Labour Code Hits Firstsource’s Q3 Profits, Deal Momentum Stays Strong

A one-time impact from the implementation of new labour codes weighed heavily on reported profit of process management company Firstsource Solutions in the December quarter, even as it delivered double-digit revenue growth, margin expansion, and raised FY26 constant-currency growth guidance.

For the quarter ended December 31, 2025, Firstsource reported a consolidated profit-after-tax of ₹120.3 crore—a decline of 33% quarter-on-quarter after accounting for exceptional items related to the labour codes.

Excluding this one-time impact, adjusted PAT stood at ₹202.2 crore.

Operational revenue rose 16.2% year-on-year to ₹2,443.1 crore, while EBIT (earnings before interest and taxes, signifying core operational profitability) increased 24.9% to ₹291.5 crore, translating into an EBIT margin of 11.9%.

Commenting on the performance, Sanjiv Goenka, chairman of RPSG Group and Firstsource Solutions, said in the Q3 earnings call that the results highlighted robust revenue growth and steady improvement in profitability, reflecting disciplined execution and resilience.

“We continue to win strategic deals with leading global organisations, expand relationships with key clients, and deliver value through innovative, AI-driven solutions,” he said.

The company raised its FY26 constant-currency revenue growth guidance to 14.5%–15.5% and maintained its EBIT margin guidance at 11.5%–12%.

Firstsource said it signed five large deals in the quarter, marking the fourth consecutive quarter with four or more large deal wins. It also added nine new client logos, including five strategic accounts.

Deal momentum spanned the US, the UK, Australia, and New Zealand, covering customer experience, account servicing, billing, and operations outsourcing across sectors, including manufacturing, communications, financial services, healthcare, retail, and fintech.

The banking and financial services vertical led additions with five new logos. This was followed by communications, media and technology with two, and healthcare with one, driven by demand for CX and AI-led solutions.

Employee strength rose to 36,689 during the quarter, with offshore and nearshore hires forming nearly 80% of additions, while attrition declined to 27.4%, improving by 10 percentage points over the past eight quarters.