 14.5%, a decline of 120 basis points year-over-year. At the end of Q4 and FY ’25, our total head count stands at 84,307, reflecting a net year-over-year addition of 2,657 employees. Attrition remained stable at 14.4%. Collaboration between academia and corporate is critical in times of technological transition. As a step towards this, we are excited to share that LTIMindtree has partnered with the Indian Institute of Management, Mumbai, to introduce the postgraduate program for executives in AI-led experience design.
This year-long program is designed to equip professionals with cutting-edge skills in customer experience designed by leveraging the transformative capabilities of artificial intelligence. At LTIMindtree, we believe that true operational excellence is measured not only in metrics, but also in the trust we build with our clients. I’m delighted to share that our CSAT score improved to 5.98% in FY ’25 from 5.85% in FY ’24, well above the industry average. I’m glad to see LTIMindtree being included in the S&P Global Sustainability Yearbook 2025. This inclusion marks the first time we have been featured in the S&P sustainability yearbook and reflects our ongoing commitment to sustainability and transparent practices.
The ongoing AI-led technology transition is enabling us to capitalize on new opportunities across various industries. Let me take you through some of the key wins in Q4. A leading U.S. life insurance company has engaged us to enhance its quality processes using AI to improve the operating model, thereby advancing enterprise quality engineering maturity. This is a multiyear deal, which will focus on enhancing quality engineering practices and leveraging AI to transform the operating model. We have been chosen by a global reinsurance group to enhance efficiency through an AI ops model as part of its end-to-end outsourcing deal.
A leading digital company in the kingdom of Saudi Arabia region has entrusted us with the providing end-to-end operations, services for their hybrid cloud security platform. We have been selected by Global NQ Measure to provide NextGen ERP support services across multiple functional and SaaS-based solutions. Our year-end deal pipeline continues to remain robust. Next, I will discuss our industry verticals performance. Our primary verticals, BFSI, technology and manufacturing which accounted for approximately 80% of FY ’25 revenues experienced good growth this year.
The Technology, Media and Communications vertical contributed 24.5% to FY ’25 revenues and grew 8.7% year-over-year in U.S. dollar terms. We see continued momentum in this sector. Our largest vertical BFSI, which contributed 36.1% to FY ’25 revenues grew 4.6% year-over-year. Client priorities continue to revolve around regulatory commitment and data transformation for better reporting and decisions. During the year, we closed several large deals in this vertical, primarily focused on cost optimization, vendor consolidation and tech modernization. The Manufacturing and Resources vertical, which contributed 19% of FY ’25 revenues grew 7.2% year-over-year aided by the large deals we signed earlier this year.
Demand was driven by vendor consolidation, ERP transformation and managed services deals. Our consumer business, which consists of retail, CPG, travel, transportation and hospitality businesses showed flat growth year-over-year in constant currency terms. Retail and CPG witnessed growth during the year, while the TTH portfolio had a couple of clients with Vix slowdowns. Our Health, Life Sciences and Public Services business, our smallest vertical, declined by 3% year-over-year. The decline primarily came from the health care business. In terms of geographies, North America grew by 7.1%, Europe declined by 1.2%, and the rest of the world declined by 1.7% in FY ’25. I I will now turn over the call to Vipul for the financial highlights.
Vipul Chandra — Chief Financial Officer
Thank you, DC. Hello, everyone, and thank you for joining the call. Let me take you through the financial highlights for the fourth quarter and financial year 2025, starting with the revenue numbers. We ended the fiscal year 2025 with revenue of $4.5 billion, registering a growth of 4.8% in dollar terms and 5% in constant currency terms. The EBIT margin for FY ’25 was 14.5% compared to 15.7% in FY ’24. The PAT margin was 12.1% compared to 12.9% in FY ’24, while the absolute PAT for the full year was INR4,602 crores, an increase of 0.4% over FY ’24.
Cash generation for the year continued to drive the strength of our balance sheet with operating cash flow to PAT at 98.8% and free cash flow to PAT at 78.5% for the full year. We closed the year with an all-time high cash and investment balance of $1.56 billion or INR13,346 crores compared to INR12,488 crores in quarter 3 FY ’25. Return on equity was at 21.5%. For the fourth quarter of FY ’25, our revenues stood at $1.13 billion, up 5.8% year-over-year in USD terms.
The corresponding constant currency growth was 6.3% year-over-year. Sequentially, revenue declined by 0.7% in dollar terms and by 0.6% in constant currency. EBIT margins for Q4 were flat at 13.8% compared to Q3. Despite the sequential revenue decline, we were able to maintain margins due to improved operational efficiencies. PAT margin for the quarter was at 11.5% as compared to 11.2% in Q3 FY ’25. Basic EPS was INR38.1 for the quarter as compared to INR36.7 in quarter 3 FY ’25. The effective tax rate for the quarter remained stable at 26.2%.
