Zensar Technologies Ltd Management Discussions

Macro Economy Overview1 Global economy

The global economy navigated a complex environment shaped by evolving trade dynamics, rapid technological advancements and shifting macroeconomic conditions. In CY24 and CY25, it delivered consistent growth of approximately 3.4% year-over-year (YoY), driven by strong investments in technology - particularly artificial intelligence - across North America and Asia, supported by favorable fiscal

and monetary policies and sustained private-sector activity. Growth was tempered by rising trade protectionism, including increased US tariffs that added volatility to cross-border trade. Geopolitical tensions, such as the Russia-Ukraine and West Asia conflicts further impacted the sentiments, supply chains and overall economic stability.

Indian Economy2,3

The Indian economy continues to display resilience, driven by robust domestic demand, structural reforms and sustained infrastructure investments. GDP grew at 7.6% in FY26 sustaining Indias position as the fastest-growing major economy for the fourth consecutive year.

Investment activity continued to improve, with Gross Fixed Capital Formation (GFCF) rising above pre-pandemic levels. At the same time, India has finalized several free trade

agreements with large markets like European Union and UK, strengthening the countrys external trade outlook. The Union Budget also placed strong emphasis on digital infrastructure, allocating more than INR 2 lakh crore for broadband expansion, data centers and Artificial Intelligence (AI) initiatives under the Digital India Program. Looking ahead, the Indian economy is expected to sustain the growth momentum, supported by domestic demand and positive developments in the West Asia conflict.

Industry Overview

Global Information Technology (IT) industry

In 2025, global IT spending reached approximately $5.56 trillion, up 10.3% YoY, with growth led by Data Centers (up 48.9% to $496.2 billion) in turn driven by AI and cloud infrastructure investment. Software grew 11.5% to $1.25 trillion on enterprise application and cybersecurity demand,

while IT Services, the largest segment, expanded 6.4% to $1.72 trillion. Tech devices rose 9.1% to $788.3 billion. In contrast, the Communications Services segment exhibited relatively modest growth of 3.8%, reaching $1.30 trillion, indicating its maturity compared to other segments.

Worldwide IT Spending Forecast4

Outlook45

Global IT spending is projected to reach approximately $6.16 trillion in 2026, representing a 10.8% increase over 2025, according to Gartner. Data Center Systems will remain a key growth driver supported by enterprise investments in advanced computing and cloud capabilities.

The IT services segment is expected to expand by 8.7% to around $1.43 trillion, mirroring rising adoption of enterprise applications, automation platforms and generative AI

technologies. Enterprises are expected to move from AI pilots to structured, scalable initiatives spanning infrastructure, data, solutions and talent. Cost management remains a key focus, with organizations investing in data standardization, governance and process optimization, while demand is expected to be stable or grow across most sectors - particularly consumer, retail, insurance, manufacturing and defense.

Indian Information Technology (IT) Industry

The Indian IT industry continues to be a cornerstone of the global digital economy, driven by strong innovation capabilities, a large, skilled workforce and the increasing adoption of advanced technologies such as AI, cloud computing and digital platforms. The Indian IT sector is estimated to grow from $297.2 billion in FY25 to $315.4 billion in FY26, a 6.1% YoY increase, with exports rising from $233.3 billion to $246.4 billion, supported by Engineering Research and Development (ER&D), Business Process Management (BPM), IT services and software products, according to the NASSCOM report. Domestic revenues are expected to reach $69 billion, up 8.1%.

AI Transformation7

According to McKinseys 2025 report, AI adoption has become widespread, with 88% of organizations implementing AI in at least one business function in CY25, up from 78% in the previous year. Interest in AI agents is rising, with 62% of organizations experimenting and 23% scaling agentic AI systems, particularly in IT, knowledge management, technology, media, telecommunications and healthcare sectors.

Indias AI ecosystem is rapidly maturing, driven by enterprise investments, government initiatives and large-scale infrastructure development. The India AI Mission, supported by over INR 10,300 crore and 38,000 Graphic Processing Units (GPUs), is expanding computing access and promoting innovation across healthcare, agriculture, education and governance. AI is expected to contribute up to $1.7 trillion to the economy by 2035, driven by inclusive adoption, workforce skilling, indigenous model development and stronger governance.

