Persistent Systems has decided to skip campus recruitment for FY27 to prioritize lateral hiring and improve efficiency. The IT firm reported a 13.7% year-on-year profit rise for the June quarter but faces margin pressure. The company is now navigating cautious client spending while managing the integration of its upcoming acquisition, Nagarro.
Persistent Systems has announced a significant shift in its workforce strategy for the current fiscal year. The company will not conduct campus hiring for FY27, choosing instead to focus entirely on lateral recruitment. This decision follows the company’s recent quarterly results, where management emphasized the need to improve employee utilization levels and protect profit margins amid a cautious demand environment.
At the end of the June 2026 quarter, the company’s employee utilization rate had dipped to 86.5%, down from 88% in the previous quarter. By pausing the induction of fresh graduates and focusing on hiring experienced professionals, the firm aims to align its staffing levels more closely with immediate project requirements. The EBIT margin for the quarter stood at 16%, reflecting a sequential decline of 30 basis points.
Despite the pressure on margins, Persistent Systems recorded its highest-ever quarterly deal wins. The company reported a Total Contract Value (TCV) of $1.15 billion for the first quarter of FY27. Net profit grew by 13.7% year-on-year to Rs 483 crore. However, profit saw an 8.7% sequential decline, largely attributed to foreign exchange losses during the period.
Looking ahead, the company is moving forward with the acquisition of German digital engineering firm Nagarro. The company has secured a bridge loan of EUR 1.4 billion to support this transaction. The integration of Nagarro remains a major focus for the firm as it aims to scale its European footprint and expand its AI-focused capabilities. Successful execution of this combination will be critical, as integrating large entities often brings operational complexities.
The company faces potential margin headwinds in the coming quarters, including an expected 180 to 200 basis point impact from upcoming wage hikes starting in the second quarter. Furthermore, clients continue to show caution regarding discretionary technology spending, often reallocating existing budgets rather than increasing overall project spends. Key factors to track in the coming months will be the success of the Nagarro integration, the stabilization of profit margins, and whether the strategy of prioritizing lateral hires effectively helps the company improve its utilization rates.