BK Kalra: Yes. Exactly to the point that you’re making Mike. We are increasingly seeing that decoupling and we are pushing the decoupling of FTE to revenue. And I would again say we are in the early stages of that and we are putting certain architecture infrastructure in place to over a period of time build more momentum there. And clearly, more of our investments are also going Moshe in building IP and building repeatable assets that we can deploy over and above say software of our partners. And we are again at early stages of that as more and more data and IP takes hold more disassociation of revenue with FT will happen and that’s where our endeavor is.
Moshe Katri: And the question for the business?
BK Kalra: Say that again your voice broke up here Moshe.
Moshe Katri: How about the discretionary part in general?
BK Kalra: Oh discretionary part? So I think — and the question on discretionary is that what portion of our business is associated with discretionary? Just wanting to clarify because your voice is a little bit muffled.
Moshe Katri: Correct yes. That’s correct.
BK Kalra: So we have in Data-Tech-AI Moshe what we have is also a lot of consulting and portions of projects that we do. Over 70% of our revenue is annuity — and so bulk of our digital ops and a large portion and a significant portion even in Data-Tech-AI is MLT for us. They are long-term contracts. But as we think of the end-to-end capabilities, one of the reasons why clients buy from us is strategy designed to run and transform, that strategy and design portion of it has componentry which is tied to discretionary. And owing to better execution our pipeline is looking better, but we don’t see it is because budgets have been released. It is more because we are becoming more agile in the marketplace if that answers the question.
Moshe Katri: Thanks for the color.
Operator: Thank you. [Operator Instructions] Our next question comes from Surinder Thind with Jefferies. Your line is open.
Surinder Thind: Thank you. Just a follow up on the non-FTE revenues and the mix shift over the past year. How should we think about that on a go-forward basis? Because the shift is pretty significant in the past year. So were there a few projects a few clients that drove that? And is this something that’s going to be maybe lumpy going forward? Or where do you kind of see the end game for this?
BK Kalra: So I’ll take that and then Mike feel free to add. Look Surinder endeavor is to push that agenda more be it in large deals and we have succeeded in a few large deals or in renewals or in smaller and medium-sized deals. And even if the entire large deal or a medium-sized deal is not on non-FTE I think there are portions of it that we are inserting is point number one. Point number two I already spoke about IP and data and these are early days. So clearly our– where is the end game, it is too early to tell. What we are exceptionally clear that we want to break this association of FTE with revenues and have revenue grow disproportionately relative to the FTE headcount. And I think we are putting architecture and infrastructure elements around that and we’ll continue to report progress. Mike?
Mike Weiner: Yes. I’m just going to build on that. So historically over the last two years, I would say we disproportionately saw on renewals, our ability to get these models implemented. But I think one of the interesting things regarding our generative AI conversations we’re having with clients initially. They’re much more receptible to moving to those models than they were historically. So the generative AI narrative is acting as a catalyst for those discussions, as well as just our pivot to have more IP-related assets that have to drive that decoupling.
Surinder Thind: That’s helpful. And then when I think about just guidance in general, I look back to last year. And obviously the environment has been challenging. It’s been hard to predict client behavior, fast forward to this year, you guys are out executing the guide. How should I think about the overall quality of the guide? Or any methodology changes that you guys have made? Is it just you guys are being maybe a bit more conservative this year? Any color there would be helpful or how you’ve been adapting to maybe the lower levels of visibility in this environment?
Mike Weiner: Yeah. So nothing has changed from what we told you about a quarter or so ago with in terms of other methodology on a go-forward basis. Obviously we get smarter every quarter that we go. Listen I will say it’s prudent from that perspective. And that prudency really relates to our assessment that the macro environment particularly that affect some of our more discretionary shorter duration work has not improved in our models from the second half of last year through the first quarter of this year. To the extent that changes? Yeah, potentially we could see additional benefits to it. But for now, I think the prudent way to move forward is using the information that we have best of our ability and making a conservative view from that perspective.
Keep in mind as BK alluded to over 70% of our business is somewhat annuitized and we have very good visibility at any given point on how that’s going to perform for the remaining piece of the year on a rolling 12-month basis. So it really comes down to that 25% roughly cohort of our business at short-term discretionary in nature. And again what we’re doing is we’re tying that to our assertion of where the macro business environment is going to be for that period of time as it changes, we’ll update our guidance accordingly.
Surinder Thind: Thank you.
Operator: Thank you. Our next question comes from Sean Kennedy with Mizuho. Your line is open.
Q – Sean Kennedy: Hi, everyone. Nice job on the quarter. Thank you for taking my questions. Can you touch on how the demand environment for new business progressed throughout the quarter both for the shorter duration discretionary deals, and the larger ones as well. It seems like the outperformance in the quarter was more Genpact specific execution versus the macroeconomic environment. Thank you.
BK Kalra: So Sean, what I would say, yes, I think the execution and early signs are good. However, I’ll also say that our pipeline is at a record level, across all the segments across Data-Tech-AI and across Digital Ops. And now we can also attribute a lot of that to our increased agility again, acting more proactively with our partnership and with technology partners and we are getting more and more advice from our technology partner, as well. As I speak to clients or even partners what Mike also incited earlier, that with understanding of hands on the keyboard and the assets and strategy and design and how we run and transform. We are able to capture the knowledge at a very key stroke level, which a lot of technology partners coming top down are not able to.
And that is the true execution that is needed by clients. And therefore, there’s a reaffirmation and we are seeing as we engage more actively with clients, to reflect that in our pipeline. Now, I would again continue to maintain it there are many ways in which we see where the macro environment is? Where the budgets are? Have we seen any significant or any meaningful improvement there? The answer is no. It continues to be as it was at second half of last year. So that is what is sitting in our prudent guide.
Q – Sean Kennedy: Great. Good luck with the rest of the year.
Operator: Thank you. I’m showing no further questions at this time. I’d like to turn the call back over to the company for closing remarks.
BK Kalra: Well, thank you so much, Michelle. And what I would say is, Q1 was a solid start to the year with revenue and gross margin above high end of our guidance range, early signs of improving execution and we are excited with the progress we are making with our 3+1 Execution Framework. And yes, we are pleased with the beat and flow I would say, with this prudent guide. And I do want to take this opportunity to thank all of our employees for embracing the pivot, all of our clients for choosing the impact, and all the shareholders for ongoing support. And I do want to thank you all, and we’ll come back to you next quarter.
Operator: Thank you for your participation. This does conclude the program. You may now disconnect. Good day. Good day.
