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Thanks, Asha. Thanks, Sanford. Thank you, everybody, for joining the call. Once again, we are -- first time we are talking in this year. Very happy new year to each one of you, and thanks for the continued interest in participating in our investor briefing.For the Q3 -- or the calendar Q4 of '20, the business performance was more or less in line with what we were expecting. The COVID impact has started bailing out, so to say, but many of the projects getting accelerated and the customers are starting to see the demand coming back.Our -- it's a little muted because everybody is expecting to try and get this done or get the work done at a discounted price and also because we were actually closing down the calendar year, which is what the performance we have for many of our customers. They want to actually square up on the discounts, and what they wanted to actually see as part of us sharing some of the impact of COVID with them as well. So that's one of the reasons why we probably saw a slight dip in the quarter-on-quarter numbers. However, we've done reasonably okay from overall 9-month performance and are quite positive on what we are likely to achieve in 2021.The demand of the pipeline seems to be quite robust at this particular point of time, even though the time lines taken for the deals are slightly longer than what it used to be pre-COVID, which also we think should get sorted in the next -- this quarter or maximum by next quarter, and we should probably start seeing a lot more demand.Our challenge seems to be now in trying and finding the right kind of talent to meet these demands because that's the standard challenge which we are seeing across the industry, not only for us, in trying and finding the right kind of talent to match the demands that are coming out in the market. So we've been doing some robust hiring in the last quarter. Despite that, we saw some decline in the revenue, but I think that's [ 1 year ] temporary for us.And we have been doing quite well from a digital enablement and how we have been able to grow the digital business. We saw more than 100% growth from 2019 to 2020 in the digital business, and we expect that, that trend should continue in 2021 as well or in the coming quarters. The pandemic actually has given us a lot more opportunity with more or less work-from-home model, which we don't think it's going to be sustaining the same work-from-home model continuously, but this is actually now an opportunity for us to rethink how we have been delivering to our customers, and it gives us a lot more flexibility. We may not go back to 100% pre-COVID days, but it will probably be somewhere in between. What will be the balance is something which we will probably get to know in the next couple of quarters.Apart from that, we have been doing reasonably well from a cost management perspective as well. There are some sales and marketing expenses which we had to incur in the last quarter. But apart from that, all the other costs are quite in line. The sales and marketing expenses also was primarily because we wanted to square out some of the market campaigns that we have been trying to run in the Middle East and in Europe. And we have probably wanted to make sure that we are able to capitalize on most of the digital initiatives in the last couple of quarters for which we had to actually -- we went ahead with some of the initiatives. And that's what is actually showing us some part of the results and which will help us in the future quarters as well.We have done whatever -- when the COVID hit, we had actually announced some costs or austerity measures for our staff. Given the performance and we are -- that we have actually grown in the last calendar year and the last few quarters, we had reversed that, and just to make sure that the staff morale is not impacted. We did reasonably well there in the staff survey as well. We jumped from almost 60%, and that's after -- sustained to almost 75% in this year. So overall, a reasonably good quarter and reasonably -- or rather more than reasonable year for us. And we think that this will actually help us in building a more sustainable growth model.Our objective is to try and get to a size where some minor changes here and there is not impacting our quarter-on-quarter performance. So that actually limits our capability on investment as well. So that's what our objective is. And hopefully, 2021 will actually put us in that particular position.Thank you so much.
Shall we open up for Q&A, sir?
