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
Vivek Ranjan — Chief Human Resources Officer
Analysts:
Jimit Gandhi — Analyst
Nitin Padmanabhan — Analyst
Sandeep Shah — Analyst
Baidik Sarkar — Analyst
NGN Puranik — Analyst
Girish Pai — Analyst
Pankaj Murarka — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Zensar Technologies Limited Q4 FY26 Earnings Conference Call hosted by Emkay Global Financial Services Limited. [Operator Instructions].
I now hand conference over to Mr. Jimit Gandhi from Emkay Global Financial Services. Thank you. And over to you, Mr. Gandhi.
Jimit Gandhi — Analyst
Thank you, operator. Good evening, everyone. On behalf of Emkay Global Financial Services, I welcome you all to the Zensar Technologies quarter four FY26 earnings call. We have with us Mr. Manish Tandon, CEO and Managing Director; Mr. Pulkit 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 and understood.
Thank you. And over to you, Manish.
Manish Tandon — Chief Executive Officer and Managing Director
Thank you, Jimit. And hello, good morning, good afternoon, and good evening, everyone. Thank you all for taking the time to join us today to discuss Zensar’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, Vijayasimha; 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 the strongest level 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 this 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 solutioning.
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 stood at $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 bps. Our annual customer satisfaction score improved by 470 bps to its highest ever level, positioning Zensar in the top three of industry CSAT. This coupled with the 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 engagement 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 de-grew by 1.9%. Our EBITDA this quarter contracted by 130 bps, 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 in SG&A, 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 50 bps.
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 INR9.2 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 88 percentile in S&P Global. The Board of Directors have approved a final dividend of INR12.6 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 Q4 FY26 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 a 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, FinOps for AI and ZenseAI.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-and-answer session. [Operator Instructions]. Ladies and gentlemen, we will wait for a moment while the question assembles. Sir, we have first question from the line of — from Nitin Padmanabhan 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 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 TMT 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 this thing. 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 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 have answered your question.
Nitin Padmanabhan
Yes, you did. So, I think the broad take is that, because growth is back in quite of 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 in this, Nitin, as you know. Not just from a market perspective, but also from the geopolitical situation and tariffs and so many of 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, Nitin, what’s the second part? What is the cost that you mentioned?
Nitin Padmanabhan
The deal related initial cost, how should we see that sort of panning out through the year?
Pulkit Bhandari
Yeah. 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 large deal. And to that extent, there’s been a expansion in number of people and costs associated with them in the P&L that you see today, yeah. But as what we have called out earlier as well, during the transition timeframe, 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 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, Nitin. So again a very relevant question. See, the competitive intensity is going up tremendously. And so much so that, we are seeing Tier 1s 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 1 in our competitive set, which was not the case a few 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 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 plus.
Pulkit Bhandari
$206 million, yeah.
Manish Tandon
$206 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. We have next question from the line of NGN Puranik from Enam Securities. Please go ahead, sir. Mr. NGN Puranik, I’m audible to you? As there is no response from the line of Mr. Puranik, we take the next question.
Manish Tandon
I think we can go to the next question then.
Operator
Okay, sir. Sir, we have next question from the line of Sandeep Shah, Equirus Securities. Please go ahead.
Sandeep Shah
Yeah. 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 1.3x, 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 formation 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 is directly reflects on our focus on AI, and how we have changed our go-to-market perspective.
Sandeep Shah
Okay, okay. And just in the TMT top client, one 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, there is a — there is an insourcing paradigm that is being talked about in that account. They are cutting costs significantly in line with other technology companies, actually. So, 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 account.
Sandeep Shah
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 is eternal, runs eternal. If we didn’t have hope, there would be too many suicides, in general. So hope runs eternal. But we have taken a pragmatic view of where we stand. Our budget and so on are 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 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’s a mega deal. And it will be contingent to some extent on the performance that we can — what we do on the mega deal.