We remain committed to reducing our days sales outstanding as evidenced by the improvement in total DSO, which reduced by 1 day, bringing it to 79 days for Q4 versus Q3. As of March 31, 2025, our cash flow hedges stood at $3,618 million and hedges on the balance sheet were $259 million. Corresponding numbers for euro hedges stand at EUR145 million and EUR28 million, respectively. Our utilization, excluding trainees, in the quarter came in at 85.8% compared to 85.4% last quarter. Our attrition continues to be stable. For the quarter, our TTM attrition was 14.4% compared to 14.3% last quarter.
We onboarded over 4,700 freshers during the year, which is another step on our pyramid correction journey. The Board of Directors has recommended a final dividend of INR45 per share, subject to shareholders’ approval, taking our overall dividend for the full financial year to INR65 per share. Our commitment to sustainability remains steadfast. Let me outline some of our accomplishments on this front. I’m pleased to announce that LTIMindtree received the India Green Award 2025 for demonstrating best practices and achievements in sustainability reporting. LTIMindtree was also awarded the prestigious Zero Waste to Landfill certification for 2 of our Mumbai offices in Powai and Mahape.
We proudly stand as the only platinum award winner in the sustainability report category within the technology IT services sector. This achievement underscores our leadership in sustainable practices within our industry. LTIMindtree attained a global leadership league in CDP Climate Change 2024 for the fifth year in a row. I’m also pleased to report that CRISIL has reaffirmed its rating on the company’s bank facilities as CRISIL AAA stable and short-term facilities at CRISIL A1+. I would now like to invite Venu to share his thoughts.
Venu Lambu — Chief Executive Officer Designate
Thank you, Vipul. I’m very excited to rejoin LTIMindtree. The transition has proceeded smoothly, and it has been a rewarding experience collaborating with DC once again. For the past 90 days, since my rejoining, I have traveled extensively to various locations, engaging with both employees and customers. I have participated in over 100 meetings involving customers, industry experts, partners and investors. These engagements across stakeholders over the past 90 days have been quite reassuring and reinforce my commitment to value creation again at LTIMindtree.
Recent macro uncertainties will take their own course. Over the past 2 decades, we have faced various challenges and emerged stronger each time. We see the current phase of technological transition and macro issues as another opportunity and are confident in our ability to thrive. I would like to outline 3 key initiatives that we have prioritized as we move into FY ’26. The first initiative is sales transformation. This centers around simplifying the service line sales structure, strengthening leadership in high potential businesses, reimagining value creation with our partners and customers and exploring new sales models in the AI economy, targeting a larger portion of clients’ cost base than just IT.
As we move into this AI-driven economy, clients are increasingly seeking multiservice, multi-delivery and multi-geographical solutions. This significant shift in demand necessitates the development of an innovative playbook prompting us to revamp our large deal organization. The framework for this organization in the context of AI differs significantly from the traditional methods. It focuses on proactive integration of new age technologies into clients’ IT system as well as our own service delivery processes. To boost our scalability in this evolving landscape, we have devised a robust go-to-market strategy, spearheaded by Nachiket Deshpande, President of Global AI Services, Strategic Deal and Partnerships.
Nachiket will now be based in U.S. and his experience across the value chain will help us in delivering integrated solutions that resonate deeply with clients evolving these. While the first 2 initiatives focus on revenue maximization, the third initiative, Fit for Future, primarily aims at enhancing agility and profitability. It involves re-baselining of our operational cost, both direct and indirect. The goal is to relook at the existing team structures and alignments, processes and reshape them towards extra — reducing the extra layers where possible, leading to an agility and operational efficiency with the innovative use of AI.
The program will target productivity improvement in all areas like sales, delivery and business enablement units, maintaining an optimal and efficient bank processes, and it’s also optimizing span of control and et cetera. It should start yielding results through the margin improvements during the year. In conclusion, we are confident about navigating the macro challenges as we move into executing our growth plan for FY ’26. And we expect our Fit for Future program to help improve the margins from Q1 onwards. With that, let me now open the floor for questions.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Sulabh Govila from Morgan Stanley. Please go-ahead.
Sulabh Govila
My perspective is, from an organization point of view, the changes that you highlighted, would you say that these changes have already been in place with — especially with respect to people? Or you think that, that is something that will take some time to play out? And secondly, within that, the areas that you mentioned about sales transformation as well as targeting margins. What among these could be some of the quick wins that you will target in the first year and what could be some of the longer areas that you will pursue
Venu Lambu
Sulabh, I think on the first part, the organization structure is final. I think the organization that was in place, we’re just strengthening that, improvising in the areas where we need to do it, but the focus is actually to continue and accelerate the momentum. That’s number one. The second thing, the areas that I spoke of with regard to the Fit for Future program. Some of these initiatives are already running as I entered into the organization. It’s just that I brought it under one overarching umbrella and overarching program and driving with that governance and focus. So it’s something which is already work in progress. So it’s not something that we have started in fresh. It’s just that it got extra focus and extra rigor.
