Persistent Systems has decided not to conduct campus hiring in financial year 2027, choosing instead to focus on lateral recruitment aligned with client demand as the company works to improve employee utilisation and support margin expansion.

The Pune-based IT services company has consistently added employees over the past three quarters. However, after increasing its headcount by 1,100 during the April-June quarter, its operating margin declined by around 30 basis points sequentially to 16 percent. The company’s total workforce now stands at 28,640 employees.

CEO and Executive Director Sandeep Kalra said the company is prioritising experienced professionals with AI capabilities over fresh graduates.

“We have been hiring, but this is not campus hiring. We are hiring laterals in line with our demand because we want to train people who have the basic skills in AI and be able to move fast in terms of our revenue growth.”

Kalra also confirmed that the company has no immediate plans to return to campus recruitment.

“We are not looking at going back to campuses in the near future. With time, we will see when to go back. But right now, our strategy is lateral hiring in line with demand, in line with the orders we have booked, and the pipeline that we are seeing… We did do a very small bit of campus hiring in FY26. This year we are not going at all.”

Persistent’s Chief Financial Officer, Vinit Teredesai, attributed the temporary margin pressure to planned hiring ahead of expected project ramp-ups and anticipated deal closures.

“We have been maintaining our utilisation at around 88 percent for the last couple of quarters. This time, we hired a little bit more in anticipation of the ramp-up of some of the deals that we won this quarter, as well as some of the expected closures in Q2. That has been the major reason for the 30 basis point (margin) decline.”

Kalra noted that enterprises continue to keep discretionary technology budgets under tight control while reallocating spending towards artificial intelligence initiatives. Rather than significantly increasing technology investments, customers are shifting resources from routine operations to AI-led automation and digital transformation projects.

“People are not necessarily increasing their budgets. People are recirculating their budgets. The budget increase is not huge, maybe 1 to 2 percent in different segments. It is more about reducing the spend on business as usual and using automation and AI and investing in new development projects. Customers are trying to see where productivity can improve using AI,” he said.

He further added, “That is the way it is. The implication for vendors like us is that if we can go after that additional spend in our customers, reduce the overall cost, and take market share away from incumbents, there is enough and more to be done.”

The company delivered its highest-ever quarterly deal wins during Q1 FY27, reporting a Total Contract Value (TCV) of $1.15 billion and an Annual Contract Value (ACV) of $536.8 million.

For the quarter ended June 30, 2026, Persistent Systems reported a net profit of Rs 483 crores, up 13.7 percent year-on-year. On a sequential basis, profit declined 8.7 percent due to foreign exchange losses.

Consolidated revenue reached Rs 4,303.23 crores, registering a 29.1 percent year-on-year increase and a 6.1 percent sequential growth.

Meanwhile, the company continues to progress with its planned acquisition of German digital engineering company Nagarro, announced in June through a Business Combination Agreement. The proposed transaction will combine Persistent’s AI-led engineering and cloud capabilities with Nagarro’s expertise in European digital engineering, ERP and customer experience, creating a business with an annual revenue run rate of approximately $2.9 billion and a workforce exceeding 46,000 employees across more than 40 countries.

The acquisition is also expected to strengthen Persistent’s presence across Europe, the Middle East, Turkey, Japan and other international markets.

Providing an update on the transaction, Kalra said, “We are on track with our regulatory filings. We expect that to be over the next three to four months, we should move towards closing the transaction. I will keep you updated.”

Persistent Systems’ decision to prioritise lateral hiring reflects its strategy of building AI-ready talent while improving operational efficiency. Combined with record deal wins and the planned Nagarro acquisition, the company is positioning itself to expand its global footprint and capitalise on growing enterprise demand for AI-driven digital transformation.