Zensar Technologies Ltd Management Discussions

Economic Overview Global Economy

The global economy in 2024 remained resilient, as businesses adapted to emerging opportunities, geopolitical disruptions and shifting market dynamics, with growth varying across different regions. While parts of Asia and Europe experienced weaker performance, the United States showed strong momentum. The global economy grew at a rate of 3.3% in 2023¹, followed by a slight slowdown to 3.2% in 2024¹. Inflation remained elevated in major economies and some emerging markets also faced price pressures.

Monetary policies differed across regions, with some central banks cautiously easing interest rates, while others took a more restrictive approach. Economic uncertainty stayed high due to trade, fiscal concerns and geopolitical tensions. Advanced economies witnessed stable growth, with GDP increased by 1.7% in both 2023 and 2024¹. Meanwhile, Emerging Markets and Developing Economies (EMDEs) grew by 4.2% in 2024 as compared to 4.3% growth in 2023.

In 2025, a gradual recovery in demand is anticipated, driven by the easing of monetary policies and an increase in private capital expenditure. This recovery is expected to contribute to global GDP growth inching up to 3.3% in 2025¹, with advanced economies playing a leading role. Advanced economies are expected to experience moderate expansion, with growth rates of 1.9% in 2025 and 1.8% in 2026¹. Europe area projected to expand by 1.0%, the United States by 2.7% and South Africa by 1.5%¹ in 2025 Meanwhile, emerging markets and developing economies are forecasted to grow at 4.2% in 2025 and 4.3% in 2026¹. China and India are

likely to maintain stable growth despite global uncertainties. The United States has announced a sweeping set of reciprocal tariffs, which will impact more than 180 countries. Under this policy, all imports will be subject to a baseline tariff of 10%, with additional increases varying by country². China will face a total tariff of 54%, the European Union 20% and India 26%². The new tariffs are likely to come into effect in the foreseeable future. Further, monetary policy divergence among major economies and fiscal tightening in certain regions may pose additional challenges to the global economic outlook.

Indian Economy

Indias economy is expected to remain one of the fastest growing in the world, supported by strong domestic consumption, infrastructure development and an expanding digital economy. Indias GDP growth for FY 2024-25 is projected to decelerate to 6.5%, compared to 9.2% in FY 2023-24, primarily due to subdued performance in the manufacturing and services sectors.³ Indian economy is expected to grow by 6.7% in FY 2025-26. ⁴

Indian GDP Growth Rate (in %)^{3 4}

In FY 2024-25, inflationary pressures persisted due to global supply chain issues and commodity price volatility. In response, the RBI cut the repo rate by 25 basis points to 6.25%, its first reduction since May 2020, while maintaining a neutral stance⁴. The Consumer Price Index (CPI) inflation for FY 2024-25 was 4.9%, lower than 5.4% observed in FY 2023-24.⁴ Government initiatives such as investments in infrastructure, renewable energy and digital transformation are expected to drive long-term growth and enhance Indias global economic standing. Initiatives like Digital India, Atmanirbhar Bharat and Software Technology Parks (STPs) have driven growth and attracted foreign direct investment (FDI) in technology. The emphasis on hardware manufacturing, such as integrated chips, under Atmanirbhar Bharat is further expanding economic contributions. Indian economy has been rapidly adopting digital technologies over the past decade. As per the State of Indias Digital Economy Report 2024, India ranks third globally in overall digitalization and 12^th among G20 countries in individual user adoption.⁵

Industry Overview

Global Information Technology (IT) Industry

The global IT industry continued to evolve at a rapid pace, driven by ongoing technological advancements and shifting market demands across various sectors. In 2024, spending on IT services grew by 4.7%.⁶ The overall technology spending witnessed a significant increase of 10.8%, primarily fueled by the rising demand for hardware and software associated with Generative Artificial Intelligence (GenAI).⁶ Plardware spending grew by 10% year-over-year (Y-o-Y), while software spending recorded a notable increase of 13.8% YoY, reflecting the growing importance of GenAI technologies in the industry.⁶

The global sourcing market demonstrated a growth rate of 3% YoY in 2024, reaching an estimated valuation of $289-$294Bn, compared to $280-$285Bn in 2023.⁶ The IT offshoring segment experienced modest growth, with its estimated market size expanding to $168-$170Bn, reflecting an increase of 1.8% YoY.⁶ Despite initial projections of a decline due to the impact of GenAI, the Business Process Management (BPM) outsourcing sector exhibited resilience by achieving YoY growth of 4.2%, with its market size reaching $122-$124Bn.⁶ India continued to maintain its dominant position as the worlds leading global sourcing destination, accounting for approximately 57%-58% of the total global sourcing expenditure.⁶ In 2024, the global technology M&A market experienced a 29% decline in annual revenues, with tech deals making up 20% of the total volume and 18% of the total value in the $655Bn global M&A market.⁶ Overall, global M&A activity fell to $2.7 trillion, with software companies driving deals in cloud computing, Al and cybersecurity.⁶