Sulabh Govila
It got expanded a bit in the last quarter.
Venu Lambu
Yes. Did we miss out any of the question. Okay, which ones will give results with regard to the second part of the question on the sales transformation? Our expectation is that both should start giving good results, right? Again, sales transformation is not about overhauling this sales structure. It’s about getting better on what we are doing. I think there is a chance to improvise our playbook as the client expectation changes, and that’s what we are focusing on. So the word transformation may look like a big thing, but you should read it as an improvisation from the overall sales effectiveness standpoint. And we’re confident of start getting some quick-end results on both these initiatives.
Sulabh Govila
Understood. Thanks for that comprehensive answer. Second is the outlook on the top 2 clients that we have. Given that, especially on the high-tech client, should we expect the productivity benefit pass on phase to be over? And one should expect that plan to grow this year? And in the banking client, given the changes that client is pursuing internally, what areas would you think are relatively protected? And what could be at risk?
Venu Lambu
Look, I think on the first part, on the productivity part, I think as DC would have briefed in the Q3, that’s been factored already in the Q3 and Q4 quarter. So that’s the end of the initiative we are driving, and we are happy that we successfully delivered those benefits to our customers. So that’s sort of a closed topic in that regard. And look, it’s a customer where we had a relationship over many years, and we’ll continue to work with them in developing new capabilities and areas to grow. The second one is, you asked a question with regard to the banking, look, I don’t want to comment client-specific news that you’re talking about, but I can only say that we continue to see an increased opportunities in our clients across all — across all the top lines that we’re engaged with. So I don’t see any immediate risk on that.
Sulabh Govila
Understood. Understood. And last one from me. With respect to the current demand environment and the visibility that you have, so the macro uncertainty that’s been playing out over the past few weeks, would you say that, that has had some impact in the month of March and that’s continuing in April? Or you’ve not seen anything like that in the past few weeks.
Venu Lambu
Look, I’ll comment on that and then DC can add if anything extra on that. Sorry. Look, I think the uncertainty is that was there in Q4. I don’t think it has disappeared as we step into the Q1, right? So I think it still persists in various forms and shapes. So that’s one part of the answer with regard to where the uncertainty lies. The second is, where do we see the demand outlook coming from the clients. I would say that it is predominantly coming from the 3 areas, right? Even the clients are navigating the same uncertainty that we are navigating. So they’re looking for opportunity to save cost. So there are opportunities where we can help customers in cost-saving opportunities.
The second is this is also an opportunity for our clients to actually simplify their vendor landscape. So there is a huge vendor consolidation demand out there. So it’s an opportunity for us to be competitive and get a bigger share of that. And the third is that as most of our clients navigate to the AI economy, they need to manage their tech as well, right? So especially if we wanted a scale at AI, it requires a tech modernization. So these are the 3 sort of an artifacts of demand that we see, which are pretty much contextual to the uncertainties that even our clients navigating it.
Sulabh Govila
Understood. Thanks for taking my question and all the best for this financial year.
Venu Lambu
Thank you, Sulabh.
Operator
Thank you. The next question is from the line of Abhishek Bhandari from Nomura. Please go-ahead.
Abhishek Bhandari
Yeah, thank you for the opportunity. I had a few questions. So, Venu, welcome back home. So from the time you left LTI, the time you rejoined, and the last 3 months you’ve spent in the company, what are the areas you think have changed where there’s a need for immediate attention? and what are some of the areas where you think things have improved since the time you left. The background of this question is some of the expectation of what investors had in terms of growth being A+C after the merger, has it really paid out? If you can answer these directly?
Venu Lambu
Firstly, Abhishek, thanks for welcoming back. Look, on your question, to be honest, I don’t think it’s fair for me to analyze that way because I was there only 1 month after the merger. So it’s very difficult for me to have a reference point and do that. But we also need to understand, I’m sure you appreciate that the market we were talking 2 years or even 3 years back is completely different from the market that we talked today. The client expectation has changed, right, and their spend areas have changed. And coupled with that, even the technology advancement, right? And the kind of AI conversation we could have had 2 or 3 years back versus today has fundamentally — has changed. So that’s only how I look at from an external standpoint. But from an internal standpoint, it’s the same organization. I have a very talented team and great leadership, and we are all passionate and determined to deliver the growth. So at least on that aspect, I can assure there’s nothing that I’ve seen a different change. If not anything, probably I would have seen more hunger and more passion to deliver growth. Thanks to DC for that. Does that answer your question, Abhishek?
