Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Zensar Technologies Ltd (NSE: ZENSARTECH) Q4 2026 Earnings Call dated Apr. 24, 2026
Corporate Participants:
Manish Tandon — Chief Executive Officer and Managing Director
Pulkit Bhandari — Chief Financial Officer
Vijayasimha Alilughatta — Chief Operating Officer
Analysts:
Zimit Gandhi — Analyst
Nitin Padmanabhan — Analyst
Unidentified Participant
Girish Pai — Analyst
Unidentified Participant
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Zensar Technologies Limited Q4FY26 earnings conference call hosted by MK Global Financial Services Limited 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 touchstone phone. Please note that this conference is being recorded. I now hand conference over to Mr.
Zimit Gandhi from MK Global Financial Services. Thank you. And over to you, Mr. Gandhi.
Zimit Gandhi — Analyst
Thank you, Operator. Good evening everyone. On behalf of MT Global Financial Services, I welcome you all to the Zemsa Technologies quarter four FY26 earnings call. We have with us Mr. Manish Tandan, CEO and Managing Director, Mr. Kulkib Bhandari, Chief Financial Officer and other members from the Senior management team. Before I hand over the call to Manish, I would like to highlight that the safe harbor statement on the second slide of the earnings presentation is assumed to be read. Understood?
Thank you. And over to you, Manish.
Manish Tandon — Chief Executive Officer and Managing Director
Thank you, Jimmy and hello. Good morning, good afternoon and good evening everyone. Thank you all for taking the time to join us today to discuss Densar’s financial results for the fourth quarter and full year FY26. With me on this call are the usual suspects. Chief Financial Officer Pulkit Bhandari, Chief Operating Officer Vijay Simha and Chief HR Officer Vivek Ranjan. Let me start with talking about the macro. Geopolitical uncertainty and sudden policy shifts have become the new normal. The rules of business are evolving and tighter immigration policies are beginning to leave their mark.
Despite these headwinds, we in the IT industry have demonstrated remarkable resilience. Turning to Zensar’s performance, we delivered a modest yet resilient revenue performance this year centered around offshore LED volume growth. Importantly, our annualized order book profitability and cash position collectively reach to their strongest levels demonstrating our disciplined execution and continued operating strength. Our AI native offerings scaled to enterprise level adoption in Q4 driven by multiple high value AI led wins, validating our early and decisive investments in the space.
With 85% of our workforce AI certified, we are systematically transitioning to a delivery model. That AI is embedded in every engagement, driving accelerated technology modernization and measurable productivity gains. Our strategic large deal win further underscores the bold forward leaning capabilities and client acceptance of our solution. Moving towards our financial performance for Q4 and full year. FY26. For Q4 FY26, the company posted revenues of 158.4 million a year over year growth of 1% and a sequential decline of 1.3% in reported currency.
In INR terms this equates to a year over year growth of 6.7% and a sequential growth of 1.4% for the full year. FY26 the company posted revenues of 643.7 billion year over year growth of 3.1% in reported currency. In INR terms this equates to year over year growth of 7.7% for full year reported currency basis. Revenues grew by 11% in banking and financial services, 8% in healthcare and life sciences in manufacturing, consumer services and telecom, media and technology. Vertical revenue declined by 0.6 and 9.7% respectively.
Additionally, we are pleased to inform that our annual profit after tax improved to $87.2 million a year over year growth of 13.6%. Net cash and cash equivalents positions to debt 319.5 million a year over year growth of 10%. Order book supported by the large deal win increased to an all time high level of 401.8 million this quarter a sequential growth of 122.9%. Utilization improved to 84.3% sequential quarter growth of 80 beeps. Our annual customer satisfaction score improved by four hundred and seventy beeps to its highest ever level, positioning Xensar in the top three of industry CSAT.
This coupled with industry leading 9.8 attrition demonstrates our commitment to disciplined execution and our enriching culture that fosters long term relationships while continuing to execute our strategic priorities. With that, I will now invite Pulkit Bhandari to provide an update on critical financial data.
Pulkit Bhandari — Chief Financial Officer
Thank you Manish. Good day everyone. Thank you all for joining this call. I will take you through some of the key business and financial metrics for the quarter ending March 26. The AI ecosystem is evolving rapidly with clients expressing willingness to expand adoption. However, a majority of AI spend is being repurposed from existing engagements such as application development and testing, creating pressure on renewals and pricing. Our ability to adopt this evolving service model combined with long term strategic client partnerships positions us well to deliver tailored solutions.
By integrating AI enhancements into our core service offerings, we aim to drive measurable sustainable value for clients. The reported revenue for the fourth quarter financial year 26 stood at 158.4 million in USD terms reflecting a growth of 1% YoY and a degrowth of 1.3% sequentially in reported terms. In the constant currency terms sequentially it grew by 1.9%. Our EBITDA this quarter contracted by 130bps sequentially driven by lower volumes due to lower working days. That’s around 0.3%. Reversal of leave utilization benefit of Q3 which has been a past practice as well of around 1.1%.
