Ample cash and stable wallet share: Mphasis’ two key watch points

Mphasis Ltd’s board has two clear messages for its management in the age of AI: make sure the company is future-ready and has enough cash to invest back into the business, and don’t lose share of wallet.

In an interview with Mint At the Four Seasons Hotel in Mumbai, CEO Nitin Rakesh described how the company’s board is guiding management at a time when AI tools are rapidly reshaping the $315 billion IT industry.

“Rather than AI usage or AI metrics, the board focused on whether we were investing enough in the business to make sure we were at the forefront of staying connected to our customer base,” Rakesh said. Mint.

Much of this concern has also led the Bengaluru-based company to announce its own AI platform, Tria, with an investment of around $27 million. Management said it will start disclosing revenue from the platform from FY28.

This makes Mphasis the first midsize IT services firm to openly discuss changing board oversight structures in response to AI-led automation. Last month, LTIMindtree said in its annual report that its board is monitoring compliance with AI-related regulations across different geographies.

AI outage

For now, the primary role of the board is focused on risk management, Rakesh said.

“The number one risk of the business today is the risk of disruption if AI consumes what we offer. So of course they’re very focused on the approach we’re taking and how we’re investing to future-proof the business,” Rakesh said.

AI tools increasingly threaten the traditional outsourcing model as automation reduces the need for human-led invoicing. These tools are also reducing average deal sizes and allowing non-IT firms to outsource more of their technology needs.

The board is also closely monitoring the quality of growth, reinvestment ability and deal wins, Rakesh said.

“Now they (the board) are a little bit more focused on saying: If you’re using AI, are you actually using AI to get the right outcome for us or just for the customer, right? Otherwise, there’s a race to the bottom right, there’s no shortage of competitors that can outperform us,” he added.

new competition

His comments come about two weeks after Anthropic entered into a partnership with private equity firms Blackstone, Hellman & Friedman and Goldman Sachs to offer artificial intelligence services.

“Assigning Claude to the core operations of an organization requires applied engineering and in-depth knowledge of how each business operates. Systems integrators in the Claude Partner Network lead the work of the world’s largest businesses today, and we continue to invest deeply in these partnerships as Claude reaches more customers. This new firm further expands its delivery capabilities,” Anthropic said in a May 4 statement.

Rakesh, however, said he did not see the Antropik-led initiative as a threat.

“There’s no competition in the Anthropic-Blackstone, Goldman, Hillman and Friedman initiative either, because ultimately what are they trying to do? They’re trying to say I can do the proof of value. Who does the real work?” Rakesh added that Anthropic clarified that it is not trying to compete with system integration partners.

growth challenges

The company remains optimistic about growth despite rising macroeconomic concerns on BT stocks, including Mphasis, whose shares have fallen 20 percent since the beginning of the year.

“Despite ongoing macro uncertainty, we expect to deliver high single-digit to low double-digit growth, supported by disciplined execution and growing demand for AI-led transformation in FY27,” Rakesh said during the company’s post-earnings analyst call on April 30.

This optimism came shortly after the company appointed Rakesh to a third term as CEO last month; It was a move that could make him the longest-serving CEO of Indian IT, despite continued concerns over the growth of top accounts such as FedEx.

“So the scary part is not that I’m renewing it (my tenure as CEO). The scary part is that we’re trying to do something in an environment that seems to have steered the industry towards a different model,” Rakesh said, addressing concerns about longevity, differentiation and the competitive moat of IT outsourcers in a world driven by AI.

battle of position

The company reported revenue of $1.8 billion, up 7% year over year. Much of this growth came from banking customers, who 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. Coforge reported revenue of $1.87 billion for the year, up 29% from the previous fiscal period.

Rakesh said that he was not disturbed by the change in the rankings.

Earlier this month, Mphasis’ largest shareholder Blackstone also pledged its entire 30.55% stake in the company and raised nearly $700 million to refinance the loan used to finance the private equity firm’s acquisition of the India-listed IT company.

Blackstone had acquired a 60.4% stake in Mphasis from Hewlett Packard Enterprise in September 2016 and has gradually reduced its holding through share sales in 2018, 2024 and 2025. He currently owns about 31% of the company.