Abhishek Bhandari
Yes, partly, I think maybe in coming quarters, we’ll have little more clarity on the strategy and how it has played out. I appreciate it’s just in a few months ago. The second question is on the head count number. In this quarter, we had a very sharp head count reduction. Maybe if you could guide us how one should think about the linkage with your expectation on growth and head count addition going forward?
Debashis Chatterjee
Nachiket?
Nachiket Deshpande
Yes. So this quarter, if you actually see the reason for a sharp decline in the head count was, sort of should be seen in the context of where Q2 and Q3, where we had built aggressive head count increase in the anticipation for the growth. And we kind of worked on deploying that in Q4. And hence, you see the net head count reduction. But going forward, as the AI-led productivity starts to play out, Abhishek, we would expect that the head count growth may not be linear with the revenue growth that we seek. So they would continue to be that play as we go along and as the AI adoption increases across our services.
Abhishek Bhandari
Got it. Thank you for that Nachiket. And my last question is, should we expect the usual seasonality for you to play out even in FY ’26, basis the order book user and the pipeline that you have? Or is it slightly different this time given the macro world play?
Debashis Chatterjee
So Abhishek, we could not hear the first part of the question. Could you repeat that please?
Abhishek Bhandari
Should one expect the usual seasonality of your business to play out in FY ’26 basis the order book user what you have and the pipeline you have? Or you think the pattern could be different this year because of the uncertain macro.
Manoj Shikarkhane
Well, the seasonality variation that you see in our quarters from the last year, I think, in my view, it will be more or less the same, right? If at all, if there is anything that we can add on top of it is that is our ability to respond to the clients’ new types of demands and helping them in all the 3 years that I mentioned. So that we need to see how that gets played out. And also how long this uncertainty environment stays throughout the year. So those are the 2 sort of variables outside that I would say.
Abhishek Bhandari
Yeah. Got it. Thank you very much. All the best. And DP, thank you for your time in the company.
Debashis Chatterjee
Thank you Abhishek.
Operator
Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go-ahead.
Sandeep Shah
Yeah, thanks. Thanks for the opportunity. You spoke about the client-specific issue in terms of both high-tech as well as in BFSI. Apart from that, is there any other client-specific issue, especially in a vertical like insurance or in travel transportation and hospitality, where vendor consolidation, we may win some, we may lose some?
Venu Lambu
Look, firstly, Sandeep, I don’t think I spoke about any issue as such. If at all, I actually give an assurance that the productivity part of our top client that we have executed successfully. So we don’t see that flowing into the Q1. That’s the point one. And second thing was — question was in regard to the banking client, where my commentary was more about how we continue to see opportunities with our clients to go on. So I’m not sure if I missed the context, but there are no certain issues that I highlighted.
Sandeep Shah
No, no. Outside of these two, what I wanted to know is, is there any top client-specific issue in travel as well as in terms of insurance because of California fire and exposure of some of our clients more towards California.
Operator
Ladies and gentlemen, thank you for patiently holding. The management line is reconnected. Over to you, sir.
Venu Lambu
Okay. Thank you. Sandeep, sorry, the line got disconnected all of a sudden. Look, yes, with regard to your questions on insurance and travel, look, I think travel, as we called out, there were a couple of clients, specific instances that had an impact on the FY ’25 numbers. And these are the clients that are actually planning new initiatives. At least I could sort of say that in the near future, there are no other new impact on those clients that was already taken care in FY ’25. In terms of the further demand outlook from those clients, we have to just wait and watch for some more– couple of quarters.
Sandeep Shah
Okay. And just a strategic question. Venu, when you are joining back the company, there has been a dual problem in terms of growth being lower versus what it used to be LTIMindtree versus peers. And second, margins are also at a very low level. Despite some of the levers have been used out in the last 3 to 4 years. If you look at gross margin is at all-time high and it’s one of the lowest in the industry. So in terms of focus, do you believe driving both the initiative concurrently would be a difficult job and you might have compromised one for the other? What is your strategy in regards to this? And second, as a clarification in terms of service line transformation. So is it — one can understand the GTM model may change from vertical focus to service line focus?
Venu Lambu
No. Firstly, let me clarify that part. No, it doesn’t mean that. What it means is that the clients are consuming service capabilities in a different way, these days, Sandeep, right? It’s no more consuming a part of one service line or anything. Most of the construct, whether it’s in the tech modernization, cost savings or in the AI kind of a niche, it was more than one service line. So when I spoke about simplifying, it’s about making sure that we become more agile and we become more competitive in the way we address the market with regard to the service line and sales capability. That’s the first part of it.
