Persistent Systems is booking more multi-year deals and the rate of conversion of deals into annual contracts is increasing. As we grow and get recognized as a larger company, there will be opportunities to participate in some of the larger bids, Sunil Sapre, executive director and CFO, Persistent Systems said. Deal advisors and clients are finding our credentials and considering them for larger $ 100 million deals, he said. Persistent is also looking at a geographic spread of its business and increasing the share of business from Europe.
Currently, the majority of Persistent’s deals are in the $ 30-80 million range. “We have been working with various sourcing channels, that is deal advisors and firms that work with large enterprise clients,” Sapre said. Persistent’s deal sizes are typically in this range as they are working on product engineering, which tends to be moderate size deals.
Persistent is expecting larger deals possible in the healthcare and life sciences business, which was more resilient than the banking and financial services business. Healthcare and life sciences account for 20% of the company’s business.
The BFSI segment was passing through a slow period but was expected to recover in the second half of the calendar year. BFSI account for 32%. However, a large part of the company’s revenues, around 48% was from software and Hi-tech, which was by and large immune to external developments as it was not dependent on consumer spending but was more linked to the enterprise spend, Sapre said. Enterprises were looking for more automation and AI, cloud computing and cyber security and software products vendors were looking to grab this market.
Persistent’s Total Contract Value (TCV) and Annual Contract Value (ACV) both trended well with trailing 12-month TCV going up from $ 1.72 billion in Q2FY23 to $ 1.80 billion in Q3FY23 and trailing 12-month ACV was up from $ 1.22 billion to 1.29 billion. Consistently both these parameters have been growing and the TCV to ACV ratio had grown from 1.33 to 1.40, which means directionally we are booking more multi-year deals, Sapre said. The improved TCV-ACV ratio indicates an incremental basis booking more in multi-year deals, he said.
The number of clients above $ 10 million was growing and those in the $ five million had gone up from 17 clients a year ago to 38 at present. The company had 176 clients in the one million-plus deals. Persistent was looking at deepening these relationships and becoming more relevant to the clients. Sapre said they were enabling large-scale adoption of AI and working with clients were investing more in cyber security and cloud.
Around 80% of Persistent’s revenues come from and around 8-9% from Europe. The company was looking at expanding in Europe, which remained an underpenetrated market for Persistent. Sapre said they aspire to take the revenue share from Europe from 8-9% at present to 12%+ in three to four years. They have identified white spaces for doing tuck-in acquisition to bolster capabilities in some of the areas, Sapre said. “We are actively looking for target companies. We are ready to look at good companies that can fill the competency gaps,” he said.
Persistent set up three GenAI Studios
Persistent Systems has set up GenAI Studios in the US, UK and India to showcase their expertise and solutions, offering an immersive experience for clients and partners. “Our GenAI Studios fosters co-innovation and co-experiment with clients and partners as to what GenAI can bring in the form of productivity enhancements,” Sunil Sapre, ED and CFO said. The company has 175 $ one million deal-size clients and they are working with 75 of them on Proof-of-Concept to establish the use cases for them, Sapre said. The studio is a co-innovation workspace.
In the last year Persistent had adopted and participated in GenAI while the business was currently modest it was expected to grow and turn into large-scale opportunities. These include work for a BFSI Fortune 500 client for data migration and analysis and another project for a healthcare company to become more agile and innovative using GenAI technology. The company launched a GenAI-powered solution for open-source maintenance services for software updating and bug fixes.
The company has been working on AI for over two decades and has been running Analytics Centres of Excellence for clients. It has done niche work using AI in healthcare such as early detection of lung cancer and chronic kidney diseases. It used AI in financial services for sanctioning and processing trade finance. The company has 3,000 engineers with AI expertise and working with Microsoft, AWS and Google AI technologies. Persistent had trained 16,000 tech employees in GenAI. The company has been named a leader in the Generative AI market leader by HFS Horizons and recognized as an early GenAI adopter and leader.