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Ladies and gentlemen, good day, and welcome to Mastek Limited Q1 FY '23 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Ms. Damini Jhunjhunwala, AVP, IR Mastek. Thank you. And over to you, ma'am.
Thank you, Niraj. Good day to all of you. Welcome to the Q1 FY '23 earnings call of Mastek. The results and presentation have already been mailed to you and you can also view it on our website, www.mastek.com. To take us through the results today and answer your questions, we have the top management of Mastek, represented by Mr. Hiral Chandrana, Global CEO; and Mr. Arun Agarwal, Global CFO. Hiral will start the call with the business update followed by Arun providing the financial update for the quarter. As usual, I would like to remind you that anything that is said on this call that reflects any outlook for the future or which may be construed as a forward-looking statement must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included but not limited to what we mentioned in the prospectus filed with SEBI and subsequent annual reports that you can find on our website. Having said that, I now hand over the call to Mr. Hiral Chandrana. Over to you, Hiral.
Good afternoon, everyone. Thanks for joining us. I will take a few minutes and provide a business update and hand it over to Arun to give more details on the financials. We delivered 13.4% year-on-year growth on revenue on a constant currency basis and it was flat on a quarter-on-quarter basis. It was a challenging quarter in some ways where we had a pause in a very large program, healthcare accounts in the U.K. There were a few delays in some decisions on some key deals and slower than expected ramp-ups in couple of accounts. The currency impact was almost 7% to 8% for us from a GBP to U.S. dollar. But having said that, we've got some really good leading indicators that demonstrate the confidence that we have in the business. As you would have seen, our backlog has continued to improve. We grew that almost -- over 30% year-on-year. Our pipeline has been growing steadily. Even through this last quarter, we have multiple large deals that continue to be added in the pipeline. We've hired more than 550 people, including trainees. We've actually consciously reduced the number of accounts that we cater to. This is, again, as communicated earlier, our focus on account mining, our focus on higher quality revenue and almost 50 lesser clients that we're catering to and delivering the same revenue. Our fixed price business as well as our annuity business, which is our managed services business, has gone up significantly. This is again part of our strategy to look at more predictable revenue. We actually delivered 19.2% in spite of some of the -- the operating EBITDA in spite of some of the strategic investments that we continue to make. The talent cost, as all of you know, is going up, but we've made some investments in specific areas as it relates to industry, solutions and geographies, which we'll cover in a minute. The customer demand environment is still looking good for us. While we do see some caution when it comes to deal decision-making, most of the deals that got delayed we have not lost, except for one, which is a small deal. And those deals are taking a little bit longer to convert. Having said that, the wins that we've had really give us confidence that we are able to now compete on a different scale when it comes to large enterprise accounts as well as most complex deals. Let me take a couple of minutes giving you some examples. We won a deal at the University of Nottingham in U.K. This is a relatively new vertical for us in the education sector where we are combining more than 40-plus disparate systems and integrating processes to deliver a digital transformation program. We also engaged with a healthcare provider in the U.S. in the Americas region where we are transforming their entire budgeting and forecasting process using Oracle Cloud. On marquee customers, our Cleveland Clinic, the Abu Dhabi Business of Cleveland Clinic, which is a very global brand, we have now engaged with that hospital chain and looking at a big end-to-end transformation across their value chain, across their different business processes. For a manufacturing customer in Europe, which is in the battery manufacturing space, we actually converted our implementation business as a follow through into what we're calling Cloud Enhancement Services, which is really our managed services business, in the digital and the cloud world. So these are some examples where it's a combination of business process transformation, combination of digital engineering projects, combination of where we are trying to convert some of our existing implementations into managed services. Our U.K. public sector continues to show good momentum. While we have grown in our current accounts, which is Home Office, HMRC, there is a new framework called DSP, which is the Digital Specialists and Programmes, which we've gotten shortlisted among some very key suppliers and that should give us access to a multi-billion-dollar framework set of opportunities in the next few years. This is something we communicated in the Investor Day in April as well that we have a seat at the table on some very large frameworks which continue to give us some predictable and annuity revenue. We are very excited to bring MST Solutions into the Mastek family. MST Solutions is the acquisition that we announced earlier this week. They are a sales force consulting and integrator which has really demonstrated unique capabilities, particularly in healthcare, state and local government, manufacturing and financial services in the Americas region. We've been looking for assets and acquisitions, as you know, in the cloud platform space, in the CX space and in the data space. And this fits us very, very complementary to our digital engineering and cloud transformation that we currently have in Mastek. The cultural strength of the company is also very synergistic. We have 250 employees in India and 75 in the U.S. And we believe that this combination of Salesforce and our capabilities in Mastek will give us a seat at the table on front office to back office transformation engagement which we have been seeing demand from our customers. As you know, we always had a Digital Commerce business, which was strong, but this capability goes across sales, marketing, customer service, integration and multiple other areas of what Salesforce calls the Customer 360 Degree platform. It's a very big economy where Salesforce is $25 billion to $50 billion as a company, and we believe there is significant synergies in our existing accounts within Mastek as well as cross-sell opportunities within MST Solution accounts to take Mastek services, both Oracle Cloud services as well as our Digital Engineering services. A little bit about looking ahead and before I turn it over to Arun. We have shared our strategy and the various pillars of our strategy. We believe our fundamentals are very strong still across those strategic pillars. We're focused on making sure that we provide differentiated services as we grow in the Americas market, and we've launched what is something called Glide 4.0. Glide 4.0 is really a framework and platform that will help accelerate not just to modernize and move companies to the cloud, but also help with their innovation acceleration. This combines our cloud transformation capabilities that we have with Oracle and our Digital Engineering capabilities that we've always been good at. Also, we have looked very selectively in our top 50 accounts across the globe and putting together focused account mining and teams that can cater across different service areas in that account. In most of our accounts, we are either present in 1 or 2 pillars. So we believe there is a big opportunity to cross-sell and grow our wallet share in those accounts. Our U.K. public sector, like I said, continues to show good momentum. We are now getting into larger framework deals and even within our own existing accounts getting involved in lot more strategic downstream deals where we've replaced competition in many of them. As we look at our backlog, we have an opportunity to ramp up and cater to some of the existing business that we have won, but we've also got an opportunity to improve and further accelerate our recruiting engine. While we've made some good movements in that area, there's more to do. And we believe that some of the investments that we've put in place, including the fresher hiring, the talent acquisition is going to pay in results in the coming quarters. And you would have seen our attrition actually is trending down. Most of the other companies, I think the attrition is going in a different direction. And we have been able to retain and put some measures to keep the attrition in check. It's still a challenging environment when it comes to talent, but we are getting confident that our attrition going down is -- really showcases that our brand and the career value that we provide to Mastekeers is paying results. As we look at the next 3 to 4 quarters, we have some recovery to do. But with the measures that we've put in place, with the investments that we have in Americas, with the continued focus on U.K. public sector, we believe that we can start looking at leading the industry growth quarter-on-quarter going forward. The demand environment will have some cautionary element to it because of the macroeconomic situation that all of you are aware. So we are keeping a close eye on that. Our Middle East business actually delivered their best order book in Q1. So that's an encouraging sign for us. And with the MST Solutions acquisition and the combined capabilities of Mastek, we believe that there is a combination here which will help us scale in the Americas. With that, I'm going to turn it over to Arun, and then we'll open it up for Q&A.