Increase in other costs 1.1% which includes initial cost with regards to large deal implementation and SGNF which has been offset by a positive forex impact of around 1.2%. Our PAT margin for the quarter stood at 14.4%, expanded by 50bps. Some other key highlights we opened a delivery center in Belgrade, Serbia. We intend to leverage this for our clients for tapping in high quality talent and nearshore benefits. Our order book for the quarter stood at 401.8 million which includes large deals signed during the quarter.
Cash including Investments stood at 319.5 million. Our attrition increased to 9.8%. ETR for the quarter is 23.7%. Diluted EPS grew by 9.2 per share which is 5.6% Growth Quarter on Quarter FY26 saw an improvement of our ESG scores across rating agencies. For instance, now we are 87 percentile in EcoVadis leadership category in CDP and 80th percentile in S and P Global. The Board of Directors have approved a final dividend of 12.6 per share for financial year 2026 which is 630% of face value subject to the approval of shareholders in the upcoming annual general meeting of the company.
With this, our total dividend for the year adds up to 750% of face value. With that, I will now invite Vijay, our Chief Operating Officer to comment further on Q4FY26 result.
Vijayasimha Alilughatta — Chief Operating Officer
Thank you Manish and Pulkit. Greetings everyone. I will share details about our operational efficacy, service line performance, annual CES and AI journey. On the operational efficacy front, our utilization for the quarter stood at 84.3% which is 80 basis point growth quarter on quarter. The rigor associated with accelerated fulfillment and capability enrichment continued in Q4. We had a gross addition of 968 employees in this quarter. As Manish stated, voluntary attrition was 9.8%. This is the fifth successive quarter where our voluntary attrition has been below 10%.
The offerings from our service lines and industry services groups continue to resonate well with our clients. The share of revenue from our service lines increased to 71.6% in Q4 which is 440 basis points higher YoY on a YoY reported. Currency basis Cloud infrastructure and security services grew by 13%. Data engineering and analytics grew by 8%. Products and platforms including CMO services grew by 6%. Enterprise application services grew by 1.2%. As spoken by Manish previously, the annual Client Experience Survey was conducted in Q4.
We clocked our highest ever score on both the overall Client Experience Index as well as the Satisfaction, Advocacy, Loyalty and Business Value dimensions. Our Experience index improved by 470 basis points and we have moved further up within the top quartile of industry ranking. The AI talent transformation initiative has seen significant growth in FY26. We upskilled 85% of our workforce in AI by leveraging the multi level training programs of our Ignite AI Academy as well as the various certification drives that we have instituted in collaboration with our alliance partner.
The number of AI learning hours per person increased by 136% in FY26 as compared to FY25. This demonstrates our unwavering commitment to developing future ready talent at scale. We continue to deliver significant value to our clients in key AI engagements. We are continuously reimagining our offerings leveraging AI technology. Some of the refined offerings that we provided to our clients in Q4 are the agentic foundry that solves complex workflow issues for BFSI clients, Quality Intelligence, Context Intelligence, Synops for AI and Zen CI Guidewire.
With that we can now open the line for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question answer session. Anyone who wish to ask a question may press Star and one on the Touchton telephone. If you wish to remove yourself from the question queue you may press STAR and two Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Sir, we have first question from the line of from Nitin Pandamanaban from Investec. Please go ahead.
Nitin Padmanabhan
Yeah. Hi good evening everyone. Thank you for the opportunity. Manish for the quarter if you could give some color on what why we have seen a sort of a broad based kind of a decline any change in clients behavior because our CSAT scores are pretty good. Normally one would think that would mean automatically more business and if you could layer it up with whether this was seen in the early part later part of the quarter and would that mean that you know, at least in the near term Q1 also could see a similar kind of a decline kind of an impact as a run through some color and context around what really happened and why it’s happened.
Manish Tandon
Thank you Nitin and I think very relevant question. So two things. One is the usual suspects have caused the problem, which is PMT sector as a whole. The second thing was that we were expecting the large deal to close in Q3 and start in Q4 but the deal closure actually happened in February. So we were not able to recognize any revenues for as far as the, or any material revenues from the large deal. So those were the biggest things that we saw. TMT will remain under pressure and it will remain under pressure for next few quarters.
As you have seen large companies like Oracle have let go of 30,000 people. There are companies like Snap and there are companies like Box which have let go of nearly 50% of their people. And that is going to, that is basically going to reflect on other. I would say that EU and SA is back on the. We have righted the ship and we should see good growth there. TMT will continue to be under stress, at least for us. FSI will continue to grow. Healthcare Life Sciences will be under stress. And that is primarily because as mentioned to you last, last call, that we have been consolidated out of a couple of accounts and MCS also we will, we are not expecting any declines, we are expecting some growth.
Nitin Padmanabhan
Sure,
Manish Tandon
I hope, I hope you have answered your question.
