Enterprise AI is helping Mphasis unlock spending beyond traditional IT budgets, Chief Executive Officer Nitin Rakesh said, as the company expects growth to broaden in the second quarter of fiscal 2027 despite macroeconomic uncertainty.
Speaking to NDTV Profit, Rakesh said clients are increasingly willing to fund AI-led transformation programmes that deliver measurable business outcomes, such as higher revenue realisation and better underwriting decisions, allowing Mphasis to win a larger share of customer spending.
Chief Financial Officer Aravind Viswanathan said the September quarter could potentially be Mphasis’ strongest in the past three years, supported by a healthier deal pipeline and improving execution.
Mphasis Looks Beyond Traditional Tech Budgets
Mphasis is targeting spending beyond traditional IT budgets by pitching AI-led programmes with measurable business outcomes, Chief Executive Officer Nitin Rakesh said.
Speaking to NDTV Profit, Rakesh said clients are increasingly prioritising efficiency and are willing to fund initiatives that can deliver tangible gains, such as higher revenue realisation or better underwriting decisions, despite macroeconomic uncertainty and longer deal cycles.
The strategy has helped Mphasis win a larger share of client spending while opening opportunities beyond the conventional technology services market, he said.
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Enterprise AI Enters ‘Second Innings’
Rakesh described the current phase of enterprise AI adoption as the “second innings”, with companies moving beyond evaluating AI tools to building infrastructure that can support long-term business outcomes.
This shift is creating new opportunities and expanding Mphasis’ deal pipeline, he said. The company currently has three large deals, including one worth over $100 million, alongside a growing number of shorter AI projects that lay the groundwork for larger deployments.
These engagements typically last eight to 12 weeks, but Rakesh said they often serve as the starting point for “another seven or eight waves” of AI adoption as enterprises scale their deployments.
Why Mphasis Margins Came Under Pressure
Viswanathan told NDTV Profit that Mphasis continues to operate within its stated margin range of 14.75% to 15.75%, although margins are currently towards the lower end.
A strategic acquisition affected margins by around 35 basis points, while investments made in preparation for deal ramp-ups also weighed on profitability as utilisation declined. Mphasis additionally recorded close to $9 million in hedge losses, limiting the benefit of rupee depreciation.
Viswanathan expects the trend to reverse as the year progresses, with margins normalising and remaining within the stated range for the full year.
BFS Remains A Key Growth Engine
Rakesh also remained upbeat on Mphasis’ banking and financial services business, saying BFS grew 3.5% sequentially in constant currency, while insurance expanded more than 20% in fiscal 2026 and continued to post strong year-on-year growth in the latest quarter.
While banks remain cautious on discretionary spending amid macroeconomic uncertainty, they are continuing to invest in AI-led transformation programmes that deliver clear business outcomes, he said. Rakesh also expects banking M&A activity to pick up over the next two years, creating fresh spending opportunities.
At the same time, he cautioned that AI’s productivity gains could put pressure on traditional IT services. The bigger opportunity, he said, lies in helping clients deploy AI at scale and tapping spending beyond conventional IT budgets.
Also Read: Mphasis Gains Over 4% After Q1 Profit Decline, Management Maintains FY27 Growth Guidance
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