Thank you, Hiral. A very warm welcome to everyone on this call. I'll share with you key highlights of our performance for the quarter ended 30 June, 2022. The date has been circulated ahead of this call and contains much, much granular details about our financial and operating performance. So I'm going to keep it quite quick so that we can spend more time in terms of Q&A. To highlight, this quarter was a mixed bag, as highlighted by Hiral. While we have successfully concluded acquisition of MST Solutions and signed the definitive agreement subject to closing requirements which team is working to close as early as possible, our quarter was a little bit muted than what we expected. As Hiral mentioned, it was more driven by one of our clients in U.K. healthcare which has gone through certain reorganization between multiple departments, which led to some pause in ramp which we anticipated. Again, we expect in a quarter or 2 for it to streamline and we'll get back to same run rate with the same customer. GBP depreciation which has been led by a macro environment has also impacted our USD/INR revenue. It's basically because 65% plus kind of a number for Mastek comes from U.K. market. And hence, the optically in terms of U.S. in terms of USD and INR revenue, we see quarter-on-quarter a little bit more impact. However, in terms of constant currency, we have delivered 13.4% growth year-on-year, while flat quarter-on-quarter, delivering INR 570 crores for Q1, and the detail is mentioned before. EBITDA margin stood at 19.2% versus 20.7% in the previous quarter. Margin was also impacted by the currency GBP to INR, as I mentioned, more than 65% of our revenue comes from U.K. market. Increased salary levels driven by supply side challenges as we continue to ramp for the cadence which we had in last 2 quarters. The utilization also got impacted because we continue to hire the right talent as we have quite a strong order backlog and healthy pipeline. PAT stood at INR 84.4 crores, which is 14.2% of our income versus INR 88.2 crores last quarter, which was 14.7% of our income. Gross cash stood at INR 665 crores versus INR 794 crores in the previous quarter. Cash net of debt stood at INR 290 crores versus INR 600 crores in the previous quarter. We saw some increase in DSO this quarter, which was more led by some seasonality in a couple of customers and certain contract signature and much is going to Mastek. We believe this is one-time. And in the next 20 days, it will settle down as we start reporting quarter 2. On the business side, we added 33 new clients during the quarter. So client addition continues in the range of 30 to 40 every quarter, which is again a good sign. In line with our strategy 2025 where we emphasize that we are going to focus a lot on Fortune 1000 customers as a base, I would like to mention, we have increased that base to 21 versus 19 in the previous quarter, moving in the direction as we laid out in the strategy 2025. Headcount stood at 5,553, net addition of 576 resources during the quarter. Acquisition of MST, as alluded by Hiral, is a strong capability addition which further strengthens our integrated offering and U.S. base at the same time, leading to increasing deal sizes and getting growth momentum in coming quarters. Thank you all for your continued support as we deliver strategic outcome outlined in Vision 2025. Handing back to moderator to open the house for Q&A.
[Operator Instructions] The first question is from the line of Mohit Jain from Anand Rathi.
So sir, first was related to U.S. Now while our commentary remains positive, but last 3 quarters or so, we have been more or less flattish in terms of revenue bookings. So what is happening here and what has changed in the last one year in terms of either deal pipeline or deals won? And how do we see it going forward in terms of organic growth?
Mohit, there are 3 different parts to this. As we've communicated in the past, the approach that we had before in U.S. was really a project-based approach and an implementation-based approach. So what that means is we should deliver a project and move on or deliver an implementation and move on. The change that we've made in the last 6 to 9 months has really put some structures when it comes to account mining. There's about 20 to 25 accounts where we believe there is significant wallet share increase that is possible. Now some element of rationalization on the account has happened as well, because there's no point going after an account which is never going to grow beyond 1 million. So we've taken some tough calls and make sure that we're going after the right logos and right accounts. So that account mining approach does need some level of investment and time as we start looking at the wallet share, the spend across one area. So that would be one big change that we've made. The second change that we've made is in all the places that we've done implementations as well as projects, we're converting those engagements into managed services, which we are calling the Cloud Enhancement Services, because all the work that we do is in the digital SaaS or cloud space. This is important because our stickiness in the account goes beyond just the project of implementation. We are now there longer in that account and are able to not just deliver what we have scoped for, but start cross-selling other areas. Classic example is a company called LHC Group, which is in the healthcare provider space. They interestingly recently got acquired by UnitedHealth, which is obviously a very large company in the U.S. But we started providing them with Oracle Cloud Implementation Services, moved into the managed services through our Cloud Enhancement Services and now starting to look at integration, data and other surround services where our wallet share in the account has improved significantly. So that's the second element of it. The last part is in terms of new logos and the hunting approach. So our alliance-based approach in Oracle continues to be the momentum that we have. However, as we look at enterprise accounts and as we look at larger more complex deals, the influence that Oracle would have in some of those accounts and deals reduces. So we are consciously investing in building direct relationships with these accounts and taking much more holistic offerings. The front office to back office transformation is one example, but there are other areas where we look at not just a single pillar solution and combine our various service offerings as we start to open even new logos. There are 4 or 5 additional platforms beyond Microsoft, Salesforce and Oracle, these are the 3 that we've been focused on, that we've started looking at in terms of opening up avenues, namely, UiPath, AWS as well as Snowflake. We believe that this gives us the focus as well as diversification of service offerings to take to the U.S. clients. Having said all that, it is right, Mohit, we would have wanted to see a lot more growth in the Americas market by now. I would say they are sort of behind by a quarter where we are starting to see lot more deals which are integrated, starting to build relationships in those accounts, but that is starting -- I mean that is not completely paid fruition in Q4 and Q1. Of course, with the addition of MST, we expect that to take it to another level because it opens up another avenue for us because Salesforce is almost present in every existing account of ours in the Americas. So those are some of the things -- I think there's some disturbance, but let me pause there. Mohit, hopefully, that answers your question.