Nitin Padmanabhan
Yes, you did. So I think the broad take is that because growth is back in quite a EU and SA and BFSI will grow and MCS will also grow. So would that mean that at least in the near term we are not going to have a decline quarter? It should be a growth quarter broadly,
Manish Tandon
Yeah. We are as we stand, we don’t see a degrowth quarter in Q1 for sure. But as you know, I mean things are changing so rapidly as you know, not just from a market perspective but also from the geopolitical situation and tariffs and so many of these, these things that it is becoming very difficult to predict with surety. But I can say that where we stand today we are not seeing a degrowth scenario.
Nitin Padmanabhan
Got it. Just two more quick ones. One is on the deal ramp. How should we think of how this ramp goes through the ramp up of the deal? And the second one was the deal related costs which we saw the initial cost of 110 basis points this quarter. How should we see that playing out through the year?
Pulkit Bhandari
Sorry. But then what’s the second part? What is the cost that you mentioned,
Nitin Padmanabhan
The deal related initial costs.
Pulkit Bhandari
How should we
Nitin Padmanabhan
See that sort of panning out through the year?
Pulkit Bhandari
So let me take that now when you look at the first part of your question in terms of how does the ramp up around revenue looks like for large deal? I would say it will be while we are on track. We have started basically kind of working with them very closely. The ramp up will take some time because it has its own complexities. Transition always is a lengthy process where basically multiple, I would say variables come into play, but it’s going and tracking, I would say, well difficult to give you an exact number but we would hope that Q1 should see some part of revenue coming in and the full fledged revenue should come from Q3.
Q2 should also basically benefit little bit. But the proper and the full ramp up I would say basically is Q3. When you look at the cost structure, we’ve already started kind of hiring for the, for the large deal and to that extent there’s been a expansion in number of people and costs associated with them in the panel that you see today. But as what we have called out earlier as well, during the transition time frame, during the ramp up period, there will be some pressure on the margins while we basically will try and see how we can cover and plan plan for them.
But there will be some pressure which you should be expecting at least in Q1. Q2.
Nitin Padmanabhan
Okay, sure. Got it. And one more if I may, from a deal pipeline perspective and closure, how do you see that? Because off late I think lot of earnings calls, a lot of talk was on hyper competitiveness and sort of pressure on margins. So just wanted your thoughts on that and that’s all from my side. Thank you so much.
Manish Tandon
Yeah, Nathan. So again a very relevant question. See the competitive intensity is going up tremendously and so much so that we are seeing tier ones competing for deals which a few months back they wouldn’t even look at. Okay. I can tell you that almost everywhere we are encountering a tier one in our competitive set which was not the case a few months, months back. As far as our pipeline is concerned, it is pretty good from where I see things at least I am not worried too much about our, our pipeline as of now.
And even the order booking that you see, even if you exclude the large deal, our order booking has been of the order of 200 million
Pulkit Bhandari
Plus 206. 206
Manish Tandon
Million or so. So while the competitive intensity has increased tremendously, we are stepping up to the plate and making sure that we are not only bidding but winning as much as we can.
Nitin Padmanabhan
Sure. Thank you so much and all the best.
Operator
Thank you.
Unidentified Participant
We have next question from
Operator
The line of
Unidentified Participant
NG
Operator
Puranic from Enum Securities. Please go ahead, sir.
Unidentified Participant
At a very large Page presented that in
Operator
Mr. N. Panik.
Unidentified Participant
I
Operator
Am audible to you. As there is no response from the line of Mr. Panik. We take the next question.
Vijayasimha Alilughatta
And that’s
Pulkit Bhandari
I, I think we can go to the next question then. Okay
Operator
Sir, We have next question from the line of Sandeep Shah Equity securities. Please go ahead.
Vijayasimha Alilughatta
Yeah, thanks. Thanks for the opportunity. Manish. We clearly understand that the sector is facing too many headwinds at the same time which are led by tech as well as geopolitical issue and macro issue. But answer to that could be a consistent traction in the order intake which helps us in terms of driving a predictable consistent growth quarter after quarter. So I think we did this in this fourth quarter but as a phenomena do you believe we need to further strengthen our large deal team? And I’m not saying every quarter we can have a mega deal or large deal but at least the order intake continues to remain above 1.3, 1.4x for a company like a mid cap which helps to have a sustainable growth on an ongoing basis.
So how are you looking at this angle and strengthening the large deal for team to perform on a consistent basis?
Manish Tandon
Again Sandeep, thank you, thank you for that question. See we are all in on AI and as you can see one of the reasons for our large deal win was our AI solutioning and we have taken this to the next level. Now none of our deals, actually large deals go without a significant AI component to it. We have created new solutions, new offerings and through use of AI we are targeting newer segments and shaping more large deals. The results are obviously we’ll still wait for the results to come out but our response to I believe that having a healthy order book and having a healthy pipeline directly reflects on our focus on AI and how we have changed our go to market perspective.
Vijayasimha Alilughatta
Okay, okay. And this in the TMT top client 1 can assume the growth could be flattish or marginal decline rather than a significant decline may continue on a going forward basis because the contribution of that client to the revenue would have been now between 6 to 8%.