In 2024, developed markets such as the US, the UK and Europe maintained steady growth. Meanwhile, emerging markets, particularly in the Middle East and ASEAN regions, experienced strong expansion, creating new business opportunities for technology service providers. Growth across industry sectors varied, with financial services benefiting from targeted strategies tailored to evolving market needs. Spending on technology services remained stable, supported by an increasing preference for as-a-service contract models and the continuation of large-scale mega deals. Investments in Al and cloud technology adoption surged, contributing to the industrys overall expansion. The BPM outsourcing sector experienced sustained growth, driven by an increased focus on Al-enabled client service solutions. Additionally, global multinational corporations continued to establish Global Capability Centres (GCCs), with India reinforcing its position as the preferred global outsourcing hub.

Outlook

The global IT industry is poised for continued growth, fueled by expanding opportunities in emerging markets and increasing demand for Al-powered solutions. However, this optimism is moderated by persistent challenges such as talent shortages, heightened cyber risks, service transformation driven by Al adoption and ongoing geopolitical uncertainties. Adding to these pressures, the US economic slowdown, driven by new import tariffs and mounting recession fears, is emerging as a key concern. As the largest consumer of technology services, any deceleration in US economic activity can adversely affect global tech demand, enterprise IT spending and outsourcing decisions. Elevated inflation and tighter financial conditions may prompt US companies to reduce technology budgets, postpone digital initiatives and delay new investments. This, in turn, could impact service providers and tech exporters globally, particularly in markets like India that maintain strong economic and delivery linkages with the US.

Indian IT Industry

Indias IT industry contributed 7.3% to the nations GDP, achieving $283Bn in revenue with a 5.1% YoY growth in FY 2024-25.⁶ The sector accounted for 43%-45% of the countrys total services exports, with technology export revenues reaching $224.4ESn. India maintained a dominant 57%-58% share in the global sourcing market while contributing $58.2ESn through domestic and international technology services during FY 2024-25.⁶

The countrys technology sector comprised over 40,000 firms, imparting innovation and digital transformation. The startup ecosystem remained dynamic with 32,000-35,000 startups, while women constituted 36% of the workforce, reflecting advancements in diversity and inclusion.⁶ In FY 2024-25, the sector reinforced its focus on research and development, filing 90,000 tech patents, demonstrating a strong commitment to intellectual property creation.⁶

Indias IT Services Sector experienced robust growth, driven by advancements in Al-led delivery, cloud-native technologies and cybersecurity solutions, underscoring a shift towards greater innovation and resilience. The Business Process Management (BPM) segment evolved significantly, fueled by increased investments in Generative Al and a rising demand for tailored solutions across key industries such as Banking, Financial Services and Insurance (BFSI), healthcare, retail and telecommunications. Software products and DeepTech remained key enablers of transformation, with technology startups developing cutting-edge solutions to address emerging industry challenges. Engineering Research & Development (ER&D) continued to be the fastest-growing segment for the fourth consecutive year, reflecting Indias transition from a low-cost R&D hub to a global center for innovation.

The Global Capability Centre (GCC) segment expanded at a rapid pace, supported by new center setups, mid-market growth and the adoption of the GCC as a Service model. Al strategies advanced further, shifting towards partnership-driven implementations, with FY 2024-25 witnessing a focused push towards practical Al applications and industry-specific solutions. Talent development emerged as a critical priority, with Al and Generative Al enhancing workforce capabilities, while academic institutions adapted their curricula to align with evolving industry demands. The domestic market outperformed exports for the second consecutive year, driven by increased investments from government, enterprises and consumers in digital transformation and AI/GenAI initiatives.