No, I was saying, I was -- my question was more related to organic growth than to the acquisition because those revenues will come through as you integrate. It was more like when should we expect organic growth to pick up? Is it like are you guys likely to take 2, 3 quarters, one quarter depending on your deal pipeline? How do you see it moving?
Based on this, I would say, in the H2 timeframe, which is really Q3 and Q4 timeframe, we expect a decent term both on order book as well as revenue growth, Mohit.
Understood. And sir, second was on Healthcare & Life Sciences. So now we have this one program which is essentially from the government, which you mentioned in the presentation as well. So how is the split between government, private and how are the growth rates moving between the 2 so that we can possibly assess how that vertical is like to move ahead?
The account that had a pause and the program impact is one single account where we actually ramped up significantly in Q4. So it was unfortunate direct hit where we had to pause and that's reflecting from the Q4 to Q1 numbers. Our healthcare business, Mohit, as you probably know, is split between 3 geographies. We are working with some key providers and hospitals in Middle East. We also work with medical devices as well as healthcare customers in the U.S. Both those have actually shown some good traction in terms of pipeline and order book. The reduction that we've had is mostly in the U.K. account as it relates to healthcare.
So like are we done with it or should we expect something in 2Q and then we expect it to move up?
For that particular account, we see some level of stability. In fact, in that same account we have now 2 or 3 new deals. So hopefully, if we are able to convert that that should reflect the growth path in H2 as well.
In H2. And sir, last question for Arun sir. The tax rate was little high this quarter. So what should be the recurring number for FY '24 or '23?
Mohit, because this was one-time between cross-country, some tax paid couldn't be realized, we expect 24%, 25% is a good range as we go on a normalized basis.
24%, 25% for FY '23, right?
Yes.
Next question is from the line of Debashish Mazumdar from B&K Securities.
Just 3 questions from my side. First one is related to the healthcare clients that we are talking about. From the numbers, it seems to me the healthcare clients where we have seen the ramp down is from the private Europe side. Is my understanding correct?
Debashish, it's the U.K. market. In U.K., we are not working with any private sector, it's mostly the government that runs the U.K. healthcare. So it's really the overall public sector in U.K., not necessarily private.
So basically, why I'm coming to this confusion is if I see my government and education performance in this fairly well, whereas the U.K., Europe as the market has come down. So I thought that it may be a private client that is there...
Yes, yes. So you're right in terms of how we classify it. The government and education, the line item that we provided as the spreadsheet, does not include the healthcare account that were essential. That is as part of the Healthcare & Life Sciences. But the account that we are referring to is the large U.K. healthcare account, which is one single account, which is basically funded by the government. But we classify it under the Healthcare & Life Sciences.
So is this ramp down has more to do with the current economic uncertainty or it's a time specific issue?
So this particular situation is a little bit unique and unfortunate. We won a very large deal 6 months back, 6, 7 months back and we were able to really ramp up. This is an account that we've been looking for almost 20 years. So it's a very stable account in the sense we're doing a lot of transformation projects. But the particular deal that we won is really what got impacted because there was a leadership change. And that leadership change essentially combined 3 or 4 different departments in that account. And really for the pause, not just a large program, but a couple of other programs as well because they were rethinking their entire strategy for how they want to deliver some of that output. So it's really led to not necessarily the macro environment, but a particular leadership change in that account.
The second question I have is the U.K. Europe market macro uncertainties that you have already articulated about. And it's not only you, even your peers are also talking about it. So do we see this decision delays or deferment both in government accounts and private accounts or that is specific to the private accounts?
See, the government space normally does have a delayed decision-making cycles, but that's something that we are used to because we've been working there for the last 20 years or more. So there, there is a longer cycle just by the nature of how that works. In the -- so the delayed decisions on some of these deals that we're referring to is in the private sector, both in the U.K., Europe, but also in the Americas. The good -- the part of the good news is that we're not losing those deals, right? So those deals, some of them are still active, but most of them are selective. But yes, the environment caution makes us feel that we will see delayed decision-making cycles at least in some programs. Customers are probably going to even prioritize which programs that they want to fund. And so eventually, we might see some of that as well. Right now, we're not necessarily seeing any cancelled demand. It's more in terms of deals being pushed right shifted.
One last question on MST acquisitions. If I see the revenue per employee of this target company, it's around $90,000, whereas you mentioned that around 250 employees are at offshore level. So just wanted to understand this. Despite such high offshore presence, how can the revenue per employee is so high? So if you can clarify those numbers?
The Salesforce ecosystem, as I mentioned earlier, is no longer one particular technology. It really cuts across the Customer 360 Degree platform. So there's some high-caliber architect and some very strong functional and process experts that are required to deliver these program, because we're talking about business programs across the sales division or the marketing division or even in the mid-office. MST also brings certain unique industry solutions. So there is a platform that Salesforce has called Vlocity. And MST has been able to really build certain unique capabilities on top of Vlocity. The certifications that it takes in this environment and this ecosystem is also not easy to get. MST has again been able to certify about 600-plus resources. So the on-site rates and some of the value addition that they're doing is reasonably high, and that's really the combination that they are seeing -- that they're probably seeing in the revenue per employee.
And Debashish, to add there, when we have seen the data as part of reporting, that is just the employee's data only. However, like any other IT companies, they are also -- seeing the current environment, they are also reporting to certain subcontractors, specifically onshore, to manage this revenue. So that is also included. So maybe once we start getting into our reporting structure, we'll get much more clarity in coming quarters.
That clarifies this disconnect. Just on this MST business model, do we feel in future that the margin of this business can go up because of this offshore shifting of contracting cost reduction? And if you can help us with what is the current margin level that we are working with, I mean the MST's part?
So Debashish, we have also assumed certain improvement definitely which has to be done in line as we get into Mastek structure. And definitely, there has to be certain investment which has to get into because as they become part of Mastek, lot of synergy has to be extracted and the same time the strategy to get into more of enterprise customers is very, very important, considering the kind of capacity they have built in. Balancing them out, I believe their existing margin profile, which is in line with Mastek, we'll continue to maintain that.
I think the only thing I would add is that the Salesforce engagement start with UX, design, blueprinting goes all the way to implementation and then of course managed services with all the different clouds that I mentioned earlier. So there's a really good mix of different skills that are needed to deliver these engagement and that will be a continued skill transformation project that MST Solutions have done well. We also have about 8 or so Fortune 1000 clients. So that's another interesting addition to our portfolio in the Americas and should help us raise the gain when it comes to larger deals and engagements going forward.
