Mphasis is seeing a tangible business transformation through its artificial intelligence (AI) initiatives, reporting 20-30% efficiency gains and a clear shift from a people-based to a technology-based service model, CEO Nitin Rakesh told FE.
According to him, these improvements are not only changing the way the firm delivers services, but also fundamentally altering the way deals are structured and client outcomes.
“From a contribution perspective, I think you can see efficiencies of 20-25%, sometimes 30%, and then use that to help a client, say, modernize their applications,” Rakesh explained. “This gives us the opportunity to fundamentally change the description, to move from people-based services to technology solutions, and to focus on the outcomes that clients are trying to achieve for their business.”
The company has seen a sharp increase in momentum in AI-based businesses. Only two quarters ago, only 30-35% of its deals were made using artificial intelligence. Now this figure has almost doubled to 65%.
“Two quarters ago, 35% of the pipeline was managed by artificial intelligence. Today, that number is 65%,” Rakesh said. “This means that either artificial intelligence is built into the system, or there is an element of implementation, or we are using artificial intelligence to change something in the efficiency, speed, or quality of the outcome.”
Artificial intelligence also helps Mphasis unlock cost and time efficiencies that were previously impossible. “We can actually eliminate about 60% of the time to market… And, of course, if you eliminate the time and eliminate the errors, you’ll actually see a 30-40% reduction in costs,” he said, referring to a deal to modernize a customer using the company’s NeoZeta artificial intelligence platform.
In the March quarter, Mphasis reported a 4.5% sequential increase in revenue to Rs 3,717.5 crore and a net profit of Rs 446.5 crore, up 4.4%. The operating margin remained unchanged from the previous quarter at 15.3%.
“We are pleased with the quarter’s results, which show the highest quarter-on-quarter growth in the last 12 quarters, the highest number of contracts won by total value in the last seven quarters and 86% year-on-year growth in the order book,” Rakesh said.
In Q4, the company signed new contracts totaling $390 million, compared to $351 million in Q3 in its direct business.
However, Rakesh acknowledged the growing concern over the proposed US tariffs, especially for sectors that have a direct impact on global trade and supply chains.
“The impact is a little bit different depending on the industry… for example, there are industries that are in the direct line of fire, such as manufacturing, automotive, steel, logistics, global trade, supply chains. There are a number of industries that are second-order industries, such as banks, insurance companies, medical companies,” he said.
“Given that 70-75% of our revenues…come from industries that are second-order industries, we don’t see any major changes yet, but…the uncertainty creates an opportunity to, you know, postpone decisions and postpone, you know, big programs.”
He said, however, that if this continues for another quarter or two, “there will be no place to hide,” as every industry and every business will be affected to some extent.
Despite the uncertainty, demand for strategic technology initiatives such as AI remains high. “Recently, the CEO of one bank said that just because there is macroeconomic uncertainty, it doesn’t mean that we won’t continue to implement artificial intelligence in the bank,” he added.
