Mphasis Targets Double-Digit Growth in FY27 Amid Strong AI Deal Flow

Mphasis, a mid-sized player in the information technology services sector, is forecasting growth in the low double digits for the current financial year. This outlook comes despite ongoing macroeconomic challenges and the deflationary impact that artificial intelligence (AI) has had on traditional deal revenues and profit margins across the industry.

For the quarter ending September 30, referred to as Q2FY27, the company reported a 9.7 percent increase in revenue when measured in constant currency terms. In US dollar terms, revenues rose by 9.2 percent. These growth figures stand out in the sector, illustrating how smaller IT firms have been able to accelerate their expansion more rapidly than some of their larger counterparts.

Nitin Rakesh, CEO and Managing Director of Mphasis, shared insights with Business Standard about their current business environment. He emphasized the strength of the company’s deal pipeline, which had grown by 23 percent year over year. “We’ve seen good activity in the short cycle deals, and there are also significant large deals visible in the pipeline. Our guidance is more influenced by the business we observe at the account level than by the broader macroeconomic factors,” Rakesh explained.

The deals fueling this growth are emerging from three main areas. First, clients are investing in building AI frameworks that require extensive engineering efforts. Second, there is a growing emphasis on automation designed for large-scale deployment. Third, spending is increasing in parts of organizations that have traditionally been outside the direct control of IT leadership, such as units led by chiefs of operations, marketing, revenue, and supply chain.

“Adoption of AI is expanding beyond IT departments,” Rakesh noted. “IT acts as an enabler, but the actual use cases and investments are cropping up in various divisions of enterprises.”

For instance, within the banking sector, functions like client onboarding, loan underwriting, and auto financing have become attractive areas for AI-driven innovation. These processes are not only targeted at cost savings but also at reimagining workflows to capture greater market share.

“This diversification means each business unit leader becomes a potential market for us,” Rakesh said, highlighting the broadening scope of IT service opportunities.

The deals that Mphasis is securing tend to be shorter-term AI projects. Although individually small, these contracts provide steady, recurring revenue that helps sustain business momentum. The IT services industry has faced challenges due to restrained discretionary spending, which has compressed revenue streams and margins. However, smaller contracts valued at less than $20 million in total contract value (TCV) have increased by 26 percent over the trailing twelve months.

During the quarter, Mphasis reported a total contract value of $466 million, which was stable compared to the previous quarter but lower than the $528 million recorded the same time last year. Notably, about 66 percent of these deals were led by AI initiatives. The company also announced five major contract wins in Q2FY27 spanning sectors such as banking, healthcare, and technology, media, and telecommunications.

These developments reflect broader trends in the IT services industry, where companies are increasingly focusing on AI and automation as key growth drivers. As enterprises seek to integrate new technologies across various departments, demand for specialized IT services is expected to rise. Firms like Mphasis, which are agile and focused on emerging client needs, are positioned to capitalize on these opportunities despite a challenging macroeconomic backdrop.