Manish Tandon
We will see continued decline in that account very clearly because that account itself, you know there is an insourcing paradigm that is being talked about in that account they are cutting costs significantly in line with other technologies companies actually. So if you, if you look at it in our projections, we have not taken any growth in that account. We have seen, we have in fact budgeted for continuous decline in that, that account.
Vijayasimha Alilughatta
Yeah, yeah. And in the backdrop of that, do you believe the coming year the growth Outside the mega deal could still be a decent growth and higher than what we have registered in the FY 2026
Manish Tandon
Sandeep. Hope. Hope is eternal, runs eternal. If we didn’t have hope, you know, there would be too many suicides in general. So hope runs eternal. But we have taken pragmatic view of where we stand. Our budget and so on are, you know, not a statement of aspirations, but a statement of reality as we see today. I would also say that the reality that we see today keeps changing and that is the, that is the whole issue that we have. The good news is as a smaller agile organization, we are better suited to respond to those changes.
And that is what we are trying to do. But I can tell you that our FY27 performance will be contingent on our performance on our large deal. There is no. Actually I won’t even call it a large deal. It is a mega deal and it will be contingent to some extent on the performance that we can. What we do on the mega deal.
Vijayasimha Alilughatta
Okay, okay. On this megadeal, can you give us color what has led us to win that deal? If I’m not wrong, we have replaced one of the tier one incumbent and how we are replicating this across sectors verticals and make this phenomena at least not quarter after quarter or one or two such instances in the whole year.
Manish Tandon
So I think, I don’t want to comment too much on the large deal because we have given Omega deal. We have given whatever we had to in our press release. But you know, I would say that it really enhances our capabilities to do deals of this size. And our clients and prospects and the analysts and advisors have noticed that also as we are executing this megadeal, we are becoming demonstrably competent to all these people. And hence we are hoping that we’ll be able to at least bid for more larger deals.
Even if we are. Even if we win or we don’t win.
Vijayasimha Alilughatta
Okay, thanks. If I have more, we’ll come in the follow up.
Operator
Thank you. We have next question from the line of Vedik Sarkar from Unified Capital. Please go ahead.
Girish Pai
Gentlemen, good evening. And Manish, congrats on navigating a tough environment. Couple of questions. In the past you’ve always given us a qualitative flavor on the size of deal pursuits of deal pipeline. Right. If you had to kind of quantify that statement relative to perhaps where we were same time last year, would you say that pie has shrunk or if it has expanded? If you could just help us imagine that pursuit pipeline, there it’s point number one. And the second question is on the megadeal, very simple back of the envelope calculation indicates the revenue potential of roughly 9 to 10 million per quarter.
Right. Starting Q2, is that a similar ballpark your delivery is working with as we step into Q2 of FY27, these two questions. And lastly, on the margin front, if you could just walk us through the incremental labor costs, is that entirely attributable to investments for the megadeal or is there a organic path to that wage cost inflation as well? Thank you.
Manish Tandon
Yeah, so great, great questions. The first question, if I’m not mistaken, is pipeline related? So see, there are two parts to that, to that answer. One is, have we increased our adjustments addressable market? The answer is definitely yes. And second is, have we increased our pipeline? The answer to that is also yes. But again, please remember that we converted a 200 and whatever $10 million deal which dropped. Dropped from the pipeline because it got converted. We wish to convert even more of those.
So just looking at the pipeline change may not give us the right answer. And this is something that we monitor on a pretty much weekly to monthly basis as to how the pipeline is doing. And I can say that, and I feel good about the pipeline that we have.
Girish Pai
Right? Yeah. I mean, if I can just touch on that net of that large deal. Right. I think the deal that we kind of booked this quarter was about 192 million. I think one of your colleagues mentioned a number of 206. I’m just kind of netting off the 210 from the reported Q4 number. What’s the right number? Is it 196 or is it 210?
Pulkit Bhandari
So basically the gross value of the deal is 210. And that’s what we stated. There are basically certain, I would say large deal related elements, which basically makes it net. And to that extent, we called it out, whatever, 195. But from your perspective and calculations, you can go ahead with 210 for now. And that’s the number that you should keep it as a reference point.
Girish Pai
Right? Yeah. I mean, thanks for that. My question actually was, you know, if I have to NET off this 402 million, with 210, we get about 192 million, right. As against 180 million last year in the previous quarter. So is this cadence, I mean, is the environment and your pursuit strong enough for you to maintain this cadence over the short term, over the very short term, next two, three quarters.
Pulkit Bhandari
So the overall order book. So if you’re commenting. In terms of the order book, excluding this, the overall order book has been in line with what we have, what we’ve been targeting and aiming at. I would say anything which is above 1.1% is somewhat acceptable and good, which ensures that we have enough traction, which is what it translates into. So I would say anything which is between 180 to 200 on a standard basis is a reasonable number.
Girish Pai
Got it. Good. And the scale up, would that be about 9 to $10 million starting Q2? I mean, that’s what the calculation indicates.