Indias IT industry strengthened its position as a global technology leader, with Multi-National Companies (MNCs)and GCCs contributing nearly 50% of the countrys technology revenue. The number of GCCs expanded from 1,285 in FY 2018-19 to over 1,750 in FY 2024-25.⁶ The IT industry comprises the following segments:

Outlook

According to an ICRA report, the Indian IT services industry is projected to experience moderate revenue growth of 4-6% in FY 2025-26, driven by increasing investments in Generative Al and higher discretionary spending in key sectors like banking, financial services, insurance (BFSI) and retail.⁷ The rapid adoption of GenAI and automation is expected to create new business opportunities, reinforcing Indias position as a global hub for digital transformation. In the medium to long term, ongoing innovation, service expansion and emerging technologies will be essential for maintaining growth and competitiveness. A strong deal pipeline ensures healthy revenue visibility, while Indias improving global competitiveness, infrastructure development and policy initiatives support its vision of becoming a leading tech-driven economy by FY 2046-2047.⁷

Al-Driven Transformation: Reshaping Industries,

Enhancing Efficiency and Driving Growth

Artificial Intelligence (Al) is transforming industries by driving efficiency automation and personalization. It enhances client service Direct to Customer (D2C) models, media content, Agri-tech and automotive solutions while accelerating business transformation. The Al market is projected to grow from $185Bn in 2023 to $780-$990Bn by 2027.¹¹

Productivity gains across key sectors:

GenAI is driving transformative changes across various industries by enhancing efficiency, promoting innovation and improving client engagement. In the retail, consumer and e-commerce sectors. It is reshaping product development, sales and marketing while enabling more personalized client experiences. Businesses are leveraging Al-driven insights to refine pricing strategies, optimize promotions and streamline operations, ultimately improving overall performance.

Manufacturing is also evolving through Al-driven automation supply chain restructuring and increasing energy demands. Intelligent technologies are enhancing production workflows predictive maintenance and workplace safety while minimizing reliance, on manual labor. Collaborative robots are further improving precision and efficiency. To build resilient supply chain businesses are localizing operations for greater flexibility. Meanwhile rising energy consumption in Al-powered data centers is accelerating the shift toward renewable energy and advanced storage solutions. These innovations are making industries smarter more adaptive and increasingly sustainable.⁹

The healthcare and life sciences sectors are advancing rapidly with Al cloud computing and personalized medicine. Al-powered imaging and automation have improved diagnostics and patient monitoring while reducing operational costs. Cloud technology has strengthened

data security, facilitated real-time information sharing and enhanced electronic health records while genomics-based treatments have pushed personalized medicine to the forefront. In healthcare, GenAI is revolutionizing both clinical and non-clinical processes by improving decision-making, optimizing supply chain management and enhancing patient care. Despite challenges such as data sensitivity and legacy systems, Al-driven solutions are enabling more efficient workflows and better health outcomes. Similarly, in the life sciences sector, GenAI is accelerating drug discovery, refining manufacturing processes and strengthening quality management, paving the way for more advanced and cost-effective solutions.⁸

The automotive and mobility industries are also undergoing a shift, with Al enabling greater innovation, streamlining operations and promoting a transition toward service-driven business models. Indian automakers and startups are leading this transformation by leveraging Al to enhance efficiency, product design and client experiences. Technology services are experiencing a profound impact, with GenAI driving greater innovation, efficiency and improved client interactions. Service providers are strategically integrating Al to enhance automation and optimize operations while navigating challenges associated with implementation.¹⁰

Industrials and energy sectors are benefiting from GenAIs ability to optimize resource management and enhance sustainability efforts. Al-powered solutions are improving grid stability, refining exploration processes in oil and gas, advancing geological analysis in mining and enabling predictive maintenance in manufacturing, leading to more efficient and sustainable industrial operations.¹⁰

In media and entertainment, GenAI is redefining content creation, audience engagement and production efficiency. Al-driven tools are streamlining workflows and enabling innovative monetization strategies. However, addressing concerns related to copyright issues, deepfakes and the preservation of human creativity remains crucial to maintaining trust in Al-generated content.¹⁰

Governments are also increasingly adopting GenAI to improve policymaking, resource allocation and public service delivery. In India, Al-driven initiatives such as BharatGen are enhancing accessibility, promoting inclusion and driving innovation in multilingual governance, ultimately improving the efficiency and reach of government services.¹⁰

Business Overview Company Overview

Zensar Technologies Limited (hereafter referred to as Zensar or the Company) is a prominent global provider of technology solutions, recognized for delivering innovative digital strategies that facilitate business transformation. The Company specializes in design, data engineering and advanced analytics, assisting organizations in successfully navigating the complexities of the evolving digital landscape.

Zensar enables its clients to innovate and succeed by conceptualizing, building and managing digital products that address the demands of modern business environments worldwide. Zensar, based in Pune, India and part of the RPG Group, serves 160+ clients globally, offering tailored solutions that improve efficiency, performance and long-term value.