Next question is from the line of Nilesh Jethani from BOI AXA Mutual Fund.
My first question was on the U.K. political scenario currently panning out. So how confident are we with regards to growth from the next 6 to 12 months perspective in U.K., especially we have a lot of orders coming from government?
Nilesh, good question. We have been following that closely, as you can imagine. We, over the last year, have been able to convert many of our engagements into a bit more longer term predictable engagement, particularly in our top 4 or 5 accounts, which constitutes almost 80% of our U.K. public sector revenue. So that gives us confidence that those programs are likely to continue irrespective of the government and the political environment. These are mission-critical infrastructure programs where they seem to have visibility over the next 2 to 3 years at least. Having said that, any new government change brings some level of new initiatives or maybe rethinking of some of the existing initiatives. The DSP Framework deal that I was referring to earlier is one such opportunity where we feel that there's going to be a lot more downstream possibilities for us. There is also a view that the civil service that are there in U.K. is likely to go down through this new government change. And that potentially provides -- presents us an opportunity. So as of right now, we don't see the political scenario impacting us in the core secure government services business that we currently have.
So how you bifurcate the mission-critical and the other projects?
So as we look at the different process areas and initiatives, the work that we do for customs, borders, immigration, biometrics, some of the work that we started doing with the police protection, cyberterrorism protection, those we are considering critical or of national infrastructure importance which are critical to the government. There is always going to be some element of legacy platform moving into a new technology platform which we may or may not directly correlate to some of these processes. So that would not be critical. But many of the different areas that we're touching, whether it's in Home Office or HMRC or Ministry of Defense, these are of national importance.
So say, we would have INR 100 of order in last 12 months, what percentage would be with the mission-critical categories you just mentioned?
I think it's tough to qualify or quantify that. But I would say -- Arun, maybe if you have a different view, but more than 80% of the work that we do for U.K. public sector, I'm talking about the secure government services, is mission-critical.
And just adding there. The kind of scale and size of U.K. public sector is quite significant. We are still a part of it, quite smaller. Opportunity which we see is multi-fold. As you penetrate and make your relationship much more deeper, there are more than enough projects where you have your skin in the game and you start participating and ensuring your growth. So really, I won't be worried as a combination of first because the investment will go down, that's not my worry because the size and scale itself gives more than enough opportunity for us to grow.
Some of it is like related to even core areas like safety and protection. And like I said, customs and borders and immigration. And so the workflows, the engineering work and some of the platforms that we are supporting, really kind of run the government directly indirectly. So that's really what falls under that national infrastructure that is important.
My second question was on the USP. So there has been some degrowth now. Just wanted to understand was the management bandwidth involved on the acquisition side to that degrowth, because clearly, the most of the peers in the IT sector has reported strong growth in the U.S. So what led to this some minute or slight decline in USP?
Nilesh, your first part of the question -- your voice was little bit feeble.
Nilesh, can I request you to speak through the handset, your voice is coming very feeble.
So just I wanted to understand on this USPs. So was the management bandwidth involved in the acquisition process which led to some decline or the growth -- decline in the revenues on the U.S. side or the general macro which has impacted the growth over there?
So Nilesh, we realigned our structure in the Americas and actually in some other parts of the geographies as well where there is a dedicated team, which is called the growth office, which includes strategy, some of the M&A as well as the service line development and partnerships. And this growth office and strategy office is really what focused on the M&A. In any acquisition process, there's always going to be some level of distraction. So that's definitely there. But the team that is working on the acquisition and the integration as well is a separate team from the Americas go-to-market teams. So that's a conscious call that we took and the conscious investment that we made because we didn't want to distract the go-to-market teams in the Americas region from the acquisition because that does take time, as you know, and it has a cycle of its on. Some of the other things that I mentioned earlier with some of the deal decision delays impacted our Q1. Our in-quarter execution could have been better. In some cases, there was a dependency on Oracle for us to close the deal. So that led to some decisions or delays as well. But in general, the pipeline and the momentum is picking up. We are having lot more -- one of the gauges I have is the number of CIO conversations. So we're having a lot more CIO conversations now compared to 3 months or 6 months back because we've invested in that account management and client partner roles. So I think give it a couple of months. And like I said earlier, in H2, we expect to come back very strong on Americas even organically, because with the inorganic, we're expecting lot more cross-selling as well. But both organic and inorganic, we have high expectations from the Americas region.
And one last question from my side on the employee addition. So employee addition number is significantly higher when I see the revenue growth outlook. So how to read through this, the employee addition number versus the revenue growth number?
So Ashish, definitely, there are 2 combinations. One, we have to keep hiring the right resources. Again, these are certain skills which are linked to our pipeline, as we are seeing good healthy pipeline, as we speak in addition to the strong order backlog, Ashish. So our hiring is quite aligned to that. In addition to this, we have also continued hiring freshers because unless you have those freshers embed into your system, your pyramid doesn't work effectively. So you cannot do just-in-time hiring. And the hiring is completely planned for the next 9 months of revenue forecast which we are working.
So I mean, we want to make sure that we are taking a medium-term view here as well. The skill transformation that is needed in some of the newer technologies and some of the newer demand areas is not an overnight solution. It does take some time to get the freshers, get them trained. And we're seeing continued demand in certain specific areas. And so that, in some ways, this is the additional headcount that we've added. But some of them will take time to get fully productive as well. So when we look at the demand environment, we feel that there's an opportunity to provide resources just-in-time. That way, we're easily able to ramp up in short-term notices versus having a gap of 1 month or 2 months from the order win to the ramp-up.
[Operator Instructions] Next question is from the line of Zubeyr from Mondrian Investment. The line for the participant dropped. We'll move on to the next participant. Next question is from the line of Mihir Manohar from Carnelian Asset Management.
I wanted to understand, in your opening remarks, you mentioned about the DSP program, specifically in the U.K. public sector side which will give you opportunity to participate in the multi-million dollar deals. I mean, if you can throw some more light into this and what are your strategies specifically to dissect this program? What is this program, in which area? And how are you strategizing that? And second question was on the cash timing. How we are having INR 650 crores of gross cash, and we are supposed to make payment -- part payment for Evosys and also for Meta Soft? So how should we read this situation? Those are the 2 questions.