Manish Tandon
We don’t want to comment on that just now because, you know, it’s at this stage we are essentially, our focus is to scale up as quickly as possible. So at this stage we wouldn’t like to comment on it. But I would also like to say that from a pipeline perspective, we have been comfortable pretty much every quarter because for us, pipeline generating new business has not been too much of a problem. Our problem has been that the revenue attrition that is happening, especially in tmt has been hurting us quite a lot.
So we continue to be positive about our pipeline and our ability to get new business from existing clients and even to some extent, new business from new clients.
Girish Pai
Right. And just on the question of attrition, you know, barring your topmost client, is there a degree of attrition in other TNP customers as well or is this majorly related to the top spend?
Manish Tandon
I think the most material is. The most material deterioration is there, but otherwise, you know, it is. It’s business as usual. Otherwise. I mean, some accounts will add, some accounts will go away. It is more business as usual on the other side of things.
Girish Pai
Sure. And on the employee cost, you could please clarify how much of it was New deal related and how much of it was organic.
Manish Tandon
Sorry, come again?
Girish Pai
Yeah, So I was referring to increase in your employee cost. You did mention in your opening remarks that there was a bit of upfront of investment relating to the new deal. I’m just trying to understand how much is organic and how much is new deal related? The increase in your employee cost?
Pulkit Bhandari
No. So employee cost, I would say the addition on account of the new deal will be somewhere close to. Around 0.5 to 0.6%.
Girish Pai
Okay. And does this go up in Q1 as well? That is, does this go up sequentially in Q1 or does it stabilize from here on?
Pulkit Bhandari
So it will. It will go up. So the cost around this deal will go up in Q1 and Q2. And that is why in the beginning I had Called out that as we ramp up during the transition time frame, there will be some pressure around margins, but they will stabilize the moment. Basically we start clocking revenue and transition phases over.
Girish Pai
Got it. And the expected cadence in Q1, Q2 will be in the same ballpark, 0.5.
Pulkit Bhandari
No, difficult to triangulate and give it to you now because as you as what we called out right now, the objective is to scale up and difficult to give you an exact cost number around that today.
Girish Pai
Okay. And if I just squeeze in one bookkeeping question, you expect a tax rate for the whole of 27.
Pulkit Bhandari
So this year has been good. We’ve basically kind of done well on etr. I would say while we would not give an exact guidance, I think normal corporate tax rate, a plus minus 0.5% is a range to work with.
Girish Pai
Okay, thanks.
Operator
Thank you. We have next question from the line of NG Purani from Enum Securities. Please go ahead.
Unidentified Participant
Hi Manish. Hello, sir.
Manish Tandon
How are you?
Unidentified Participant
Good, good. I want to understand from you your readiness to be in the large aid deals, meaning EIDs are not large yet, but whatever size they are, 5 million, 10 million. And in terms of people readiness and project readiness and the experience that you have gained over a period of time, is it enough for you to bid for a pure play EA service? And also if you can give the list of service lines you have developed over time and ea.
Manish Tandon
Yeah. So great questions. As, as always, sir, I would say on AI, we are very, very, very bullish. Okay. I am personally driving the effort along with my senior management team and Vijay Pulkit, Vivek and others. We are looking at all aspects of AI. Almost every service line that we have today, we have rethought it and we have made it AI native rather than AI infused. And this philosophy has percolated not just to our delivery and sales organization, but also to our support organizations in terms of finance, HR and everything.
85% of our workforce, 85% of our workforce is AI enabled.
Girish Pai
So we
Manish Tandon
Are ready to. We are ready to take advantage of that. And not only we are ready to take advantage, but we are taking proactive steps to make sure that the benefits of AI are seen by our employees and also by our clients. So I believe that for companies of our size, this is the next turn in the road. And as in Formula one, they say that you always win in the turns. So this is. We believe that we have to win this, we have to win it.
Unidentified Participant
And how significant is EA usage within your organization, both in finance, hr, admin, you know project management everywhere.
Manish Tandon
Maybe you should answer that question. And Vivek is our
Unidentified Participant
Thanks a lot sir. It’s a brilliant question. In fact just adding to what Manish mentioned. I am Vivek, I’m Chr of Zensar. SO one in fact we have invested significantly in the training of our people and as Manish mentioned 85% of our employees are AI ready. Second, from HR process perspective, from pre onboard to retire there are various touch points including hiring, engaging, developing our employees. For each of these touch points we have identified areas where we can bring in generative AI and agentic AI.
So for example our recruitment is completely AI enabled. So each of these touch points we are also making it sure that we bring in AI to ensure that we are not only selling AI to our customers, we are role modeling that and infusing that in all of our processes. So that’s from HR perspective. Pulkit, you want to add on that?
Pulkit Bhandari
Yeah. Hello sir. So I think good question in terms of how are we using it internally From a Vivek, give you a perspective around HR from a finance side I would say a lot of business process oriented functions say something like an arap. Right. We are trying to basically infuse AI in those areas fpa which is again based around data and how do we basically comprehend and use that data? So we are using AI around that. The third element is contracting contract. When you look at legal contracts we have designed and using in house agents who are basically helping us, helping us basically shorten the time frame of the entire contracting.
Yeah.
Unidentified Participant
And the saving in terms of number of people who are deployed for this would be significant.