Thanks, Balaji. Good evening to all. I'll start with the quarter-on-quarter comparison of the performance and then talk about the year-to-date 9-month comparison.Quarter-on-quarter, the operating revenue slight -- had a slight fall of 2% and the total income had an increase of around 2.8%. The revenue drop was expected, as mentioned by Balaji, due to COVID discount and has reduced billing days. The total income was up due to foreign exchange gains contributing around 5%. On the EBITDA, it dropped by 22%, ending INR 13 crores compared with the previous quarter at INR 17 crores. Other than the revenue growth, we had some costs incurred during the quarter because we had some software purchase for projects which actually got reimbursed, which is reflecting in -- as a part of revenue. We saw some increase in travel expenses due to visa for Middle East region and some recruitment expenses. And finally, as mentioned by Balaji, we had some investments in the marketing expenses. With respect to marketing expenses, we do not expect this to continue in the subsequent months, but the benefit of it will have an impact on 2021, so come back to this.On PAT, a marginal drop during the quarter, ended at 16.3% compared to 17.2%. As mentioned before, exchange gains has contributed to reduce the gap.Finally, as part of the cash position, cash position continued to be positive with INR 141 crores. We got a better-than-expected collection this quarter. This is the second consecutive quarter where we had a good collection. We did a collection of around INR 90 crores during the quarter as compared to INR 95 crores in the previous quarter. The effect of the drop is in DSO, from 80 days to 61 days. We expect this to go up and maintain around 70, which is more ideal level. This is on the quarter-on-quarter.If you look at the 9 months ended December 2020 performance compared to the last year same period, the operating revenue ended at around 13.8%, so higher than last year same period. Total income improved by 15%, ending INR 228 crores. The increase was majorly contributed by increase in revenue in Middle East and APAC business, the balance from Europe and U.K.PAT margin, profit after tax margin, improved by 17.2% as compared to last year's 12.8%. The improvement is contributed by revenue increase and also a reduction in the travel expenses. Due to COVID in this year, we had a lesser travel expense compared to last year. The net cash position was already explained.Now I'm opening it for a Q&A session. Thank you.
[Operator Instructions] The first question is from the line of Ravi Naredi from Naredi Investments.
Sir, utilization of cash, is there any inorganic acquisition in -- [ on card ]? Because if you distribute the dividend, the matter will be [ end ]. So any inorganic acquisition is [ on card ]?
So we are actually exploring all opportunities. And one of the opportunity is to look at what is it that we can do to build our competency because we have -- like what I mentioned to you when I started out, we do have some skill gaps considering what is the kind of growth that is actually coming in the market. And to bridge those gaps, the option is certainly something which we are exploring.But if you're asking us to whether we have made a decision or whether we have any specific targets that we are looking at, nothing at this particular point of time. But yes, that option is something which we are exploring as well.
Because you see, in this time market, every software company or service company, those are providing U.S. services like you. Everyone is -- rises so much. But in case of Expleo Solutions, it is a well-managed company, cash-generating company, but all investor are afraid from this company. So my request, you do inorganic organization -- inorganic acquisition so investors can have faith in the company.And secondly, what is the margin reduce -- because I have just a little bit joined. So if you tell anything, I am not listen. So why the margin reduced in quarter 3?
Actually, I'll explain. This is with respect to -- there are 2 reasons for that. One is the revenue being a little lower than what is the last quarter is. It is expected as per what we expected of that. And the second is -- on the side of expense, we had some software purchase for the project, which actually got reimbursed, but it is reflecting in the revenue side of the books. And some increase in the -- slight increase in the travel expenses and also some recruitment expenses -- yes, and also some recruitment expenses. And finally, we also did some investment in the marketing where we had some lead generation, [ white paper ] and branding purpose which has been incurred during the quarter. So those are the items which have contributed to the overall drop in the EBITDA.
So anything you want to forecast for quarter 4 margin-wise? I'm not talking the top line or anything, just margin.
Generally, we don't give...
If it's not possible, it is okay. We are comfortable because I'm a shareholder since last 5 year, and I'm attended the AGM of your company in Chennai. So I'm well acquainted about this company and Expleo Group and Expleo Group everything. So just why I'm asking, see if you want to predict. Otherwise, no problem.
Yes. So while we don't really have a forward-looking statement, but we don't expect this margin drop to continue in this current quarter.
Margin drop.
So currently, whatever margin drop that you saw in Q3 is not likely to continue in Q4 is what I'm trying to say.
The next question is from the line of Deepan Sankaranarayanan from TrustLine PMS.
First of all, I wanted to understand whether the discounts which were offered during current quarter, so is those process been completed? And are we expecting further discounts in Q4?
