Mphasis Ltd.’s board of directors has two clear messages for its management in the AI era—ensure the company is future-ready and has enough money to invest back into the business, and don’t lose 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.
“Instead of AI usage or AI metrics, the board has been very focused on are we investing enough in the business to make sure that we stay at the forefront of staying relevant to our client base,” Rakesh said.
Much of this concern also prompted the Bengaluru-based company to announce its own agentic AI platform, Tria, at an investment of about $27 million. Mphasis said it would begin disclosing revenue from the platform from FY28 onward.
This makes Mphasis the first mid-sized IT services firm to openly discuss changing board oversight structures in response to AI-led automation. Last month, LTM Ltd. (formerly LTIMindtree) said in its annual report that its board monitors compliance with AI-related regulations across different geographies.
AI disruption
For now, Rakesh said, the board’s key role is centred on risk management.
“Number one risk of the business today is risk of disruption if AI eats into what we deliver. So, of course, they've been very focused on the approach we are taking, and how are we investing in making sure that we future-proof the business,” said Rakesh.
AI tools are increasingly threatening the traditional outsourcing model as automation reduces the need for human-led billing. These tools are also shrinking average deal sizes and enabling non-IT firms to insource more of their technology needs.
Rakesh said the board is also closely watching growth quality, reinvestment ability and deal wins.
“Now they're (the board) a little bit more focused on saying, well, if you're using AI, are you actually using AI to drive the right outcome for us, or only for the customer, right? Otherwise, it is a race to the bottom right, there's no dearth of competitors undercutting 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 AI services.
“Putting Claude to work in an organization’s core operations takes hands-on engineering and deep familiarity with how each business runs. System integrators in the Claude Partner Network lead that work for the world’s largest enterprises today, and we are continuing to invest deeply in those partnerships as Claude reaches more customers. This new firm extends that delivery capacity further,” Anthropic said in a 4 May statement.
However, Rakesh said he does not see the Anthropic-led venture as a threat.
“As for the Anthropic-Blackstone, Goldman, Hillman, and Friedman venture, there is no competition there either, because in the end, what are they trying to do? They're trying to say, I can do proof of value. Who does the real work?” said Rakesh, adding that Anthropic has clarified it is not trying to compete with its system integration partners.
Growth challenges
Despite mounting macroeconomic concerns weighing on IT stocks, including Mphasis — whose shares have fallen 20% since the start of the year — the company remains optimistic on growth.
“Despite ongoing macro uncertainty, we expect to deliver high single-digit to low double-digit growth, supported by disciplined execution and increasing demand for AI-led transformation in FY27,” Rakesh said during the company’s post-earnings analyst call on 30 April.
This optimism comes shortly after the company granted Rakesh a third term as CEO last month — a move that could make him Indian IT’s longest-serving chief executive — even as concerns persist around growth from top accounts such as FedEx.
“So the scary part isn't the fact that I'm renewing it (tenure as CEO). The scary part is that we are trying to do something in an environment that seems to have ridden the industry in a different model,” said Rakesh, referring to concerns around longevity, differentiation and the competitive moat of IT outsourcers in an AI-driven world.
Position battle
The company reported $1.8 billion in revenue, up 7% year-on-year. Much of this growth came 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. Coforge reported $1.87 billion in revenue for the year, up 29% from the previous fiscal.
Rakesh said he was not bothered by the shift in rankings.
Earlier this month, Blackstone — Mphasis’ largest shareholder — also 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.
Blackstone had acquired a 60.4% stake in Mphasis from Hewlett Packard Enterprise in September 2016 and has gradually reduced its holding through stake sales in 2018, 2024 and 2025. It currently owns about 31% of the company.
