Mphasis' Financials Show Ample Liquidity and Stable Wallet Share

Mphasis Ltd. Adapts to AI Era with Focus on Future-Proofing and Wallet Share

Mphasis Ltd.'s board of directors has conveyed two key messages to management in the AI era: ensure the company is future-ready and has sufficient funds to invest back into the business, and maintain wallet share. In a conversation with Mint at the Four Seasons Hotel in Mumbai, chief executive Nitin Rakesh spoke about how the company's board is guiding management at a time when AI tools are rapidly reshaping the $315 billion IT sector.

The board's primary focus is on whether the company is investing enough in the business to remain at the forefront of relevance to its client base, rather than solely on AI usage or metrics. This concern prompted the Bengaluru-based company to announce its own agentic AI platform, Tria, at an investment of about $27 million. Mphasis has stated that it will begin disclosing revenue from the platform from FY28 onward, making it the first mid-sized IT services firm to openly discuss changing board oversight structures in response to AI-led automation.

The board's key role is currently centered on risk management, with Rakesh stating that the number one risk of the business today is the risk of disruption if AI eats into what the company delivers. The board is closely monitoring growth quality, reinvestment ability, and deal wins, as well as whether AI is being used to drive the right outcome for the company or only for the customer.

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Mphasis' comments come at a time when AI tools are increasingly threatening the traditional outsourcing model, with automation reducing the need for human-led billing and shrinking average deal sizes. Rakesh noted that the board is also watching the growth of new competition, including the Anthropic-led venture, which recently partnered with private equity firms Blackstone, Hellman & Friedman, and Goldman Sachs to offer AI services.

However, Rakesh does not see the Anthropic-led venture as a threat, stating that it is not trying to compete with system integration partners. Despite mounting macroeconomic concerns weighing on IT stocks, including Mphasis, the company remains optimistic on growth, expecting to deliver high single-digit to low double-digit growth in FY27, supported by disciplined execution and increasing demand for AI-led transformation.

The company reported $1.8 billion in revenue, up 7% year-on-year, with much of this growth coming from banking clients, which contribute more than half of Mphasis' revenue. However, the company lost its position as India's seventh-largest IT services company to Coforge last year, with Coforge reporting $1.87 billion in revenue for the year, up 29% from the previous fiscal.

Rakesh stated that he was not bothered by the shift in rankings, and earlier this month, Blackstone pledged its entire 30.55% stake in the company and raised about $700 million to refinance a loan used to fund the private equity firm's acquisition of the Indian-listed IT company.

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