No, not really. We don't expect the same quantum. In this quarter, the amount was a little substantial. There is -- there'll be some flow-through, but it will be very, very marginal. It is not likely to be the same because it does that -- because the calendar quarter -- and basically this calendar quarter is the end of most of our customers' financial year performance as well. And that's the reason why we had to [indiscernible] up all those in the last quarter. But we don't expect this to continue in -- and all the discounts are also not rate discounts. These are all discounts which are given at a volume level rather than at the rate level. So it is not likely to continue.
Okay. Okay. Also, in the press release, you have explained that you're on a reasonably large digital transformation project. So can you share more details about the project business-wise and margins kind of thing?
So I can share with you the type of the deal. This is for one of the large financial system company. And what we are doing was to support them in modernizing their legacy platform across multiple geographies. And our role is to look at the products, make some modifications or security and vulnerability checks, and then to roll out the particular product after testing and the integration. So the deal is worth probably a little over 100 to 120 people is what we are expecting for 2021.Margin and others, I think I would still leave it for now because what we budgeted and what we will actually be translating into is something which we are not sure of at this particular point of time. But it's a reasonably large deal. It's one of its kind. We haven't done this in the past. And there is a similar kind of an engagement that we are trying to do with another company as well, but hopefully, we should get a response by -- sometime next month.
Okay. Okay. So broadly, can we say -- so on a base of 100 order book, can we say we can move into 110, 115, something like that?
Sorry, I didn't get the question, sir.
So if you say on a base of 100 order book previous quarter, so during this quarter, this order book improvement could have increased that base to 110, 115 kind of?
Yes. I would say we are still not at the pre-COVID levels in terms of our order book or the pipeline, but we are slowly getting there. Before end of this quarter, we should be able to get to the pre-COVID order book and deal pipeline. So we saw a drop in -- from -- Q1 was good. Q2 was going down. Q3 actually is when we started seeing some improvement. And by Q4, I think we should be back to the pre-COVID levels or even better than the pre-COVID levels.
Okay. Okay. Finally, what will be the contribution of revenues from the group during the quarter?
It still continues to be the -- continues to be around the same, 21%, 22% from a direct lease coming from the group and close to around 35% more, apart from the 22% coming through the group geographies, which are supported by the group. So it will be anywhere in the [ weight ] of 55% to 60%. But 20% of order coming directly -- 21% of order coming directly from the group.
[Operator Instructions] The next question is from the line of Anuj Sharma from M3 Investments.
I have a few questions. One, it's been some time that Mr. Rajesh Krishnamurthy has joined the group as a CEO. And he has spent some time on industrial business. So what are his key priorities? Also, any changes on business structure? Would you like all subsidiaries to independently source clients or [indiscernible] structural client acquisition? Any thoughts will be helpful.
Yes, sure. There are lots of changes that have been brought in, including the management change at the group level. India is a key focus. So in the last -- this is his month 7. February is month 7 for him. And he has already traveled to India twice despite the pandemic because we have a lot of interest in what we can do in India and what kind of capabilities we can build in India.So he has actually made quite a bit of changes in the org structure, more in terms of integrating the companies, promoting the best shoring or offshoring to the -- offshore location in India being the largest in that, and the move towards integrating the engineering and the quality services, being a more digital player, both from a technology perspective and also from a quality assurance perspective. So there are multiple projects that he is running at this point of time. And at least, we are -- India is part of at least 75%, 80% of all those projects that we were running.Of course, we have a bigger challenge in France with the impacts that we saw during the pandemic, particularly in the aerospace and auto industry because France has only aerospace and auto. But despite that, there is a lot of focus on what we are trying to do.So from multiple org changes that are being -- it will be restructuring a lot more matrix organization at this point of time. And the expectation here -- I have certain expectation that it will grow or we should double the India business in the next 2 years.So [indiscernible]. And we should start seeing a lot more interaction [indiscernible] company. He is also [indiscernible] of what we were trying to do with [indiscernible]. We said that we are not going to do direct investing [indiscernible] the U.S. a few more interest. We had also [indiscernible].
Yes. Balaji, your voice is not -- can you hear me, Balaji?
[indiscernible]
Excuse me, this is the operator. Mr. Balaji, your voice was breaking. We tried to chat with you, but -- hello, Mr. Viswanathan?
