Indian IT services firm Mphasis is positioning itself for industry-leading growth despite emerging pricing pressures driven by artificial intelligence (AI) adoption.
AI disruption is unfolding unevenly across sectors, but the company maintains a strong near- to medium-term outlook supported by a robust deal pipeline. Analysts note that AI-led efficiencies have limited immediate impact in complex brownfield enterprise environments, where the traditional services model remains relevant. However, pricing structures are evolving as clients increasingly prefer outcome-based delivery models that demand stronger execution.
Large global banking, financial services and insurance (BFSI) global capability centres are continuing to manage routine back-end work internally, while complex legacy modernisation projects are still being outsourced. Reflecting this trend, Mphasis said its legacy modernisation deal pipeline has doubled year-on-year. Clients are also choosing their own preferred large language models but require model-agnostic platforms that integrate with existing systems rather than full technology rebuilds.
The company is, however, facing AI-led deflationary pressure on renewals. Discounting has widened to around 20%, from roughly 10% earlier, contributing to a dip in repeat business to 80–85% and leakage rising to about 20–22%. As a result, achieving double-digit growth will depend heavily on net-new deal wins.
Mphasis reported total contract value (TCV) of $428m in the third quarter of FY26, up 22% year-on-year, with trailing twelve-month TCV doubling to $2.6bn. Around 62% of wins were AI-driven.
The BFSI vertical, which contributes about 65% of revenue, remains stable, supported by resilient technology spending from major global banks. Analysts have trimmed FY27 and FY28 earnings estimates but retained a positive stance, citing the company’s strong pipeline and AI-first legacy modernisation strategy.