And second thing is that with regard to playing on both the tracks of revenue and margin, I think it’s something we have the capability. It’s not the first time we would have addressed these challenges, right? So we have all the capabilities and we have the teams who can navigate this both. And our endeavor is actually to drive the profitable growth. So that — so hence, we need to get both. I don’t think you can get the profitable — you can get the profit you just cutting the cost. So you need the revenue and the volume as well. So it goes both hand-in-hand. I know it always looks challenging, but I think that’s where we have a great leadership and team in place to deliver that.
Sandeep Shah
Okay. Thanks. Congratulations Venu, and all the best.
Venu Lambu
Thank you.
Operator
Thank you. The next question is from the line of Manik Taneja from Axis Capital. Please go-ahead.
Manik Taneja
Hi, thank you for the opportunity and Congratulations Venu for rejoining LTIMindtree. So my question was with regards to the commentary that was provided post the third quarter results, where you were quite optimistic about sustaining a growth momentum driven by a combination of factors. If you can talk about where were you negatively surprised in terms of verticals with the way how Q4 panned out. And the second question is with regards to the sales transformation that you’re talking about, you see the number of exits in the organization in the course of recent months. Could you talk about how you could look in to backfill some of these positions and the likely timelines there? Thank you.
Venu Lambu
Yes. I think on the first part, I request DC to comment and come back on the sales transformation.
Debashis Chatterjee
So Manik, the way to look at it is that we had a strong growth in Q2. And we also saw good order inflow in Q3, which kind of made us believe that the volumes are going to be coming for which there will be good growth in terms of Q4. But obviously, multiple factors, mostly macros, as you are aware of, which kind of played a role in terms of 2 aspects. One is many of the deals that we closed, which were supposed to start, they did not start in the same vein when the ramp-ups were delayed. And secondly, some of the deals which were expected to close in Q4, they are also kind of what carries forward into the next quarter. So these are some of the factors that did not play out the way we had anticipated. We — that is why you will see that there was a — there was a well planned, in terms of — if you look at the intake for Q2 and Q3, the intakes were high, but we could not really wrap up the way we want it. But of course, the good news is that some of those deals will get closed in this quarter. So you will hear about it as we go along. But otherwise, that is [Technical Issue] why the growth momentum could not continue though we had anticipated. And on the sales transformation, let me hand it over to Venu.
Venu Lambu
Thank you, DC. Look, I think on the sales transformation, as I mentioned, it is more about getting a better version of ourselves in the context of the new playbook or in the new AI economy. So that means we already have a great sales team and we have a very effective way of managing our client relationship. And we’re sort of infusing with the new playbook that is needed in the context of AI economy. So that’s how I look at the sales transformation. And all our industry leadership, I don’t think is constant and is steady. So there has been no exits in that part of the organization. And 1 or 2 exits that we had, we have backfilled it very successfully. The growth office we consolidated under one leader now, where we have a global Chief Growth Officer. And we also integrated vertical delivery as well under one single chief delivery officer. So I don’t think we have any risk with regard to the exit. In fact, we have a good interest for the leadership infusion and we start growing as well.
Manik Taneja
Sure. If I can chip in with one more question. This question was for Vipul. With regards to our Fit for Future program, we’re talking about some of the easy wins come through very quickly in FY ’26. If I look at your cost split up over the course of FY ’25, we’ve seen our non-manpower expenses come off meaningfully over the course of last couple of quarters. If you can talk about what exactly has driven some of those efficiencies? And how should we be thinking about these expenses on a go-forward basis?
Vipul Chandra
So I think, Manik, as we said that under Fit for Future program, we are targeting agility and cost optimization and there are many tracks in the program that we are simultaneously focusing on. So some of the tracks, which have started yielding results are in terms of the overhead side, which you have seen and yourself commented on in the SG&A side. I think some of the other initiatives, which are going to start playing out will be in the manpower cost area also as we address the span of control and also the optimization and driving the efficiencies in the workforce management process and the talent process. And we are also — as we are adopting AI more and more we have already said that the increase in head count versus revenue may not be linear going forward. So I think all of these levers playing together is what we are looking at. Some of them have already been in place. Some of them will start kicking in further now.
Manik Taneja
Sure. And any targets or any timelines that you’re giving to the margin improvement aspiration?
Vipul Chandra
Manik, as you know, we don’t give a guidance per se for the future. But I think in terms of the time lines or impact, that will be visible through the quarter in FY ’26 as we go along.
Venu Lambu
It’s a journey, which will start getting visible from Q1 onwards.
Manik Taneja
Yeah sure. Thank you. All the best for the future.
Venu Lambu
Thank you.
Operator
Thank you. The next question is from the line of Vibhor Singhal from Nuvama Equities. Please go-ahead.