Let me answer the first and then I'll hand it over to Arun on the second. So the DSP program and the framework is really about -- again, like I said, Digital Specialists Programme, that's what it stands for. There are multiple phases here, what they call multiple lots. And the first lot will be about essentially key transformation initiatives and people and processes that they are trying to change. This is related to the mobile operations and mobile platforms as well as the e-commerce platforms that the government is funding. It cuts across multiple departments as well as multiple phases. The Digital Specialists Programme has some more end-to-end nature of demand. So as they look at the research, design, all the way to testing and implementation. The Crown Commercial Services, this is information that is publicly available as well. But we are looking for certain capabilities, certain specific capabilities, which they're calling digital specialists. It could be involved in one of those areas or it could be involved as a full stack in multiple areas. So these are the 2 components. The central government and the health team as well as the defense teams will all kind of benefit from this. And so it's a more larger kind of vehicle that's across multiple divisions in the U.K. government. So Mihir, hopefully that addresses the first question. Arun, if you want to answer the second.
On the gross cash, yes, it's $85 million plus we have as of June end. But Mihir, again, we need to be mindful, as I mentioned, there's some timing difference because of which DSO was impacted and we believe to come back to our quarterly run rate to keep generating the healthy cash. So that will continue. However, this particular MST acquisition is funded by internal cash and plus a portion has been through borrowing. So just to give you a quick split. $80 million is the upfront consideration. We are planning to borrow $30 million as a loan which we'll be using to part fund this particular acquisition and $50 million will be the internal cash which will be used.
And just on the first question, I mean, on the DSP side, if you could quantify the opportunity. I understand it is difficult, but if that could be that?
Sorry, Mihir. Quantify the...
DSP opportunity.
I mean, the overall -- it's tough to quantify the overall value of the framework, as shared by the Crown Commercial Services, $4 billion across 3 to 4 years. It does include roughly about 50 suppliers. And you probably might know the various frameworks that were earlier the Dark Framework, which had a lot more suppliers. So this has 50 suppliers. The 2 lots that I was referring to, the digital programs and digital specialists, there's only 20 suppliers that got selected in both lots. And so we are in that 20 list. Now obviously, it's tough to quantify which ones that we would win, but this is the overall pie and the overall timeframe of the programs.
Next question is from the line of Sachin Kasera from Svan Investments.
My first question is regarding the comment -- the impact that we had in the U.K. performance. You mentioned it was because of our large contract in the government which could not be ramped up due to leadership change. So is it that it's got -- need to be going for rebidding or is it this is a temporary pause and maybe after a quarter or 2 will start getting executed?
So Sachin, just a small clarification. This particular account, we had already ramped up in Q4 for this particular program. So it was not like we could not ramp up. We actually did a decent job in ramping up in Q4. That particular program was paused. And that's what led to -- I mean, like I mentioned, the leadership changes and the consolidation of various departments. So as of right now, it's a pause which they have said is of 6 to 8 weeks, which sort of ends in the July timeframe. Having said that, the way that particular program will come back will be in a different avatar, if you will. So it's not going to be in the same form as how we had won it. It will come back in a slightly different set of components with some of the decisions that they've made. In that same account, we are seeing 2 or 3 different areas which we have developed pipeline in. So this is still a large account for us and runs the entire healthcare in the U.K. So that particular program will come back in a smaller fashion and the efforts are on in building or converting some of the pipeline so that we can get back, like Arun mentioned earlier, to the previous run rate. But I think it will take at least a quarter or 2 for us to get back in that particular account, the run rate that we had in Q4.
When you say different avatar, does it mean that there is going to be some impact on what you were looking earlier in terms of weak revenue from this contract or overall size of the contract? I mean, if you could give us more details when you see coming in different avatar now when we start alone?
Those exactly the 2 things you said. So one is, actually, it will come -- specifically there was a particular solution direction that this program was conceived by or conceived in when we had won it. And when I say different avatar, it's now going to be a little bit more standardized platform versus developing a custom solution. So that's the one piece. The size of the program will be reduced a little bit and it will actually be spread into multiple phases, because given the change in direction, we have to actually go through a little bit more design and blueprinting before we can actually develop the full functionality. So both ways in terms of interim rate and the timeframe as well as on the size as it relates to this particular program. What I was referring to also was there are couple of other initiatives that are going on in that same account, which we're also engaged in. So that is independent of this particular program.
And on the currency, you mentioned that we have been impacted because of the cross-currency and the weakening of the pound. So from what I can see here, roughly around GBP 10 million hedged. So how are we approaching this? Are we looking at seeing the current scenario increasing the hedging significantly or we will play as it goes by?
So Sachin, we always take hedging and we continue to maintain our internal policy and guidance for that. However, as you would be aware of, in our U.K. business, specifically Digital Services business, significant portion is onshore. There the hedging is not possible because how we are structured, only the services which is rendered from India can be hedged. So that portion of hedging continues. And we ensure our pricing as well reflect going forward the revised currency model. So that's all going to pan out, Sachin, in medium to long-term.
The second question was on the acquisition of MST. So from what I can see in the media, Hill mentioned that in our vision of $1 billion, this entity should contribute between $180 million to $200 million. So 2 parts to that. One is that, that's from a little long-term. How long will the integration take? And can we start seeing, because if you're talking about $180 million to $200 million from this entity, we are talking about significant scale up from the existing run rate of $30 million. So one, when is the integration expected to happen? And when can you start seeing this ramp-up in the MST numbers?
Participants, please stay connected. The line for the management dropped. [Operator Instructions] Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.
Sachin, sorry about that. It looks like we got disconnected. You're able to hear us now?
Should I repeat my question or you were able to get it?
No, I got the question. When we were starting to respond, we got cut off. Your question is about the Salesforce growth of the MST growth as far as $1 billion. So I mean, there's some short-term things that we are doing. The integration plan, we have got some good learnings from the past. We took a lot of efforts to prepare well when it came to synergy, account planning, synergy planning or integration planning. So over the next 3 to 6 months, we should start seeing that and we expect most of the integration to be complete before the end of this fiscal year. The key thing though is that we're not going to wait for that. The account planning and cross-sell synergy is starting right away. For example, I'm headed to Chennai later today. Our account teams are meeting in August second week. We're starting to share. We're actually working already on one deal together. There are about 25 accounts that have been identified. Some in U.K., but most of them in Americas. And these accounts are a combination of existing Mastek accounts and a few MST collationed accounts. So a lot of planning has already gone in even before the acquisition. And of course, we have to execute that now with the account teams and the field teams. The reason we are bullish about the medium to longer term as well, just because of the sheer spend that Salesforce ecosystem has and the talent gap that we see in the market with our customers in this specific area, across the different Customer 360 Degree Cloud. So even if we have a fairly organic growth on the Salesforce ecosystem side, that revenue should increase maybe 10% to 15% ahead of industry growth rates. Having said that, the areas that we would like to amplify that is with some of these integrated deals and offerings. And so that's really where we see this overall business becoming $150 billion to $200 billion over the next few years.