Pulkit Bhandari
So what we have done, an interesting thing that we have done is within our own support functions, whether it is hr, whether it is finance, we are hiring engineers as well who are, who are, who are only focused on infusing AI into our processes in support.
Unidentified Participant
That’s a good way to introduce AI to the organization, right? Hello.
Pulkit Bhandari
Yes sir. Yeah, can
Unidentified Participant
You, can you also mention about the service lines you have developed? Because I want to understand from you, for example if somebody says that I want to spend $10 million on EA related invest projects with your entire organization. So what service lines you think he should adapt? You know, for a $10 million project, do you have enough services, you know, to deliver?
Manish Tandon
On a lighter note, we will create any service line that they want us to create for a 10 million dollar project. But to answer your question more directly, I think one is, as I said, we have reimagined all our services ground up using AI. One of the key new offerings that we have launched is qi, which is Quality Intelligence. Quality intelligence is, is. See what, what is happening is as people, you would have heard of vibe coding. And so people are giving prompts. So essentially you have to test against the prompts, not against the code.
So you have to against intent, not against functional requirements or functional spend.
Unidentified Participant
So
Manish Tandon
That is an example of a service which we have launched and it can easily become a $10 million service line. In fact, on couple of deals we are in, we are bidding Qi related stuff in that range. So we, we have created many more. But this is just a classical example of a service line.
Unidentified Participant
But do you have any specific service lines like what you used to have in the traditional ADM world? You know,
Manish Tandon
The quality intelligence is in the ADM world. ADM world, it was known as IVS or testing, if you are referring to. Correct.
Unidentified Participant
Yeah.
Manish Tandon
As you know, I, I started that business.
Unidentified Participant
Yeah, I know that.
Manish Tandon
And now I am starting Quality Intelligence here.
Unidentified Participant
Wow. Interesting. Manish, I also have to understand from your mega deal, how much of that mega deal will have productive VI and. And what percentage is predictive yet in terms of people, processes and all.
Manish Tandon
So see, while it is. See, bulk of it is it’s both product, first of all, it’s both productive and predictive. So for example, the transition. Okay. And you will need
Unidentified Participant
A lot of prompt engineers there also.
Manish Tandon
No, not really. Not really. But there are, there are. I mean, I’ll have to spend, you know, a couple of hours explaining both the productive and predictive part of it. But I would want to do
Unidentified Participant
That
Manish Tandon
Maybe in our one on ones or so on. Maybe
Unidentified Participant
We’ll do that. So. But this is a significant investment AI would be in this project in megadel.
Pulkit Bhandari
Sir, we would like to refrain from commenting on the. Okay.
Unidentified Participant
Yeah. Understand. Yeah, yeah. So if
Pulkit Bhandari
I may request everyone.
Unidentified Participant
Thanks. Very good. Thanks, Manish. Thank you.
Pulkit Bhandari
Thank you, sir. Thank you, sir.
Operator
We have next question from the line of Greasebai from BOP Capital Markets Ltd. Please go ahead.
Vijayasimha Alilughatta
Yeah, thanks for the opportunity. I just want to understand what was the AI deflation impact in FY26? Because you’re. For the full year, you’ve grown at about 1.7% in constant currency terms. And you have digital application services, which forms almost like 75, 80% of your revenue, which I suspect would see fair amount of deflation because of AI. So can you quantify the deflationary impact in FY26 and what do you see happening in FY27 with all these new Models dropping almost every other week. How do you see that deflation playing out in FY27?
Manish Tandon
So first of all, we are slightly unique in that sense that we don’t have too many annuity type of contracts. And that is one of the reasons where why, you know, we are, we have to literally earn our business and our clients trust quarter after quarter. So we are not seeing so much of deflation because of the nature of work that we are doing is not annuity based. And the newer projects that we are going after, I believe that it is making us much more competitive rather than looking at it as deflation.
So the lens that I am using to look at AI is a positive lens rather than focusing on the negative parts, mainly because the negative part is not impacting us as much as far as our business is concerned. But if the negative part is impacting our clients, then it has an impact on us. So as I mentioned, you know, there are companies who have let go of 30,000 people. If they are letting go of 30,000 of their own people, imagine how many of the outsourced people must be going out. So that impact is anyway there and that is accounted for in the revenue attrition overall.
But we are not seeing yet that we were doing a project for hundred dollars and now because of AI we have to do the same project at $70.
Vijayasimha Alilughatta
Okay, Manish, in your opening remarks you mentioned, I don’t know, maybe open remarks. You mentioned about, you know, larger companies, Tier one companies bidding for some of the projects which they never used to do previously, or at least you didn’t see them do that a few months back against tier one competition in these projects. What is our right to win or why do you think we should win some of those contracts?
Manish Tandon
So I would say one is our AI native offerings are making an impact, number one. Number two, as you see that our customer satisfaction and our employee satisfaction is really excellent. Okay. And I’ve said this before, that ultimately I run a very simple business where if you take care of your clients and if you take care of your employees, then things should be good. So that is the second best thing. And the third I would say is while a heavy car has momentum, a lighter car is more agile and more maneuverable.