Sandeep Shah
Okay, okay. On this mega deal, 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 1 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 a mega deal. We have given whatever we had to in our press release. But 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 mega deal, we are becoming demonstrably competent to all these people. And hence we are hoping that we will be able to at least bid for more larger deals even if we are — even if we win or we don’t win.
Sandeep Shah
Okay, thanks. If I have more will come in the follow-up.
Operator
Thank you. We have next question from the line of Baidik Sarkar from Unifi Capital. Please go ahead.
Baidik Sarkar
Gentlemen, good evening. And Manish, congrats on navigating a tough environment. A 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. That’s point number one.
And the second question is on the mega deal, very simple back of the envelope calculation indicates the revenue potential of roughly 9 million to 10 million for 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 mega deal, or is there a organic part to that wage cost inflation as well? Thank you.
Manish Tandon
Yeah, so great questions. The first question, if I may, I’m not mistaken is pipeline-related. So see, there are two parts to that answer. One is, have we increased our 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, $210 million deal, which 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, I feel good about the pipeline that we have.
Baidik Sarkar
Right. So — yeah, I mean, if I can just touch on that, Manish sir, so you have 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 million. I’m just kind of netting off the $210 million from the reported Q4 number. What’s the right number? Is it $196 million, or is it $210 million?
Pulkit Bhandari
So basically, the gross value of the deal is $210 million, and that’s what we did. 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 million. But from your perspective and calculations, you can go ahead with $210 million for now. And that’s the number that you should keep it as a reference point.
Baidik Sarkar
Right. Yeah. I mean, thanks for that. My question actually was, if I have to net off this $402 million with $210 million, 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 years large deal, 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 gives — which ensures that we have enough traction, which is what it translates into. So I would say anything which is between $180 million to $200 million on a standard basis is a reasonable number.
Baidik Sarkar
Got it, got it. And the scale up, would that be about $9 million to $10 million starting Q2? I mean, that’s what the calculation indicates.
Pulkit Bhandari
Yeah.
Manish Tandon
We don’t want to comment on that just now, because 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 us, for us pipeline is 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.
Baidik Sarkar
Right. And just on the question of attrition, barring your top most client, is there a degree of attrition in other TMT customers as well, or is this majorly related to the top end?
Manish Tandon
I think the most material is — the most material deterioration is there. But otherwise, 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.
Baidik Sarkar
Sure. And on the employee cost, if you could please clarify how much of it was new deal related and how much of it was organic?
Manish Tandon
Sorry, come again?
Baidik Sarkar
Yeah. So, I was referring to the steep increase in your employee costs. You did mention in your opening remarks that there was a bit of upfronting 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%.
Baidik Sarkar
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
No sir, 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 timeframe, there will be some pressure around margins, but they will stabilize the moment basically we start clocking revenue and transition phase is over.
Baidik Sarkar
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.
Baidik Sarkar
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.
Baidik Sarkar
Okay. Thanks, everyone. I’ll be in touch. Thank you.
Operator
Thank you. We have next question from the line of NGN Puranik from Enam Securities. Please go ahead.
NGN Puranik
Hi, Manish.
Manish Tandon
Hello, sir. How are you?
NGN Puranik
Good, good. I want to understand from you, your readiness to be in the large AI deals, meaning AI deals 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 AI service? And also, if you can give the list of service lines you have developed over time and year?
Manish Tandon
Yeah. So, great questions 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 in 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. So, 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 1, they say that you always win in the turns. So, this is — we believe that our — we have to win this, we have to win it.
NGN Puranik
And how significant is AI usage within your organization, both in finance, HR, admin, project management, everywhere.
Manish Tandon
Pulkit and Vivek, maybe you should answer that question. Pulkit is our CFO, and Vivek is our CHRO. Vivek?
Vivek Ranjan
Thanks a lot, sir. It’s a brilliant question. In fact, just adding to what Manish mentioned, I am Vivek, I’m CHRO 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. Sir, 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. FP&A, 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 timeframe of the entire contracting. Yeah.