And just one last question for Arun. When we see the geographical reporting both in North America and the other segment, there is a significant correction in the EBITDA margins. So is it mainly because of investments or are there certain one-offs? And when do we see the profitability improving these 2 geographies going ahead?
Particularly if you're speaking about the North America, they have a combination of both. One there is one-timer, which we expect it to normalize in quarter 2. And second, there is investment which continues, Sachin, as we are focused and we believe there's a significant opportunity in the market to grow those investments also has some impact. But predominantly driven by one-timer.
Sachin, sorry to interrupt you. I request to come back in the question queue. [Operator Instructions] The next question is from the line of Amit Chandra from HDFC Securities.
My question is on the U.K. government digital spend. So seeing the data, so the government spend on the digital side has come down significantly over the last 2 quarters. So is it only because of the political uncertainty or turmoil that is going there or is it because of the uncertainty in the various departments? And also, our growth over the last 2 years has been largely driven by the traction that you've seen in the U.K. government side. So with the spending coming down at an aggregate level, don't you see that the organic growth that we earlier thought of is at risk?
So Amit, maybe just to clarify a couple of things. Our U.K. public sector, I'm talking again about secured government services, the non-healthcare account, the rest of the secure government business, that has actually continued to show some good momentum. Now if you remove the currency impact from that, the business actually has grown. You can see that reflected both in the government and education industry slicing as well as in the digital engineering slides that we provide. So both ways, the digital engineering business that we do for the U.K. public sector has shown growth. Again, if you remove the currency impact, I'm talking about constant currency. So yes, from that perspective, we don't think the political environment has impacted us in any way. The decisions and the delays in some of those decisions could still be in place and the recycles do take longer. And in some cases, some of these larger framework deals have longer cycles just by the nature of it. But at an organic level, particularly in the U.K. public sector, we don't see that dramatic a change, at least from the current lens that we have, both in terms of our existing accounts as well as the growth that we see in those accounts.
So sir, in the U.K. government accounts, so what is the average tenure of a deal? What is the annuity component? And if we don't see refilling of deals because the spending is coming down, because of uncertainty and utilization making, how do you see that second half can get impacted more?
Some of these engagements that I was referring to earlier, Amit, some of these engagements we've been able to convert them into reasonably long-term predictable engagements. So while some of the contracting used to happen in 3 months, 6 months before, we've been able to take and convert them into a one to 2 year engagement, which gives us a little bit more predictability. Also like I was mentioning earlier, you would have seen our fixed price go up, our annuity business go up. So we're consciously making sure that some of the places where we've developed the platform, as an example or done some engineering work or implementation work, we're converting that into managed services as well. So yes, I mean, there is definitely a macro environment which is so unpredictable with inflation, with some of the uncertainty, with the war that continues as well as the political environment. But for the engagement in the accounts that we are running, we still see stable growth from that sector. The impact that we saw in Q1 was really from the healthcare account in U.K., like I said.
And sir, my second question is on the MST acquisition. So obviously, it's a good acquisition and good add-on to our portfolio. But if I see the 3 year CAGR, it's around 11%. I know it also includes the COVID year. But in terms of the earn-outs that we have set for the company is around $35 million and last year growth rate is around 20%. So what kind of targets are we actually looking out in terms of the earn-outs to actually get paid?
So again, it's quite initial stage as we speak. The targets have been staggered and the payout is also staggered accordingly. So as it has been mentioned, earn-out could be in the range of $0 million to $35 million. And it has multiple both top-line and bottom line which is attached to it. While we want them to achieve the maximum number, to be honest, because if they meet their numbers, it means our acquisition is successful. But again, we are still evaluating in next 6 months how it's going to develop.
Also, Amit, like you rightly pointed out, there was a COVID timeframe in between and the company consciously pivoted towards some large enterprise accounts. We kind of liked the rhythm of the company because that goes deep in some of these accounts and actually are expanding into different divisions, different Salesforce clouds. We've done about 6 customer reference calls prior to the acquisition. And all those 6 customer calls indicated more opportunity just within the Salesforce ecosystem itself, plus potential other areas as well. So the mining and the deep relationships that the company has was the pivot that they made in 2020 during the COVID year versus going into mid-size accounts or smaller size engagements. But from a future outlook perspective, the pipeline looks strong, the team momentum that they have look strong. The other thing that we've not talked about very explicitly is that they have a high focus on state and local government in the Americas. This is an interesting market which we were evaluating in the past, but it was not very easy to get into. So MST has been able to develop relationships at the government agency level in certain states where they're actually digitizing multiple process areas; fire and forestry, economic development, even land and water resources which is challenging in some states like California. So the spend of the state and local government still continues to be very high. And even with a recession type of environment, we like the healthcare and state and local government focus. So that's another thing we found attractive in addition to the Fortune 1000 clients.
Amit, sorry to interrupt you. I'll request you to come back in the question queue. [Operator Instructions] The next question is from the line of Zubeyr from Mondrian Investment.
Sorry, I got disconnected early. So a couple of questions from me. First of them would be a clarification what Hiral mentioned in the introduction. So Hiral, did you mention quarter-on-quarter you're expecting industry-beating growth? Is that from next quarter or you mentioned normalization in the next 3 to 4 quarters?
The latter, Zubeyr. Next 3 to 4 quarters.
So post 3 to 4 quarters, you're expecting industry-beating growth, quarter-on-quarter growth?
That's it.
And in the near-term, not been pointing the exact number, but just trying to understand what you're expecting in terms of -- because obviously, if you look at the past 2 year numbers, this is probably one of the weakest quarter-on-quarter for you and possibly year-on-year results. So just kind of your input in the next 12 months' timeframe, if you were thinking that?
Zubeyr, we will be back to quarter-on-quarter growth, as we mentioned. This quarter had certain one-timers which were not anticipated. But our backlog, our pipeline looks strong enough. And we believe our quarter-on-quarter and year-on-year growth will continue to be there from coming quarters onwards.
And second, I think one of the participants early asked this question, but just want to ask this differently. If you could help me break down the revenue, I don't know if you quantify it this way, but discretionary versus non-discretionary? I think you explained that, for example, mission-critical is at about 80% of the U.K. business. But overall, do you quantify the discretionary versus non-discretionary? And also, if you could help me understand what would you say is discretionary versus non-discretionary even you think about the services that you provide to your customer base?