And this is the time for maneuverability rather than momentum. So I would say those are the three reasons that we can claim.
Vijayasimha Alilughatta
Okay, my last question is, are you seeing any rise of new players in the market? Because now you don’t require those thousands of employees to deliver a project. So are you seeing newer Players coming to the market or do you think it’s little too early? Maybe that that phenomenon is going to pick up maybe six months or 12 months down the road?
Manish Tandon
See, I would say the newer players see the industry attractiveness. Newer players coming in is when the industry attractiveness is high and the margins are higher. Both as you know, have been declining relatively for the industry as a whole. So we are not really seeing new boutique firms. And anyway these boutique firms are one or two account wonders usually. So we are not seeing too many of those entrants of new competitors per se. Because you know, the attractiveness of the industry has come down over a period of time.
Vijayasimha Alilughatta
Yeah. Lastly, is decision making pushed back because of either macro concerns or because of AI related issues in the sense that clients think that you’re going to get more from the same vendors maybe three months down the road or six months down the road? So is decision making impacting?
Manish Tandon
Yeah, I have no purview of client decision making cycles to be honest with you. I would say, you know, I am not seeing that same client taking who was taking a decision in six months is now taking nine months for the decision. It has more to do with the culture of the client rather than on the Mac macro situation is impacting the overall budgets. AI also is impacting the budgets. But you know, I am not the right guy to comment on decision making cycles per se. It’s a very intimate thing that you have to look at for each client and figure out whether culturally they have become more cautious or not.
Vijayasimha Alilughatta
Okay, thank you.
Operator
Thank you. We have next question from the line of Pankaj Irani son investment managers. Please go ahead sir.
Unidentified Participant
Hi, this is Pankaj Muradha Manish. You mentioned on the call about this layoffs by tech companies including Oracle and Snap. And now in the last few days that has only accentuated because we’ve seen something similar from Meta and Microsoft as well. So if you can share some more industry perspective as to what is driving that, you know, is it these companies are reaping a efficiency gains and which is what it is leading to or what is the trend that’s playing out there and if that be the case, meaning is it next few quarters or you think it’s likely more medium term trend?
That’s the first question.
Vijayasimha Alilughatta
And also in
Unidentified Participant
That context, sorry just to compare also in that context what it means for where does our business from that segment stabilize?
Manish Tandon
No, no. So see we have to see first of all there is some amount of AI washing happening. Okay. Second is if you have to buy. If you have to make capital investment worth hundreds of billions of dollars, that money has to come from somewhere. And one way that money is being generated is by letting go of people who are not adding full value or whatever. So one, as I said, it’s the capital investment that these companies have to make which forces them to cut cost. And the second is. Second is some amount of AI washing, etc.
That is happening. The answer for us is, you know, we have to use AI to expand the addressable market much more. And you know, for example, we are not a BPO company but. But we are using AI to go after some of that traditional BPO business. Because our proposition is, you know, what you are doing with 200 people, I can do it with 50 people and 150 agents, AIA agents. And by the way, because we are doing it ourselves, we can assure you those.
Operator
Line has been disconnected. We are quickly reconnecting the measurement line. Please hold the line. It. Sa. Participants. Thank you for the patience. We have measurement and reconnected.
Manish Tandon
All right, Is there something that we need to answer? Because we got disconnected. So that’s why.
Unidentified Participant
Yeah, we could only hear partly your answer to the question. So she could answer that.
Manish Tandon
If you can repeat the question please.
Unidentified Participant
I was saying we were talking about, you know, on the TMT side, we’ve seen acceleration of layoffs from likes of Microsoft and Meta as well now.
Manish Tandon
So where did we lose you? At what point did we lose you?
Unidentified Participant
No, you were mentioning that essentially companies have to reap those benefits to fund their AI CapEx.
Manish Tandon
Okay, so you lost us very early in the cycle. Okay, so the issue is that they have to fund the capex and that is number one and number two, I, and this could be my personal view that these companies had owned overhired in the post Covid boom and hence they are working on reducing the excess fat, if I may say so. And some amount of AI washing is also is also happening. The answer to the second part of your question is what should companies be doing? I would say that what we are doing is trying to.
Trying to go after increase our addressable market and increasing our addressable market. We can do it today because of AI and that means getting out of our comfort zones, which is just the CIO organization and moving to adjacent organizations that spend a lot of money on technology, including CMO content organization, BPO or operations, HR finance, etc. So that would be our response to this market.
Unidentified Participant
And the other question was where do we see this stabilize for us given the fact that we continue to face headwinds here on this side of the business.
Manish Tandon
That is, that’s a very important question. I wish I knew the answer too. But I can tell you that you know, we, our aim is, our aim is to make sure that we continue to grow and create value for our shareholders despite the headwinds. Sometimes when we are not able to create value through, through revenue growth, we create value, still create value through EPS growth, through profitability and so on. But the focus is on creating shareholder value quarter after quarter.