NGN Puranik
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 only focused on infusing AI into our processes in support functions.
NGN Puranik
Very good. That’s a good way to introduce AI to the organization, right? Hello?
Manish Tandon
Yes, sir.
NGN Puranik
Yeah. 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 AI-related projects with your entire organization. So, what service lines you think he should adapt for a $10 million project? Do you have enough services to deliver?
Manish Tandon
On a lighter note, we will create any service line that they want us to create for a $10 million 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, okay. Quality intelligence is — see, what is happening is as people — you would have heard of vibe coding and so on.
NGN Puranik
Yeah, yeah.
Manish Tandon
So instead of writing, people are giving prompts. So, essentially you have to test against the prompts, not against the code.
NGN Puranik
Yeah, absolutely.
Manish Tandon
So you have to test against intent, not against functional requirements or functional strength. So, 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 bidding QI-related stuff in that range. So, we have created many more. But this is just a classical example of a service line.
NGN Puranik
But do you have any specific service lines like what you used to have in the traditional ADM world?
Manish Tandon
The Quality intelligence is, in the ADM world —
NGN Puranik
Okay.
Manish Tandon
ADM world it was known as IVS or testing, if you are referring to —
NGN Puranik
Correct, correct. Yeah.
Manish Tandon
As you know, I started that business.
NGN Puranik
Clarification [Phonetic], yeah, I know that.
Manish Tandon
Yeah. And now I am starting Quality Intelligence here.
NGN Puranik
Wow, interesting. Manish, I also have to understand from your mega deal, how much of that mega deal will have productive AI, and what percentage is predictive AI, 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.
NGN Puranik
And you will need lot of prompt engineers there also?
Manish Tandon
No, not really.
NGN Puranik
No, not.
Manish Tandon
Not really. But there are — I mean, I’ll have to spend a couple of hours explaining both the productive and predictive part of it. But I would, maybe —
NGN Puranik
Why didn’t you do that?
Manish Tandon
Maybe in our one-on-one’s or so on, maybe I’ll —
NGN Puranik
Sure, sure. We’ll do that. So — but this is a significant investment. AI would be in this project in mega deal.
Pulkit Bhandari
Sir, we would like to refrain from commenting on the —
NGN Puranik
Okay. Yeah, yeah. Understand. Yeah, yeah.
Pulkit Bhandari
So, I’m sorry. If I may request everyone —
NGN Puranik
Yeah, sure, sure.
Pulkit Bhandari
Yeah.
NGN Puranik
Thanks, Pulkit, and thanks, Manish. Thank you.
Pulkit Bhandari
Thank you, sir. Thank you, sir.
NGN Puranik
Thank you, thank you.
Operator
We have next question from the line of Girish Pai from BOB Capital Markets Limited. Please go ahead.
Girish Pai
Yeah. Thanks for the opportunity. I just want to understand what was the AI deflation impact in FY26? Because 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 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, there are companies who have let go of 30,000 people. If they are going — 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 are doing a project for $100. And now because of AI, we have to do the same project at $70.
Girish Pai
Okay. Manish in your opening remarks, you mentioned, I don’t know maybe opening remarks or elsewhere, you mentioned about larger companies, Tier 1 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 1 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 — 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 have 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 this 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.
Girish Pai
Okay. My last question is, are you seeing any rise of new players in the market? Are you, 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 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 have not seen too many of those entrants of new competitors per se, because the attractiveness of the industry has come down over a period of time.
Girish Pai
Yeah. Lastly, is decision-making pushed back because of either macro concerns or because of AI-related issues. You said that the 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 deal flow?
Manish Tandon
Yeah, I have no purview of client decision-making cycles to be honest with you. I would say, 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 macro situation. Macro situation is impacting the overall budgets. AI also is impacting the budgets. But 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.
Girish Pai
Okay, thank you.
Operator
Thank you. We have next question from the line of Pankaj, Renaissance Investment Managers. Please go ahead, sir.