AI budgets continue to rise steadily, supported by enterprise-scale programs but moderated by persistent gaps in data-readiness and process maturity. Industry strategies are likely to consolidate around core strengths, with differentiation increasingly driven by platform-led models, a transition from services to solutions, outcome-based pricing and selective M&A, all underpinned by AI-first delivery and trust-led client engagement. At the same time, hiring is expected to shift from volume-led expansion to a more focused skill mix, with organizations prioritizing AI fluency, adaptability and domain expertise, while AI-native roles grow faster than the broader digital workforce.

Business Overview Company Overview

Zensar Technologies Limited (hereafter referred to as "Zensar" or "Our Company") is a leading international provider of technology solutions, recognized for delivering innovative digital strategies that facilitate business transformation. Our Companys expertise covers design, data engineering and advanced analytics, helping organizations successfully navigate the complexities of an evolving digital landscape.

At Zensar, we support our clients in innovating and succeeding by conceptualizing, building and managing digital products that address the evolving demands of modern business environments worldwide. Our Company is based in Pune, India and operates as a key member of the RPG Group. It collaborates with over 170 clients globally to deliver tailored solutions that enhance efficiency, improve performance, and generate sustainable long-term value.

Services Offered

We serve key industries including Telecommunications, Media and Technology, Banking Financial Services, and Insurance, Manufacturing and Consumer Services, and Healthcare and Life Sciences, delivering innovative, technology-driven solutions that enhance efficiency, drive growth and deliver superior client experiences. Key services offered by our Company include:

Business Outlook

We delivered a resilient performance during FY26, supported by disciplined execution and strengthened our profitability, order book and cash reserves. We saw a strong momentum in Financial Services and Insurance (FSI), while Telecommunications, Media and Technology (TMT) faced headwinds. We strengthened our AI-led capabilities with the launch of ZenseAI, our innovative agentic AI platform, enabling impactful solutions across industries. Our Company remains committed to becoming an AI-native technology services Company, with nearly 85% of our workforce AI-certified and about 36.4% of our order book influenced by AI. We would continue to build future-ready talent through initiatives such as the Ignite AI Academy, which has trained over 9,200 employees and achieved more than 12,500 AI course completions.

Financial Review

Revenue for the year grew 7.7%, while PAT grew by 19.2% driven by operational efficiencies and favorable currency movement. The Board has approved the payment of an interim dividend of INR 2.4 per share for the year.

Revenue by Segments

Revenue from Digital and Application Services grew by 4.7%, while the Cloud Infrastructure and Security segment grew nearly 20%, reflecting strong industry tailwinds for this segment.

The United States remained the largest contributor, while Rest of the World was the fastest growing geography.

Other Income: At Zensar, our other income comprises interest earned on bank deposits and investments, gains from the sale of investments, net gains on financial assets measured at fair value, interest on security deposits and net foreign exchange gains or losses among other items. For the current year, our other income stood at INR 2,339 million, compared with INR 1,602 million in the previous year.

Tax Expense: Our income tax expense for the current year stood at INR 2,471 million, compared with INR 2,079 million in the previous year.

Equity Share Capital: During the year, we issued a total of 385,042 fully paid-up equity shares of INR 2 each. Of these, 21,635 shares were allotted under the "2006 Employees Stock Option Scheme," while 362,907 shares were granted under the "Employee Performance Award Unit Plan, 2016".

Other Equity: At Zensar, our Other Equity stood at INR 46,738 million as of March 31, 2026, compared with INR 40,243 million as of March 31,2025.

Fixed Assets: During the year, we recorded additions of INR 469 million to the gross block of tangible fixed assets and INR 1 million to the gross block of intangible assets.

Return on Capital Employed: Our return on capital employed (ROCE) for FY26 stood at 22.7%, compared with 21.7% in FY25.

Debtors: The position of outstanding debtors was:

Cash and Bank Balances: Our cash and bank balances represent funds held with banks in India and overseas. We also maintain balances in the Exchange Earners Foreign Currency (EEFC) account in India, primarily to meet the remittance requirements of our branches and to support travel-related expenses. As of March 31, 2026, our total cash and bank balances (excluding unpaid dividends and including overseas balances) stood at INR 4,163 million, compared with INR 2,708 million as of March 31, 2025.

Other Current Assets: Our other current assets stood at INR 1,629 million for the current year, compared with INR 1,243 million in the previous year. These primarily comprise unbilled revenue, prepaid expenses, advances to suppliers and statutory receivables.

Other Current Financial Assets: At Zensar, our other current financial assets stood at INR 3,723 million as of March 31, 2026, compared with INR 4,029 million in the previous year. These primarily comprise unbilled revenue, interest receivable, foreign exchange forward contracts and security deposits.