Vibhor Singhal
Yeah, hi. Thanks for taking my question. Venu, I had a question on the strategy that you mentioned about the various initiatives that you are taking in terms of a chief growth officer and the revitalization of the employee workforce. So I mean, in terms of the targets that you’re looking at, I mean, these strategies to achieve that target, is there any target in our mind a northstar maybe that we want to basically achieve this kind of a growth, if not in absolute terms, in terms of relative to peers or industry, similarly on the margin trend. So are there any targets are how far that you’re looking at. And if you can’t share them with us at this point of time, is there a time line that we are looking that we would be looking to share that, okay, this is what we aspire to be in excess years of time or whatever that time frame will be?
Vipul Chandra
Yes. Look, I think in the short term, it’s about getting the growth in the first quarter, which I feel we are reasonably confident of achieving that, right? And in the medium term for the full year, I would not comment on any specifics, but I think I will live up to the spirit that DC has been advocating over the years of industry-leading growth. I think that’s what our endeavor will be to achieve that. But, as I said, in the short term of the Q1, as I see it, I think, reasonably confident of getting that growth.
Vibhor Singhal
Got it. Got it. Also just a couple of questions on the outlook and just especially on the Q4. I mean, we’ve heard a lot of our peers talk about heightened level of uncertainty in the manufacturing and retail vertical. These 2 are key verticals for us and of course, the impact of the uncertainty is mainly because of the tariffs. Is that also what is kind of reflecting in our conversations with them? Or do you think that nothing as now has come up with them and your outlook for these specific verticals, let’s say, in the near to medium term?
Venu Lambu
You actually — you can’t generalize it across the sector because it depends on where the client’s operations are? Where the supply chain is? Where do they sell and so on. So it becomes very difficult to generalize it. But I can tell you how our demand is looking at these 2 sectors, right? And manufacturing, I would sort of phrase it as a steady and growth-oriented in the short term that we can say. In retail, we have a very exciting conversation going on, on some of the strategic deals and strategic engagement. So there is no big material request. There is no material request that has come to us at the back of the tariff changes. But the fact of our discretionary spend is still muted because that still remains the same as what it was in the previous quarters, and clients are adopting wait and watch. But the three areas that I called out in the beginning about cost savings, better consolidation, tech modernization initiatives across these three areas, specifically, in these two sectors, I would rephrase the way I said it. Steady growth in manufacturing; retail, some couple of exciting engagements that we are in the discussion.
Vibhor Singhal
Got it. Just one last bookkeeping question. The healthcare vertical, though it’s a small one for us, saw a very sharp decline in this quarter, both on a Q-o-Q and Y-o-Y basis. We almost lost $10 million of revenue on a quarterly run rate basis in the quarter. Any specific thing to call out? Any client-specific issue which might reverse in the next coming quarters? Or anything on that will be great?
Debashis Chatterjee
No. I think there is no client-specific issue per se. Most of the business in — most of the businesses in healthcare and public services is project-based. And there are these project-based business related cyclical impacts in the public services portfolio. That’s all about it. I mean there is definitely no customer specific issue.
Vibhor Singhal
Could it be the DOGE impact that the government of U.S. is leading the initiative in?
Debashis Chatterjee
Most of the work we do in public sales are in all India. So there is no impact like that. There’s no DOGE impact.
Vibhor Singhal
No impact. Got it, got it. Thank you so much. Thanks for taking my questions and wish you all the best.
Venu Lambu
Thank you.
Operator
Thank you. The next question is from the line of Abhishek Kumar from JM Financial. Please go-ahead.
Abhishek Kumar
Yeah, hi, good evening and Congratulations Venu on your new role. My question is it’s a difficult environment to execute transformation of any company. Any macro that you have kept in mind? How contingent is your transformation program on the macro? Have you baked in similar macro, any deterioration? Or in other words, what can derail the transformation of your delays?
Debashis Chatterjee
Okay. First, let me clarify the question with regard to the transformation, right? Let me define what are we focusing as an organization, right? So, look, we have a lot of things already in place. We have great capabilities, fantastic clientele reference base and the successful engagements across many years and so on. So [Technical Issue]
Operator
Ladies and gentlemen, please stay connected. We lost the line for the management ladies and gentlemen, we have management reconnected. Over to you, sir.
Venu Lambu
Thank you. Abhishek, I don’t know till where you heard me because I could start from the beginning?
Abhishek Kumar
Yes. I think it’s better if you can start from the beginning sir.
Debashis Chatterjee
Okay. All right. Thank you. Look, I think, firstly, as I said, I just want to rebaseline or contextualize the transformation question that you said, right? The way I look at it is the very fact that I come back to an organization, which is familiar to me? I know the people, of course, I worked with DC for many years and Nachiket and other leaders for quite a few years. So we’re looking at ourselves as how do we get better with our own version. I call it as can we become a better version of ourself. So transformation may look like a very heavy lifting multiyear theme kind of a narrative. That is not what we are at it. What we are at it is identifying specific areas where we can get better, right?