Participants, please stay connected. The line for the management dropped. We have the line for the management reconnected.
Do you want me to repeat my question?
Yes, if you can.
I was just trying to understand, actually, one of the participants who asked this question about mission-critical versus non-critical. If I want to understand in a whole, in a consolidated level, if you were to quantify the revenue where there's discretionary versus non-discretionary business? And also according to you, how would you characterize discretionary versus non-discretionary spend in terms of the services that you provide to your customer base?
So again, I think Hiral was alluding into it when line got disconnected. See, again, discretionary spend has to be seen from the eyes of the customers. As we engage, and again, lot of the work which we are doing is not in the legacy space, either these are digital transformation space or in the cloud. And most of these projects drive ROI, significant ROI to the customer whether in terms of them -- basically in terms of helping them to acquire their end customers or whether in terms of cost reduction or in terms of process improvement, which goes in a long way in terms of customer satisfaction, to keep it simple. We have multiple ROIs which can be driven depending upon the projects which we do. So most of these projects have the ROI, significant ROI for the customer. But again, when you get into discretionary and non-discretionary, it depends the priority on the customer. If they are on the growth mindset, any projects which can help them to get their customers will not be discretionary. But they are in the tough time zone where they can't spend money, then definitely they have to balance out which one they want to go for. So it will be difficult really to quantify. But in the space of public sector, Zubeyr, as we answered in the previous one, most of the projects which we do for public sector are in the space of immigration, borders, customs, which are important, very critical because as different countries are restricting their borders or making it much more prune to avoid different kind of issues, and with Brexit coming together, those clearance becomes much more critical and important. So that...
So if -- very quick sort of back of the envelope calculation. So 65% business is U.K., 80% is critical. So can I say largely first do a consolidated calculation that 55-45 would be a good split in terms of the essential work you're doing and the 45 where the customer has more discretion that in a tough time they would possibly try to cut that expense. So all like 60-40, would that be a fair number?
No, I don't think, Zubeyr. Because as I said, most of the work which we are doing is more digital transformation and cloudification for the customer. Calling 40% discretionary will not be a correct answer.
And Zubeyr, maybe just to clarify this, the reason it's tough to kind of -- so if you think about it, a good majority of the work that we do, almost 95% of the work that we do, is in the SaaS, digital or cloud migration and cloud transformation space. And when you look at how we engage with our customers, it's also like Arun was referring to, it's either to improve their top-line, help them get more customers, move their business from brick and mortar to online, increase their customer loyalty, completely transform their value chain processes across different industries. And we tied to business process KPIs across -- even when we do back-office, mid-office transformation, it is related to business process KPIs in terms of improvement or cost reduction or in some cases, top-line. So yes, I mean, it's a little bit tricky to classify that as non-discretionary or discretionary versus non-discretionary because those are all critical for them to run their business.
Next question is from the line of Amit from Care PMS.
Just a couple of points. One on the MST transaction. Did I hear it right that the margin profile of the company is similar to Mastek, which is 18% to 20%?
Yes.
And this earn-out, which is the $0 million to $35 million is all going to be in cash only, right?
Yes, it is in cash.
And these delayed large probability deals, which we are mentioning, is it because of the pricing, is it because of the competition or it's just a global recessionary fear macro issues?
It's not the first or the second. I mean, it's really deals that we had high probability as it relates to Q1 closure -- in early Q1 closures, for example, in the April timeframe. And many of them either got deprioritized in terms of decision-making or some of them just moved and shifted right. Now we have won a couple of them in July, but there are still deals which are ongoing. So the decision-making cycle that we saw in some of our cloud implementation has taken slightly longer than we expected. And that's really what we're addressing to. I mean, it could be due to the macro environment. It could be due to particular customer prioritization. But we have not canceled those programs, the deals are not cancelled. So that's really what's giving us confidence that we still have. In some cases, we were actually shortlisted to be the final and there were some contractual negotiations that had already started as well, which is why we're calling it high probability. So yes, I mean, some of those delays in decisions impacted the in-quarter execution, which we call as book and ship, where you would book the deal and still close revenue in the same quarter, particularly if it's early in the quarter.
And this MST transaction, the leaders of their company will be continuing or now the Mastek leadership will take over, I mean, in terms of the operations in the business, so to say?
No, I mean, all of the leaders will continue. In fact, there is a good strong retention program that is built into the value of the deal. There is some good talent that they have that goes beyond Salesforce actually. And many of them have grown through the architect ranks and program management ranks and delivery ranks. So they're delivery leaders or they're CTOs, the sales leaders and the account planning, the account managers will all continue, Amit.
The next question is from the line of Mayank from Dalal & Broacha.
My first question is regarding the annuity business or managed services. Sir, in the earlier remarks, you had mentioned that you want to focus more on expanding this annuity business. So what is the current contribution to our revenue? And what do we aspire it to be in the future?
It's a good question, Mayank. Our annuity business, relatively speaking, to many of our competitors is very low. And we've moved the needle on that in the last 6 to 9 months. So now we are hovering in the 30% to 35% range. And our ambition is to move that more closer to 50%. What we have done is we've gone to each engagement and each program that we've done implementation. It could be e-commerce implementation, it could be a cloud implementation, it could be a digital engineering program where we've developed the platform and converted them or most of them into managed services engagements. So that's one strategy. We're calling it Cloud Enhancement Services because we believe that in the new world of digital landscape and SaaS landscape, the on-premise type of managed services does not hold good. So where we see DevOps programs or continuous improvement or continuous release programs, it's a very different type of managed services. So we think that there is an opportunity to upset and beat some of the incumbents who are doing managed services the old way. That's another kind of track where we may not have done the implementation, but we can still get the managed services. So as an example, maybe an Accenture or Deloitte might have done the implementation, but we could still get the day 2 services or the managed services in that. And third is, when we go after new engagement, we're actually baking in some of that Cloud Enhancement Services as part of the implementation. In the past, we used to just focus on the Phase 1, which is the implementation. So now our deals include this element as part of the package. Of course, we can't do that with every customer, but that's a conscious effort. So we're approaching it from multiple angles where we can move this from a 30%, 35% type of mix to at least 50%.
Sir, my second question is regarding the funding for MST acquisition. You said around $30 million will be through loans. So what do you expect the annual interest outgo to be on this loan?
So Mayank, it's the loan taken in the U.S. is approximately 190 bps plus SOFR. So we expect 350, 360 bps on an average will be the cost of capital.