Services offered

Sales Transformation - Zensars sales enhancement strategy focuses on driving revenue growth and expanding market presence through a client-centric approach. The Company conducts annual relationship assessments via surveys and interviews to understand client expectations and track industry trends. Zensar strengthens partnerships, grows within current accounts and forms new collaborations. The Company achieves this by strengthening executive relationships, expanding its service offerings and transforming presales teams into solution architects. Additionally, targeted marketing, sales team development and strategic partnerships play a key role in attracting new clients and promoting long-term growth in the competitive digital services industry.

Delivery Excellence - Zensar drives digital transformation by leveraging its core strengths to deliver agile solutions that create stakeholder value. The Company focuses on strategic growth through acquisitions and partnerships, achieving success in key regions such as the United States, Europe and South Africa while expanding its client base. Zensar is institutionalizing structured competency development across service lines to enhance relationships and improve outcomes. The Company prioritizes operational excellence by establishing expert teams across various industries and expanding the Industry Solution Group in sectors like manufacturing, retail, healthcare, life sciences, banking and insurance to address client challenges with advanced technologies.

Talent Transformation - The Company prioritizes talent development through initiatives like the GenAI Academy and gamified learning programs, ensuring employees gain deep expertise. The Company nurtures a mix of specialized and interdisciplinary skills to build versatile teams. Zensar received notable recognition in FY 2023-24 for its client programs, earning prestigious awards such as the APEX Award and the Brandon Hall Awards.

To read more about our strategies, please refer to Strategy chapter on pages 31-33

Financial Review

Particulars	FY 2024-25	FY 2023-24	% YoY Change
Revenue	52,806	49,019	7.7%
EBITDA	8,167	8,717	-6.3%
EPS (Basic)	28.6	29.4	-2.4%
EPS (Diluted)	28.4	29.1	-2.4%
Profit Before Tax (PBT)	8,577	8,758	-2.1%
Profit After Tax (PAT)	6,498	6,650	-2.3%
Particulars	FY 2024-25	FY 2023-24	% YoY Change
Digital and Application Services	42,269	40,019	5.6%
Digital Foundation Services	10,537	9,000	17.1%
Total	52,806	49,019	7.7%

Revenue By Geography

Particulars	FY 2024-25	FY 2023-24	% YoY Change
United States of America	35,762	32,939	8.6%
Europe	11,036	10,138	8.9%
Rest of the World	6,008	5,942	1.1%
Total	52,806	49,019	7.7%

Other Income - Other income includes dividends from mutual fund investments, interest on bank deposits, profits from the sale of investments, net gains on financial assets measured at fair value, interest on security deposits, net foreign exchange gains and losses and the impact of share buyback liabilities, among others. For the current year, other income amounted to INR 1,602Mn, compared to INR 1,588Mn in the previous year.

Tax Expense - The Companys income tax expense for the current year is INR 2,079Mn, compared to INR 2,108Mn in the previous year.

Share Capital - During the year, the Company issued a total of 476,221 fully paid-up equity shares of INR 2 each. Of these, 28,570 shares were allotted under the "2006 Employees Stock Option Scheme," while 447,651 shares were allotted under the "Employee Performance Award Unit Plan, 2016." No shares were issued under the "2002 Employees Stock Option Scheme."

Reserve and Surplus - The Companys Reserves and Surplus as of March 31, 2025 stood at INR 38,847Mn, compared to INR 34,067Mn as on March 31,2024. Similarly, the Companys Other Reserves as of March 31, 2025 amounted to INR 1,396Mn, as opposed to INR 1,099Mn as on March 31,2024.

Fixed Assets - During the year, there is addition of INR 467Mn in Gross Block of Tangible Fixed Assets and addition of INR 345Mn in Gross Block of Intangible Assets.

Return on Capital Employed*- The return on capital employed (ROCE) for FY 2024-25 is 21.7%, compared to 25.4% for FY 2023-24.

*ROCE %=(PBIT/Avg. capital employed) (capital employed consists of net worth, lease liability and deferred tax liabilities)

Debtors - The status of outstanding debtors was:

(in INR Million)

Particulars	As of March 31,2025	As of March 31,2024
Considered Good	7,901	7,320
Credit Impaired	92	234
Allowances for Credit Loss	(92)	(234)
Total Receivables	7,901	7,320

Cash and Bank Balances - The Cash and Bank Balances reflect the Companys holdings in banks both in India and abroad. Additionally, the Company maintains funds in the Exchange Earners Foreign Currency (EEFC) account in India, primarily to cover the remittance needs of its branches and for travel-related expenses. As of March 31, 2025, the total Cash and Bank Balances (excluding unpaid dividends and including overseas balances) amounted to INR 2,708Mn, compared to INR 4,432Mn as of March 31, 2024.