Hello?
Sir, yes. Sir, we could hear you, but your voice was breaking a lot. We could not understand the statements made, sir.
Hello?
Yes, Mr. Desikan, you are audible.
No, no, not me, actually. This is Anuj, actually.[Technical Difficulty]
[Operator Instructions] Ladies and gentlemen, thank you for patiently waiting. The line for Mr. Viswanathan is reconnected. Sir, you may go ahead. We've got Mr. Anuj Sharma on the line with us.
Yes. Balaji, we lost you when you were giving the targets of doubling the -- and then your voice was muffled, so if you could just reiterate that last part.
Yes. So the objective for Rajesh is to double the India business both from a capability and from a scale perspective because he's looking at India to be the digital transformation hub for the group. And the -- whatever actions that he is taking at this particular point of time is towards that. And the other one which he is doing also is helping us in restarting our U.S. business. Earlier, we were waiting for an acquisition from the group to happen. And given the current circumstances, that is getting pushed out. So he is helping us in finding the right people and the right connects to restart the U.S. business, which also is likely to start. We should have the team in place sometime in April.
All right. All right. And just -- again, I missed it. The intention is to double the revenues in the next 2 years? Or did I get it wrong?
It's basically the size of the team because mostly, the offshore centers are measured with the size of the team rather than just the revenue. But obviously, it will come with the revenue as well. It may not be exactly double, but at least it will come at a reasonably good growth from a revenue perspective as well.
Okay. And the second related question is we have a system concern with these -- in the non-BFSI segment. What's the rationale of keeping that independent? Because a lot of synergies and a more diverse set of clients and maybe better sales management. So any discussions on merger and maybe integrated entities from a legal point of view rather than just from a synergies point of view?
As of now, the synergies are the ones which we have started working on after Rajesh has come on board. So we have a renewed focus on trying and utilizing the resources and the capabilities across both, both the entities or both the setups. But from a legal entity and a merger, I will -- it's still a little early to say at this particular point of time. But hopefully, maybe in the next couple of quarters, we should have some progress.
All right. And one more, if I could. Just you see, our performance if you see has been volatile. We had some few good quarters and then subsided then again. So is that something to do with testing industry? Is there some structural changes in testing? Or this volatility entirely our own -- due to our own, I suppose, whatever we can call it, maybe client or structuring, client profiling or are -- just your thoughts on the testing market in the next 2...
So the testing industry is certainly undergoing a change for sure. And we are adapting to that change. And from that perspective, I don't think it is because of the testing industry or what we are doing. Our biggest challenge is our scale, for our size and scale, which is in the range of around USD 10 million per quarter. Even 100,000 here or there can actually swing the numbers and make it volatile. And our objective is to try and see as to how we can get to a position where we are of reasonable size so that these 100,000 and 150,000 differences are not going to make so much of an impact and show it as if it's that volatile.Because if you look at the numbers as well, the volatility is -- in 1 quarter, you see a 10%, 15% increase. In the other quarter, you would see a 2%, 3% decline. So -- and all those are in that range of the $10 million. So the difference is the 100,000. And that actually shows -- in terms of -- when you translate into percentage terms, it looks really large for our size. Our objective is to try and see what we can do to build our scale to extend the -- these small changes here and there doesn't show us that it's volatile.
So our focus would be get more numerous number of smaller clients or scale the exact planning?
No. We are looking at winning larger deals. That's the focus because that is what will actually help us in also diversifying our risks as well because our challenges that we have the top 5 -- if you look at the last 3 years, the top 5 plan contribution has come down from 61% to close to 53% now. If you add more clients in that 1 million range, it will help us because -- our focus is not a very large client, but at the same time, not small clients either.
[Operator Instructions] The next question is from the line of V.P. Rajesh from Banyan Capital.
So Balaji, a question on the big deal you referred where you are hiring or you are going to deploy 120 people. Which geographic region did it come from?
So this was signed by us directly in the Asia Pac region. But the client's geography is across the globe. So this is a large global client. And this 120 also is going to be over the period of next 2 quarters. It's not one shot. But the client geography is actually U.S., India, APAC and Australia as well.