Unidentified Participant
That’s helpful. And one last thing. When we, meaning you highlighted that you’ve seen very high level of competitive intensity which is industry wide phenomenon and you’re seeing let’s say in some of your accounts, tier one companies which you would have not otherwise seen. Meaning what’s your take from where you, you’re sitting and as you foresee things, how long do you think this competitive intensity probably might just persist? Or do you think that persisting throughout the course of the year, this year or how would you think this whole phenomena plays out?
Manish Tandon
Till the situation with AI stabilizes this country, this will continue to be, see you know, competitive intensity is a function of the changes happening in the environment and a lot of changes are happening in the environment in terms of introduction of a new technology which is AI. So till this situation around AI stabilizes a little bit, we, we will continue to see increased competitive intensity because the market size is not increasing dramatically. Unlike previous technologies where be it digital, be it Internet, be it mobile, be it cloud, the market size increased.
But with AI the market size is not increasing with services, at least in services it might be increasing on spends, on LLMs and tokens and so on, but it is not increasing on the services side. So this competitive intensity we should learn to live with it till the situation with AI stabilizer.
Girish Pai
So thank you, thank you, that’s very helpful.
Operator
Thank you. We take the last question from the line of Mr. Sandeep, please go ahead.
Vijayasimha Alilughatta
Yeah, thanks. Thanks for the second question opportunity. This question is on margin so we generally trade 14 to 16 as a comfortable band while 4Q is at the upper end of the band and we understand there would be a large deal transition cost in the first half. So Pulkit, is it fair to assume 1416 as a full year would also be true for the upcoming year FY27.
Pulkit Bhandari
So I would say yeah, mid teens is something which we have always maintained. We would like to continue with that overall guidance for the year. There may be a quarter where it can basically vary slightly but that’s how we are looking at FY27 as a whole. Yeah.
Vijayasimha Alilughatta
Okay. And Sandeep,
Pulkit Bhandari
Like what I also maintained is that basically there’s a trade off from a growth and a margin perspective and while from a long term perspective your question is very fair and we should and as I said long term we will stay in this guided range. There may be blips which I can’t call out today but if there are then the trade off around that will be for growth.
Vijayasimha Alilughatta
Okay. And just the last question in terms of margin box in this quarter more than 100 bits or closure to 100 bits has been defined as a large deal, transition cost and investment. So can you also believe those transition cost is already captured for the mega deal in the fourth quarter number
Pulkit Bhandari
Not at all. Not at all. There’s only a very small part. So the cost that I spoke about while I kind of mentioned it, please do not get anchored that this is all the cost which has come into it. And I would like to reiterate that as we go into the transition phase these costs will increase. The one which I mentioned is that in the planning process once we got I would say some certainty that there is a chance of getting in there, we started planning ahead of time, we started hiring ahead of time, we started investing ahead of time.
But these are very, very minuscule costs which have come in. Now the large part of these costs will come in Q1 and Q2.
Vijayasimha Alilughatta
And last question, if I can squeeze in Manisha outside the top client in pmt.
Pulkit Bhandari
Hello, can you hear me?
Vijayasimha Alilughatta
Yeah, yeah,
Pulkit Bhandari
Just want to make it amply clear that do not assume that all the cost with regards to this has come in this quarter but that is not the case at all.
Vijayasimha Alilughatta
Yeah, got it, got it. And just the last question Manisha, if I can, except for the top client in tmt, is there any other large specific client related issue in other sectors or in TNT
Manish Tandon
As I mentioned before, I mean this is see other clients small ups and downs will happen, you know which is business as usual which we plan for. We plan for certain amount of revenue attrition and so on. So as I mentioned in last call also there have been couple of you know, consolidation plays that have happened against us in healthcare and life sciences. But you know that is those kind of things are to be expected. So we are ready for those kind of things.
Vijayasimha Alilughatta
And that wallet share loss in the healthcare will that impact in the coming year or the impact is already reflected in the FY26
Manish Tandon
The impact? No, actually FY26 healthcare and life sciences actually has grown by 8.6%. While for FY27, we are hoping that we can remain at least flat in Healthcare Life Sciences.
Vijayasimha Alilughatta
Okay, thanks and all the best.
Manish Tandon
Thank you ladies
Operator
And gentlemen. I now hand conference over to Mr. Manish tendon for closing comments.
Manish Tandon
Yeah. Thank you everyone for being on this call. Before we conclude, I want to reiterate my gratitude first of all, as always, to our clients for their continued trust, to all the Ansarians for their unwavering dedication, and to our shareholders for their confidence and support. In summary, while the demand environment remains mixed, our annualized revenue growth, significant margin expansion, healthy order book and robust cash position collectively reinforces our confidence in the path ahead. As we move into FY27, our priorities remain clear.
Maintain disciplined execution, deepen the value we deliver to clients, and continue advancing our AI native capabilities. Thank you once again for taking the time to join Tensile’s Q4 and FY26 earnings call. Thank you very much
Operator
Participants on behalf of MKA Global Financial Services that conclude this conference. Thank you for joining us and you may now disconnect your lines. Thank you.