And my last question is regarding the attrition. So we are seeing the attrition trending downwards. I just wanted to understand from you that what are we doing differently from our peers that we are able to retain our employees in a better way.
So Mayank, we spoke about it I think about 6 to 9 months back late in 2021 where we essentially started a series of measures to engage our employees in a very different way. As you can imagine, there's a lot of Gen Zs, Gen Ys which are there in the workforce. And they have a very different expectation of how to be engaged. Second is in terms of careers and opportunities. The work that we are doing clearly has cutting-edge technologies, new sort of emerging areas. We're starting to see some work in the data, AI space as well, Web 3.0, Web 4.0. So as we look at newer program, making sure that we are engaging our employees in some of these newer technologies, also giving them opportunities to scale in different areas or even transform their own skills. That's the second part. The third is, just purely engagement with many of the employees. I mean, our leadership team -- my direct executive leadership team is spending a lot of time with employees and Mastekeers directly so that we understand their ambitions, their aspirations, in some cases, challenging them to take on more responsibilities. We have a program called Aspire, which has identified top talent in the company and we are engaging them into strategic initiatives, as an example. So these are some examples of things. I mean, nothing earth-shattering, but making sure that we are continuously engaging employees so that they can deliver better for us as well as grow themselves on their careers as well.
The next question is from the line of Sunil Kothari from Unique Investments.
Sir, my question is to achieve your objective or vision of $1 billion in second half of this decade. This particular acquisition which you feel or are you seeing some entry that we can reach with integration maybe $150 million to $200 million. So no need of any adding or any new acquisition further or how you -- how to understand this?
So Sunil, as part of our 3 to 4 year strategy, we had created a roadmap for anywhere between 3 to 5 acquisitions. And of course, a lot of that depends on the size of the acquisition, the timing, et cetera, et cetera. And this was very, very consciously done in areas where we felt we needed to bridge certain gaps. So the 2 other areas that we have identified as the cloud platforms, this is in the Azure and AWS space and then in the data and automation space. The CX space that we have identified, we believe in that space, this is the right acquisition and we were very consciously going after Salesforce as an area. So on the 3 pillars, we've taken or at least one of them, which is the customer experience, the digital experience, the front-office. The 2 other pillars, we are still very interested. So over the next couple of years, we would be making some more acquisitions. Data moving to the cloud, AI and automation, some of the innovation that is happening with Azure and AWS, those are still interesting areas that we feel could be acquisition candidates.
And sir, my second question is just in one of today's interview you said that this healthcare project, it has some 60, 70 online consultant or engineers. So are we utilizing those somewhere else currently or yet we have to wait for some time?
Can you repeat your question? Sorry, I didn't get it, Sunil.
So basically, I think, Hiral, today's ET Now interview mentioned that we had 60, 70 people on this project, which has been paused, this healthcare project. So what is the status of those manpower, those skills? Are we utilizing somewhere else now or we have to wait for some time?
It is the combination. Some of those skill set has already gone into different projects. A combination of those were also served through subcontractors. And as you don't have those requirements, you let go the subcontractors. It's a combination. I don't see significant talent sitting on bench from that particular ramp issues out there. But yes, as we need, we can always onboard those talent back into the company.
And sir, my last question is this event which has given little major trades and to investors' mind of this healthcare project which has been paused. Do you feel should we -- it should have been announced little early whenever that happened? How do you react to this situation?
So again, Sunil, we were still -- again, as we mentioned, nothing has been concluded yet. The client has got into a little pause mode. They are recalibrating -- as they got merged between multiple departments, they are recalibrating their overall strategy. So again, we are also -- as days goes by, we are also in a watch mode. We are having multiple interaction with them how can we establish the project back, maybe in different avatar, as Hiral mentioned into -- in the earlier point. And also there are multiple new projects which is coming, which can offset some of this impact at the same time. So it's combination, Sunil. And you know, sometimes informing on the real-time basis become difficult because some of the decision-making is always as a part of more discussion and to make things happen in a positive base from both sides.
True. But just one suggestion [Technical Difficulty] to help us to...
Sir, sorry to interrupt you. You've broken your audio.
Point taken, Sunil. We'll take care of it going forward.
The next question is from the line of Ashis Dash from Sharekhan.
Arun, just a question on EBITDA margin. See, the Q1 EBITDA margin is below the company's aspiration level. Earlier you used to say that it would be around 20%. Now you will take the wage revision in Q2. What is the outlook for the EBITDA margin for FY '23?
Again, yes, you are right. But as we mentioned, our endeavor is always to maintain its high-teens. Closing to 20% was always the direction. However, the currency has impacted something which was not envisaged, Ashis. And I've mentioned in my commentary, because since we have significant exposure to GBP and a similar portion of our revenue comes from GBP, negative movement in that section led to some of the depletion in our margin profile. But still, we are -- our endeavor is to maintain in high-teens. And depending upon currency, to be closer to 20% if we can.
And the wage revision would be higher than the last year? The impact of the wage revision?
Again, as I mentioned, we are still working on. Quarter 2 is the cycle when we do the wage release. Still they are under discussion, Ashis. We should be able to give more information maybe in the coming months.
And my next question is on your $800 million framework deal, that is also related to [indiscernible] healthcare. So what is the status? Still we are -- do we think that we will get any new deals under this framework in the near future or it has also stopped?
Ashis, that framework still continues. The 2 deals which Hiral mentioned about that we are quite positive if we are able to convert into Mastek's favor, we'll again -- we'll be able to offset the impact which we have got from the other calls, it's part of this framework. So not only these 2 days, we expect couple of more high-value deals between $30 million to $50 million coming up in near-term in the pipeline. And I said, near-term is between 3 to 6 months.
I now hand the conference...
I know we're out of time. So maybe I'll just take a minute to wrap up. First of all, thank you to everybody, all the investors, analysts and for your support, your questions, very thoughtful questions and feedback. Like I said, it was a challenging and a mixed quarter, but we are seeing some good lead indicators, which give us confidence in the future. I want to reemphasize on a couple of things. Our fundamentals of our strategy, we believe are still in the right direction. Our Oracle Cloud business is still strong in terms of the market opportunity that we have in front of us. The differentiation that we see in our engagement because of the specialist nature of some of the business outcome-focused engagement is still very strong. And we're truly excited about the unlocking of value through the MST acquisition. It's in a space which is high growth. And combined with our engineering and cloud transformation opportunities, the Salesforce ecosystem presents a great opportunity for us to grow in the Americas. So with that, I'd like to again hand it over to the line, but thanks, everyone.
Thank you very much. On behalf of Mastek Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.