I see. And what is the duration of the project? Or this could run into multiple years?
As of now, 2 years is what we are expecting. But if we do this well, then I'm sure it will continue beyond that as well.
Right, right. Congratulations. That's wonderful. My second question is when you said Rajesh is looking to double the capacity here in terms of number of people, what is the time frame for that?
2 years is what he had set for himself.
Okay. So then could we assume that the revenues will at least go up by 50%, 60%, even if it doesn't go in proportion?
It should be up.
Okay. Okay. And then as you were talking about winning some scale, why not acquire something smaller in the U.S. which gives you the capability? Because we are seeing other software companies doing like that. So any constraints? Or what's your thought around that?
So we had actually -- based on the group's performance and some of the constraints, we had actually put on hold any inorganic growth opportunities till the beginning of this year. But we hope to restart some of those, at least thought processes, starting from -- during this quarter. And that is certainly one of the options in our mind. But we also need to figure out, based on what we have as cash of -- the group infusing cash, because if the group were to buy it, it may not get integrated with this entity alone per se. So we're trying to figure out what is the best way to use our cash as well.
I see. And the second, one question on the increase in the other expenses. You called out 3 things. One is the purchase of software and the onetime marketing expenses. Can you just quantify those 2 things?
If you look at -- okay, the increase in software expenses, it is in the range of around -- compared to what we had in the last quarter, this quarter, we had an increase of around INR 10 million increase compared to last time. And with respect to the marketing expenses, that -- from the last year then, it has increased for most by around INR 20 million. That is the range we are talking about.
Okay. So INR 1 million and INR 2 million, right? That's what you're saying.
Sorry, INR 10 million and INR 20 million.
INR 10 million and -- around INR 20 million, actually, not INR 2 million, marketing and...
Yes. Okay. Okay. Okay. So that explains the majority of the difference. All right.
Yes.
And in terms of margin, do you think -- in the next financial year, you guys, assuming there is a revenue growth, therefore, you can sustain margins over 20%, EBITDA margin?
We are targeting approximately 18%, Rajesh. So that's what we are targeting because given that we have to hire, and mostly, the new deal that we have been -- which we have won and the deals that are there in the pipeline are capabilities which we don't really have straight away because we don't really have it in that kind of scale. So there will be some amount of expenses that we need to incur in acquiring that particular talent. So we expect that we should be in the range of anywhere between 17% to 18%.
I see. So the thought process is that let's go for the revenue growth at the cost of near-term margin dilution. Is that the...
Yes. All these variations will be for a quarter at best. And if you continue to sustain the growth, then maybe over the next 3, 4 quarters, it should get normalized automatically.
The next question is from the line of Anuj Sharma from M3 Investments.
Yes. Balaji, you spoke about the U.S. market and intend -- maybe saw some traction in U.S. market in this quarter. Was it just one-off? Or you are actually seeing the efforts building up? And second is when we are planning to enter, what segment are we trying to focus for further first [indiscernible] in the U.S. market?
So Anuj, we actually had a couple of clients in the U.S. always. So it didn't really ramp down. The challenge was that in Q2, the calendar quarter Q2 when the pandemic hit, one of our customers actually ramped down or went to 0 almost, from -- close to clocking around 150,000 per quarter. And they have come back in Q4. Once things settled down, they started again in Q4. And apart from that, we also won another insurance customer primarily on automation, which is based on a partnership that we have with one of the RPA vendors as well.So it was basically based on those 2 is what you see a traction in the U.S. market in this quarter -- or rather the last quarter. And the new focus that we are looking at once we have the new sales team, while it will be based on our capability on BFSI, but the person or the group or the team that we are hiring, the 2 people, are not just BFSI. So we'll be looking at QA as a business but may not be just BFSI. But it will still be, I would say, predominantly BFSI.
Sure. And the second thing is you're talking about building capabilities in our business. Sir, do you have -- are you limited to testing and BFSI for looking at adjacencies and capacity building?
No.
Or we are exploring beyond BFSI as a category and beyond testing as a segment?