Pankaj Murarka
Hi, this is Pankaj Murarka here. 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, is it these companies are reaping AI 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 a slightly more medium-term trend? That’s the first question. And also in that context, sorry, just to complete, 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 investments worth hundreds of billions of dollars, that money has to come from somewhere. And one day 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 costs. And the second is — second is amount of AI washing, et cetera, that is happening.
The answer for us is, we have to use AI to expand the addressable market much more. And you know, for example, we are not a BPO company, but we are using AI to go after some of that traditional BPO business, because our proposition is what you are doing with 200 people, I can do it with 50 people and 150 agents, AI agents. And by the way, because we are doing it ourselves, we can assure you those — [Technical Issues]
Operator
Participants, management line has been disconnected. We are quickly reconnecting the management line. Please hold the line. [Technical Issues]
Participants, thank you for the patience. We have management line reconnected.
Manish Tandon
All right. Is there something that we need to answer? Because we got disconnected. So, that’s why.
Pankaj Murarka
Yeah. We could only hear partly your answer to the question. So, if you could answer that.
Manish Tandon
If you can repeat the question, please.
Pankaj Murarka
I was saying, we were talking about on the TMT side, we’ve seen acceleration of layoffs from like so Microsoft and Meta as well now.
Manish Tandon
Okay, okay. So, where did we lose you? At what point did we lose you?
Pankaj Murarka
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, that these companies had over-hired 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 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 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 zone, 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, et cetera. So, that would be our response to this market.
Pankaj Murarka
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 a — that’s a very important question, I wish I knew the answer too. But I can tell you that, 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 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.
Pankaj Murarka
That’s helpful. And one last thing. When you — meaning, you highlighted that you’re seeing very high level of competitive intensity which is an industry-wide phenomena and you’re seeing let’s say in some of your accounts Tier 1 companies which you would have not otherwise seen. Meaning, what’s your take from where you’re sitting and as you foresee things, how long do you think this competitive intensity probably might just persist, or you think that persistent 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 continue — this will continue to be — see, 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 will continue to see increased competitive intensity, because the market size is not increasing dramatically, right, 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 stabilizes.
Pankaj Murarka
So, thank you, thank you. That’s very helpful.
Operator
Thank you. We’ll take the last question from the line of Mr. Sandeep. Please go ahead.
Sandeep Shah
Yeah. Thanks. Thanks for the second question opportunity. This question is on margin. So, we generally will 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 14%, 16% 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.
Sandeep Shah
Okay. And in the —
Pulkit Bhandari
Sandeep, 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.
Sandeep Shah
Okay. And just the last question in terms of margin ball [Phonetic], in this quarter, more than 100 bps or closer to 100 bps 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, right, once we, 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.
Sandeep Shah
Okay. And last question, if I can squeeze in Manish sir, outside the top client in TMT, what’s the other —
Pulkit Bhandari
I just want to make it amply clear. Hello? Can you hear me?
Sandeep Shah
Yeah. 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. That is not the case at all.
Sandeep Shah
Yeah. Got it, got it. And just the last question, Manish sir, if I can squeeze in. Except for the top client in TMT, is there any other large specific client-related issue in other sectors or in TMT?
Manish Tandon
As I mentioned before, I mean, this is, see other clients, small ups and downs will happen, which is business as usual, which we plan for — we plan for certain amount of revenue attrition and so on. So as I mentioned last call also there have been couple of consolidation plays that have happened against us in healthcare and life sciences. But that is — those kind of things are to be expected. So, we are ready for those kind of things.
Sandeep Shah
And that volunteer 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, we can remain at least flat in healthcare life sciences.
Sandeep Shah
Okay, okay. Thanks, and all the best.
Manish Tandon
Thank you.
Operator
Ladies and gentlemen, I now hand conference over to Mr. Manish Tandon 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 Zensarians 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 Zensar’s Q4 and FY26 earnings call. Thank you very much.
Operator
[Operator Closing Remarks]