Other Current Liabilities: Our other current liabilities stood at INR 1,649 million, compared with INR 1,858 million in the previous year. These primarily comprise unearned revenue, along with statutory dues.

Contingent Liabilities: At Zensar, our contingent liabilities are disclosed in Note 30 of the "Consolidated Financial Statements - Notes to the Accounts." We follow consistent accounting principles in the preparation of our financial statements and the same principles are applied when recognizing income and expenses across individual segments.

Significant Change in Key Financial Ratios

Profit margins have improved year-on-year on account of operational efficiencies.

Analyst Recognitions

Major Contender and Star Performer in the Everest Groups Property and Casualty (P&C) Insurance IT Services PEAK Matrix? Assessment 2025, underscoring our strong capabilities in insurance technology

Major Contender in the Everest Groups Adobe Services PEAK Matrix? Assessment 2025, highlighting our expertise in delivering digital experience transformation through Adobe solutions

Major Contender and Star Performer in the Everest Groups Payments IT Services PEAK Matrix? Assessment 2025, highlighting our ability to deliver innovative and next-generation payment solutions

Industry Awards and Recognitions

Among the Top 25 Best Workplaces in the IT and IT-BPM sector by Great Place To Work India? for our exceptional employee experience and high-trust culture

Among Indias Top 100 Best Workplaces for Women by Great Place To Work India?, highlighting its strong focus on gender equity and inclusion

Recognized by Avtar and Seramount as a leading Company for women and an exemplar of inclusion practices

Among the Worlds Top 100 L&D Teams by the OnCon Icon Awards 2025, highlighting our innovative approach to continuous learning and skill development

GCC Leadership Award in CSR for our impactful CSR initiatives in skilling and education

Silver medal from EcoVadis, reflecting strong performance in environmental, social, ethical and sustainable procurement practices

Bronze recognition for its commitment to LGBTQ+ inclusion and workplace equality from the India Workplace Equality Index (IWEI) 2025

Human Resource

Our Human Resource Processes in the Age of AI

We have continued to invest in initiatives that smoothen employee journey, from recruitment and onboarding to performance management. This year, we have focused on bringing artificial intelligence into these touchpoints, enabling faster and more consistent hiring decisions, making performance conversations more continuous and data-informed, and giving employees quicker access to the information they need.

These initiatives are designed to streamline workflows, reduce manual effort, and generate insights that benefit both employees and managers. Ultimately, they aim to deepen employee connection to Zensars purpose and support our long-term growth.

Happiness Journey

Zensar is committed to an inclusive, empowering culture, reinforced by a data-driven happiness framework that measures and enhances employee wellbeing and engagement. Insights from the previous years happiness survey and focus group discussions led to a structured action plan governed by Happiness Councils and supported by cross-functional teams and COEs. As a result, Zensar achieved Happiness Score of 88 in FY26, a remarkable improvement of 5 points over FY25.

Diversity, Equity & Inclusion

At Zensar, we foster an inclusive and equitable workplace grounded in equal opportunity and respect for all. Our diversity and inclusion efforts are guided by the Universal Diversity, Equity and Belonging Council and the Diversity Center of Excellence. We continue to uphold gender pay parity and ensure fair, non-discriminatory practices across performance evaluations and promotions. Our gender diversity for FY26 stood at 30%.

Risk Management

At Zensar, we have implemented a robust Enterprise Risk Management (ERM) program to safeguard our operations and strategic objectives. We assess risks at all levels using both top-down and bottom-up approaches, ensuring compliance while addressing strategic, operational, cybersecurity, financial and ESG/climate-related risks. Our strategy is proactively updated based on internal and external feedback, with a focus on key risks such as market fluctuations, cybersecurity threats, financial challenges, client dependency and climate change. We also evaluate risks in the areas of data security, talent management and other emerging risks like advancements in Artificial Intelligence (AI).

Cautionary Statement

The statements contained in this report, including those presented in the Management Discussion and Analysis section, relating to the Companys objectives, projections, outlook, expectations and other related matters, may be considered "forward-looking statements" under applicable laws and regulations. Actual results may differ materially from those expressed or implied in such statements. A range of factors, including changes in government policies, global economic conditions, foreign exchange fluctuations, natural disasters and other unforeseen events, may affect the Companys operations and lead to variations in actual outcomes.