Absolutely, yes. So it is beyond testing for sure because now that the customers are also in agile mode, so you need to be -- have the capability of software development and testing together. It is not just -- it is not going to be just testing. And beyond BFSI, for sure, because we actually have now 2 customers who are non-BFSI customers as well. And most of the non-BFSI engagement that we are winning are indeed performance engineering, performance testing and security and vulnerability piece. And the other one is -- other one which we are exploring is also the RPA element as well. And now with the new focus of combining the strength of the other entities within India, we'll be looking at outside of BFSI for even the normal testing as well.
[Operator Instructions] The next question is from the line of Sachin Kasera from Svan Investments.
My question was basically related to some of the previous questions when there have been questions regarding the cash as well as we've been talking about the U.S. strategy. Now what is happening is that we've been hearing for a while that our U.S. strategy is depending on the parent. But it's been a while since we have not done into -- how long -- you're citing -- we should take either one vision, either we look in terms of distributing the cash to the shareholder or we'll see something about it. Because we are not getting either or there, nor is the cash coming to the shareholders, nor are we using it for growth because it depends on the parent and parent maybe has its own priority. So is there some sort of -- since you're independent from independent Board, have internally the Board given a time line that -- to the management that is, okay, the next 1 quarter or 2 quarter, decide what you want to do, and then let's move it, take at least one vision either ways?
So the U.S. strategy, like what I mentioned to you, Mr. Kasera, as a response to even Mr. Anuj's question and the previous question as well, while it was dependent on the Board, it all dependent on the group till last quarter. But given the current circumstances and the group is not able to invest or do any inorganic growth in the current situation, we are going ahead with our own plan. And that's what I was telling the team as well, saying that we are likely to have our team focused on U.S. sales on board by April. And we should start seeing some traction with them during the course of next quarter or latest by Q2 of the next financial year.And in terms of cash distribution, yes, it has been discussed in the Board as well. And the discussions have been primarily around how we are going to utilize the cash. Hopefully -- they haven't given a deadline as yet, but they also want us to come back with what the plan is, which hopefully we should be able to present in the next Board meeting. But there has not been any given -- there has not been any fixed time line per se.
Okay. Because we would appreciate -- we would -- at least I look at it for myself. I've been very happy as an investor. If you decide that, okay, that the cash payout is going to be much lower, but then the cash is going to be used for growth. But if you can, as a management, come out with some clarity in the next maybe 1 quarter, over the next 2, 3 years, this is the game plan, we will use the cash either for growth or for payout. Even today, [indiscernible]. So we are less concerned as a shareholder what to do.
Yes, point taken. We'll do that.
And this doubling of headcount that you mentioned, so does it mean that, basically, more offshoring work will come from the parent? Because you were mentioning that the U.S., they are not looking at very aggressive growth acquisition. So -- or is it that they're looking at using the offshore capabilities to get some more deals in Europe and offshoring that to India? What -- how it...
{}Yes. That's to build the capabilities here, which will actually help us to grow in Europe.
Okay. So maybe then the parent can get more aggressive and they can increase their share of business in Europe and then [indiscernible] will come. Okay, okay. But any -- is it going to be like proportionate [ topography ] entities they have in India? Or if you could give some sense. Does it...
The -- we feel that between Chennai and Pune will probably be -- have the maximum impact because that's where most of the QA work is being done right now. And the -- to some extent -- so I would say that it will not be equal, but at least 1/4 of it or 1/3 of it will come to -- should ideally come to the Chennai team as well.And we are actually having our own aggressive work. So if you look at the market spread in our numbers, in our direct market, which is India, Asia, Middle East, has also been growing in healthy double-digits. And we expect to double this business as well in the next 3 years as well. So if you look at what we were in 2019 from these markets to what we are in 2020, there's almost more than 20% growth in these markets as well. So we continue to grow that market and increase the group's footprint.
The next question is from the line of [ Rajesh Chaudry ], an individual investor.
Yes. My question is regarding the dividends and the buyback. Are there any plans for any dividend or buyback in time to come?