And Fit for Future, for example, is one area. I think there is an opportunity for us, we can get better at the cost, right? And we need to get better at the cost, again, because of the macro uncertainty and also because an opportunity that AI has given us to rebaseline certain element of cost. So we’re bringing all that under one umbrella for Fit for Future. So that’s a very specific thing not related to the external environment hugely in our control to deliver that. The second thing is that with regard to the sales transformation that I spoke of, again, it’s about how do we ensure that we give a newer playbook to our sales leadership? How do we give new sales capabilities to our sales organization. And that’s not a onetime effect. That’s an ongoing thing. We just kicked it off and it will go on throughout the year and beyond.
Again, that is pretty much in our control, right? So there’s only one thing which is outside of our control is the demand outlook and that is not included as part of transformation. So I — that’s why I would sum it up that the things that we are focusing on to get into a profitable growth curve is all a lot in control minus the macro uncertainty, both in terms of how long it will remain and in what shape it takes.
Abhishek Kumar
Understood. My second question is on the growth outlook for FY ’26. DC, you said roughly 6% of TCV growth this year. At the same time, there is a shift from discretionary spend to longer-tenured deals or cost takeout deals, which are longer tenured and then we have probably a full year impact of productivity passback coming in FY ’26. So fair to assume that the growth could be lower than 6%? Or just in terms of whether FY ’26 could be similar, better, worse compared to FY ’25? That would be helpful. Thank you so much.
Debashis Chatterjee
Look, I don’t want to give a very specific range or something because we don’t give those guidance. But I can only tell you that order booking momentum will continue. It will only go up from the last year. And as I did indicate, we are at a very interesting and exciting phase of conversation with a couple of large clients in the retail sectors. And so we’ll have a couple of large deals update that we may share it with you in the due course, right? But at the moment, I’m very optimistic that the order book will be higher than the last year.
Abhishek Kumar
Okay, great. Thank you and good luck.
Operator
Thank you. The next question is from the line of Mihir Manohar from Carnelian Asset Management. Please go-ahead.
Mihir Manohar
Yeah, hi. Thanks for giving the opportunity and Congratulations to Venu on joining back. Lastly, I wanted to understand on the margin impact, which has been there over the last seven, eight quarters when we see. So essentially, I think the rate is largely coming from gross margins. Now in utilization has remained largely flat, on-site offshore ratio has remained in that range of 14%, 15%, which essentially means that either there is a pyramid has gone bad over the last 8 quarters or there is a pricing reset itself, there’s a margin reset itself, which has happened in the business. So can you throw some light on what is causing this margin impact because there over the last seven, eight quarters, is it the pyramid getting really bad? Or is it the new pricing itself getting adjusted?
Vipul Chandra
So in terms of the margin, having deteriorated over the last few quarters. I think in quarter 3, also, we had called out that the impact of wage hikes, which we had implemented from 1st October had kind of affected the margins in Q3, and the impact of that has continued in Q4. At the same time, we had started initiatives on margin improvement and which we talked about earlier. So in spite of the revenue growth not coming through in Q4, we have managed to maintain our margins. So I think it’s — we can say that we have bent the cost curve by taking some initiatives. Yes, pyramid correction is one of the levers that we are focusing on and we have been focusing on. Span of control is another lever that I talked about. So there are multiple levers that are being focused upon as a part of our Fit for Future program, and we are confident that they will start to impact from Q1 onwards, but it is a journey, and we will have to undertake that journey over the next few quarters.
Mihir Manohar
Sure. Is there any sort of with respect to the large high-tech client, which is there. Is there a pricing reset which is happening — which has impacted margins?
Venu Lambu
There is no pricing reset that has happened.
Vipul Chandra
It was productivity pass back as we had called out in Q3, and that is what it was. And as we had said in our Q3 earnings call also, it has not affected the margins of our segment. So there is no pricing reset. It is productivity faster, which we have done and successfully delivered.
Mihir Manohar
Sure, sure. And my second question was on the deal wins side, as two quarters of good buildings. I mean I understand the situation is a dynamic situation. But I mean when should one expect these deals to see some impact on the revenue side? And specifically, if you can highlight how is AI helping us over here in getting deals? That will be really helpful?
Debashis Chatterjee
Look, I think we spoke about delivering growth in Q1. So part of it should get reflected in Q1. And I also spoke about sharing a further update on some of the couple of strategic deals pursued that we are in, which is what we would share in the due course. So that will start reflecting from Q2 onwards. So that’s all I would say. Vipul, anything further you want to add?