Other Current Assets - Other Current Assets, totaling INR 1,243Mn for the current year compared to INR 1,347Mn in the previous year, primarily consist of unbilled revenue, prepaid expenses, advances to suppliers and statutory receivables.

Other Current Financial Assets - As of March 31, 2025, Other Current Financial Assets amounted to INR 4,029Mn, compared to INR 3,527Mn in the previous year. These assets primarily include unbilled revenue, foreign exchange forward contracts and security deposits.

Other Current Liabilities - Other Current Liabilities, totaling INR 1,858Mn compared to INR 1,691Mn in the previous year, primarily consist of unearned revenue, as well as payments due for the provident fund, pension fund and statutory taxes.

Contingent Liabilities - Contingent Liabilities are disclosed in Note 30 of the "Consolidated Financial Statement - Notes to the Accounts." The accounting principles consistently followed in the preparation of the financial statements are equally applied when recording income and expenditure in individual segments.

Significant Change in Key Financial Ratios

(in INR Million)

Particulars	FY 2024-25	FY 2023-24
Revenue	52,806	49,019
EBITDA	8,167	8,717
Operating Profit Margin	15.5%	17.8%
Net Profit Margin	12.3%	13.6%
Return on Net Worth	16.0%	18.7%
EPS (Basic)	28.6	29.4
EPS (Diluted)	28.4	29.1
Debtor Turnover Ratio	6.9	6.7
Interest Coverage Ratio	50.4	43.0
Current Ratio	3.8	3.0
Debt Equity Ratio	0.0	0.0

Note: The table shows no significant changes in the ratios.

Zensar Technologies is well-positioned for ongoing growth and capitalizing on any future opportunities with a robust order book and a healthy cash position. The Company will focus on further investments in sales and infrastructure, while also advancing its sustainability initiatives, such as achieving net-zero emissions and increasing the use of renewable energy. Zensars success in coming years will be driven by its diverse client base, low attrition and consistent growth in key sectors.

Human Resource HR digitalization

The Company has invested significantly in developing advanced offerings to upskill and cross-skill its workforce. By continuously assessing HR touchpoints, the Company aim to enhance key moments in the employee journey, from recruitment to onboarding and performance management. Digital initiatives, such as gamified onboarding, personalized learning, wellness-focused performance discussions and automated immigration processes, are designed to improve the overall employee experience. These efforts streamline workflows, reduce errors and provide valuable insights, ultimately driving employee integration into the Companys vision and contributing to its success.

Happiness Journey

The Company is dedicated to cultivating a positive and engaged workplace culture. Each year, a Happiness Council evaluates areas for improvement based on survey feedback, prioritizing growth, work-life balance and ensuring that employees feel valued. Local councils lead initiatives that align with these goals. In FY 2023-24, the Company launched several impactful initiatives, such as the ChatGPT Conquest, a single sign-on feature for apps, a policy clinic, wellness surveys and celebrations for events like International Mens Day and Parents Day.

Diversity, Equity & Inclusion

Zensar promotes equal opportunity and diversity through initiatives led by its Global Diversity, Equity and Inclusion (DEI) Council and Center of Excellence. Key achievements include 30% gender diversity, gender pay parity and non-discriminatory practices in performance evaluations and promotions. Zensar supports women through programs like "Enliven," comprehensive healthcare benefits, wellness programs and mentoring initiatives. The Company also ensures accessible infrastructure for employees with disabilities and maintains grievance redressal forums, cultivating an inclusive culture where all individuals can thrive and contribute to collective success.

To read more about Human Resource, please refer to our Human Capital chapter on pages 66-79

Zensar has implemented a strong Enterprise Risk Management (ERM) program to protect its operations and objectives. The Company assesses risks at all levels using top-down and bottom-up approaches ensuring compliance and addressing strategic, operational, cybersecurity, financial, compliance and Environment Social and Governance (ESG)/ climate-related risks. Zensar proactively updates its strategy based on internal and external feedback focusing on key risks such as market fluctuations, cybersecurity threats, financial challenges, client dependency and climate change. The Company also secures data, manages talent and adapts to emerging risks like economic downturns and Artificial Intelligence (Al) advancements.

To read more, please refer to our Risk Management chapter on pages 31-41

Cautionary Statement

The statements in this report, including those in the Management Discussion and Analysis, regarding the Companys objectives, projections, outlook, expectations and other matters may constitute "forward-looking statements" as defined under applicable laws and regulations. Actual results may differ from the expectations expressed or implied. Various factors, such as changes in government policies, global market conditions, foreign exchange fluctuations, natural disasters and others, could impact the Companys operations and cause actual outcomes to vary.