Not in -- we'll probably have. We have been discussing this for a while now. We don't have a decision on whether it's going to be dividend or buyback or what we are going to do. But hopefully, like what I told Mr. Kasera as well, we'll come out with what our plan is before the next investor call.
The next question is from the line of [ Manish Jain ], an individual investor.
Yes. I got -- my question was same as last question. So I got the answer. For dividend, we'll have to wait whether it's coming or not till next Board meeting. So that's what I've understood.
That's right.
The next question is from the line of [ Zaki Nassar ], an investor.
Sir, regarding the synergies with your sister organization, that is the one based in Pune, do you think it will be only a distant synergy? Or do you think there's a possibility of a merger going forward, sir?
So the business synergies is what we are looking at right now. So that's what we have been -- we have started working from last quarter onwards. And that's something which we are working along with all the 3 entities, both in terms of utilization of space and utilization of resources across the 3 entities, and of course, knowing the arms-length regulation requirement.From a merger or a legal entity, this one -- I would say, it's a little too early for me to comment. But hopefully, we would know how -- based on how this works, we'll get to know in the next quarter or so.
Okay. No, because, sir, I think last year, before [ XQO ] became [ SQS ] then it was [ SQS], there was already a clear strategy, then you are only into BFSI. Now since you're out of it...
No, no. We are not going to get out of BFSI, sir. That's certainly not there as part of the plan at all.
The next question is from the line of Vaibhav Badjatya from HNI Investments.
So you have indicated quite contrary to our earlier standard, U.S. will be primarily driven by the group. But now we have kind of taken over in that market. And now we'll be doing our independent job in the U.S., right? Is my understanding correct?
Yes, yes.
Yes. So in the U.S., what kind of investments are you looking for? I mean any number that you can give us to build a sales and marketing team there?
So we are looking at getting 2 resources, 2 experienced sales resources who have worked in that particular market, who has proven themselves in that particular market. That's what we are trying to do before April. And apart from that, there is a marketing budget that has been allocated for lead generation and some kind of brand building there in that market as well. So we already have the group's brand, but it's in a different name. So we're trying to ride along with that particular branding name as well.
Sir, what would be the -- on an annual basis, what would be these investments will amount? Broad number that you can give us?
So it's -- if you had to look at it, in a typical sales scenario, most of it is going to be linked to what the outcome is. So the actual investment would probably be in the range of $0.5 million. But the returns will be based on what is the kind of numbers that we are able to generate. It is mostly based on the deals that are signed, and that's what it's like to be.
And you will be just looking for organic growth there or the inorganic U.S.-based acquisition is also on the card? And also color on the kind of segments we are going to focus on, whether it could be BFSI there or it could be something else?
So the people whom we are hiring are not just BFSI, but they have BFSI experience as well. So it could be -- we are not going to be restricting ourselves to just BFSI. But it will also depend on what is the capability we can showcase to them. So we're not going to be focusing only on BFSI, but at the same time, I would say that if you were to go by what we can showcase to the customers, it will be predominantly that -- the BFSI segment.In terms of numbers, it's too early to say right now. I would say that we need to wait for a quarter or so before we can actually comment to whether we -- before we can talk about numbers.
The next question is from the line of [ Ritesh P. ] from Girik Capital.
Sir, just to clarify. Doubling the headcount in, say, 2 or 3 years, is it only for this listed entity or for the India business as a whole?
It's for the India business as a whole. Right now, we are almost 50-50 between what we do and what the other entities do. So even the growth will probably be almost the same.
Okay. And so what kind of investments you need to do to accommodate this kind of a growth?
It's probably be in the way of resources and skills that we need to build -- the competencies that we need to build, which is what we are looking at, at this particular point of time.
Nothing in terms of physical infrastructure is needed?
Not required at this particular point of time. So we have physical infrastructure. And with this work-from-home model, which has proven reasonably well, we feel that we should be able to manage a good -- to manage this growth with our current infrastructure.
The next question is from the line of Bhavik Mehta from Roots Ventures.
Sir, I've joined late. I don't know if this question has been asked. I wanted to understand if you track constant currency numbers for our revenue and EBITDA.
Yes. On account of -- sorry. Balaji?