Vipul Chandra
Nothing.
Mihir Manohar
Sure, that is it from my side. Thank you.
Operator
Thank you. The next question is from the line of Kumar Rakesh from BNP Paribas. Please go-ahead.
Kumar Rakesh
Hey, hi, good evening and thank you for taking my question. Welcome back, Venu. My first question was to better understand the growth trend during this quarter. So when we entered this quarter, we were expecting the growth momentum to continue. And through the quarter, as you spoke about that some of the deals didn’t close and the ramp-up got slowed down, the impact seems to be about 2.5 percentage points, which is higher than what your peers have seen the impact in the quarter. Actually, many of the peers have spoken about that they haven’t seen any impact. And going into the quarter, you were building head count as well expecting that growth to play out. So first part of the question is that what resulted into the impact in your business to be higher than peers? Because you also spoke about that manufacturing and retail, where you are over indexed, you haven’t seen material impact to be there. So what exactly is it that resulted into your growth being impacted more than peers? And now as we are entering into the first quarter, your head count is much lower. While you are speaking about that, you’re confident of growth. So what essentially is driving that confidence going into the first quarter that you would be able to deliver growth?
Debashis Chatterjee
Yes. So let me take the first part. So when we — remember when we had our earnings last quarter, we had very clearly called out about the fact that we have to pass on some productivity benefits for one specific account. And it exactly played out the way we had anticipated. And the good news is that we have kind of completed that exercise in Q4. So there is no overhang of that winning into the next quarter. Having said that, we also expected the volumes to increase in the other parts of our business. And that is what I think I elaborated in my earlier answer that we know we signed a lot of — we signed a lot of orders. The order book was very healthy. But the ramp-up did not happen the way we had anticipated and predominantly factor could be the macro situation. That’s one.
And some of the deals that we should have closed in Q4, they are also kind of getting shifted to the Q1. So overall, the long story short is that the ramp-up did not happen. The volumes did not come the way we had expected, though we had — in anticipation of that, we are well prepared. And that’s predominantly the reason why we did not meet the expectations that we had set. But having said that, as Venu articulated, we are very confident that as we get into the next quarter, the two things will happen. One is we’ll be definitely able to talk about a few new deals. And second thing is we are very confident of the growth coming back. So Venu, you want to answer the second question?
Venu Lambu
Yes. I think some of the deferment topic that we spoke about or some of the decisions that got slightly deferred is also one of the reason why we will start seeing that coming up in Q1. But I think — if you look at it in the Q4, the way I see it from a market standpoint, is most of the clients were sort of a wait and watch mode in JFM quarter. I think in the coming quarter, at least the conversations have started happening, right? Yes, they are cautious. They are waiting and watching on some big, big decisions, but things have not stand still. So there are still opportunities in the areas that I highlighted earlier, and these conversations are happening. I think the JFM was a quarter where a lot happened within the short period of time. So it was, I think, probably too much for our clients as well to sort of comprehend and then active. But I think now — I’m not saying things are getting clear. But as the things continue to remain as it was before, I think it’s an opportunity for people to start finding a way to start doing business, specifically in those three areas.
And we see the continued traction of these three years. That’s why I’m confident about getting back to growth in Q1. And also I highlighted a couple of large deals where if I may take a risk of saying we are favorably positioned, which we will announce it in the due course. And those large deals are also is the reason that I’m confident of Q1.
Kumar Rakesh
Just a clarification on those comments. So you spoke about volume took a hit in this quarter. So the revenue decline that we are looking at, the volume decline was similarly lower in the quarter?
Venu Lambu
Which one are you referring to, Rakesh? Sorry, I didn’t get it?
Kumar Rakesh
So the sequential revenue decline that we have seen in a constant currency basis, your volume also had a similar decline in the quarter?
Venu Lambu
Yes, it was more or less the same.
Kumar Rakesh
Understood. And my second question was, in the past, you have although not giving guidance, but you have been quite confident about talking about that the company’s growth would be peer leading growth. Are we confident enough to at least speak about that for FY ’26 that we should be able to match or lead the peer growth or the uncertainty is too high to make that comment at this stage?
Venu Lambu
Yes. Look, in the given situation, I will take it one or two quarters at a time before giving — sitting here, giving the full year commentary. So that’s why I’ve been consistent in this call that do we see a growth coming back in Q1? Absolutely, yes, we will see that coming back. Do we see margins getting better in Q1? Yes, we see the margin getting better in Q1. But as we get more and more clarity and both with our clients and outside enrollment, I think we can extend — we can give a further extended commentary beyond a couple of quarters. At the moment, that’s probably I would stop.
Kumar Rakesh
Makes sense. Thanks a lot.
Operator
(Operator Closing Remarks)