No. I'm not responding, yes.
Okay, yes. Okay. On a constant currency on a quarter-on-quarter basis, so the growth was negative 3.5%.
Okay. And so the degrowth is primarily for what particular region or any particular geography which we list our budget? Or is that the case or it's uniform? Or any particular region that...
No. Actually, not in a particular region. It is more of overall. If you look at -- if you take this period of time, October, November, December, there will be -- and the holidays coming in, which will contribute to the overall drop in the revenue, it is an expected kind of a trend, seasonal trend, we call it. And also, we have the discount which has been charged because of COVID. That -- both has put in -- that contributed to the degrowth in this quarter.
Sure. And EBITDA on constant currency would be down by how much?
EBITDA on constant currency, we don't calculate because they're only at the revenue level.
Okay. So yes, okay. But I think from next presentation, I think it would be helpful for all investors because most of our revenues are exports. And if we could get some constant currency updates, I think, if it's possible. Okay.
Yes.
Yes. And my second question was around margin. So the entire dip in margin is only primarily driven by the sales degrowth? Or are there any other specific expenses which led to this EBITDA margin fall?
No. Not anything else. Whatever we have mentioned on the call, those are the things that contributed to the drop in the EBITDA.
Okay. And my second overarching question is that, since in our BFSI part, we do mention cards and payments as a stream. And I think we've also gone through the parent's trend report. So I just wanted to understand that when you will say cards and payments, are there any new disruptions that you are working with? Or is it the traditional business within that as well? Because card and payments are a macro thing has disrupted quite a bit and the company being in India, being an Indian entity known for its fintech expertise. So are we delivering somewhat disruptive technologies within that? Or it still remains the traditional card and payment service?
So the work that we do is in line with what the market is because that's the reason why the cards and payments as a segment is going as well. And we are supporting digital payments, more online payments, more real-time payments -- real-time payment projects. And we are working with some other product vendors as well. So even the one which I talked about of a large deal that we signed in the last quarter, which is around the legacy modernization of one of the large fintech platforms.
The next question is from the line of V.P. Rajesh from Banyan Capital.
So Balaji, can you give a split-off of our non-testing versus testing revenue? Or that is not an important metric to think about?
So we are tracking what we call it as a digital revenue, which includes development, automation and specialized testing. And the -- under regular testing automation, the automation of -- automated testing is actually now part of the regular testing is what -- how we consider from the market. So if you have to look at between those 2, it's approximately 75% in the traditional testing plus automation, and the specialized testing and digital services is approximately 20% to 25%. And what was 9% in 2019 and -- which became 24% in this year.
I see. And my second question was when you said 18% margin, were you talking about just next quarter or were you also referring to next financial year?
Yes. I was looking at more from a calendar year for -- it will be more or less in that same range is what we expect. Well, we feel that the next 3 to 5 quarters is what is going to be our investment-heavy quarter, so to say, for building the capability. It's not that we are building any infrastructure or anything of that sort. But building the capability particularly to make sure that we are playing in the digital world, it's going to be critical. And so we will have some amount of leadership hiring and capability hiring which we may have to do during this...
I see. And therefore, in terms of revenue growth, one would assume because you are investing, then there should be a higher revenue growth in the current calendar year. I mean, I think, last year, we are finishing around INR 280 crores or thereabouts, INR 280 crores. And one can expect, let's say, 20% growth in this calendar year over that?
Yes. 15% to 20% is what our expectation is. But of course, we don't really mention a specific number. But yes, that's what our expectation is. 15% to 20% is what our expectation. So if we can get to 20%, it will be great, but the minimum should be at least 15%.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Sure. Thanks, Sanford. Thank you so much. And once again, thanks for all the interesting question and the interest shown on us. Really appreciate each one of you taking time. And hopefully, we should have a better conversation during the next investor call. And some of the action points which I have taken, which is primarily the decision on what we are going to do with cash during the course of -- for the next investor call.So thank you once again, and have a good day. And stay safe and stay out of corona. Hopefully, everybody should get vaccinated before our next investor call. Thank you so much, and all the best.
Thank you.
Thank you very much, sir.