As global automotive software budgets remain under pressure, KPIT Technologies is repositioning itself around what it calls AI-defined mobility, betting that outcome-led, AI-infused solutions will help it navigate a prolonged industry slowdown and emerge stronger by FY27.
Speaking during the company’s Q3 FY26 earnings call, co-founder and joint managing director Sachin Tikekar says automotive engineering R&D spending had fallen sharply worldwide, declining by as much as 24-25% in 2025 after starting to taper in 2024. While the downturn continues at a macro level, KPIT sees selective recovery in areas where complexity is rising, and software has become mission-critical.
“Budgets that were frozen are slowly opening up,” Tikekar says, pointing to sustained OEM investments in digital cockpit, autonomous navigation, cybersecurity, after-sales diagnostics and propulsion technologies, even as overall spend remains constrained.
AI at the Core of Delivery
At the centre of KPIT’s strategy is a structural shift away from effort-based services to AI-enabled, fixed-price solutions, underwritten by outcome-based pricing. Over the past four quarters, the company has converted a large part of its business from time-and-material contracts to fixed-price engagements.
Fixed-price revenue has risen from around 50% to nearly 70%, with about 90% of the new pipeline now structured this way, Tikekar says. The long-term ambition is to push that share beyond 90%.
Chief operating officer Anup Sable, who was appointed to the role during the quarter, says fixed-price delivery improves KPIT’s ability to innovate, optimise speed and embed AI deeper into development workflows. “AI infusion into solutions will allow us to leverage this further and improve revenue per person,” he adds.
This transformation is also reshaping the workforce. KPIT is actively encouraging its engineers to become proficient in AI-led delivery, with compensation increasingly linked to outcomes rather than effort.
“Those who embrace AI and drive solutions will be highly compensated. Those who do not will get left behind,” Tikekar says, describing the shift as a two-to-three-year journey rather than a sudden reset.
Commenting on the company’s solutions-led and AI-led model, Kishor Patil, co-founder, CEO and MD, KPIT, tells AIM that mobility is moving from software-defined to AI-defined. He explains that KPIT is making deliberate investments to stay ahead by reimagining the software lifecycle, improving quality and speed, and bringing AI-infused solutions to our clients.
“These solutions are now validated and are being implemented on production programmes, portrayed by an increase in our fixed price contracts and per person revenue.”
He adds that the company’s strategic direction for the next phase is mobilising change—a shift from effort-led services to outcome-led solutions to increase the value delivered to clients and the value captured by the company.
Headcount, meanwhile, is becoming less closely tied to revenue growth. Chief financial officer Priya Hardikar says total employee strength stands at around 12,724, broadly flat quarter-on-quarter, with additions largely driven by recent acquisitions. “Going forward, headcount will be increasingly disassociated from revenue. We will achieve more with less.”
China As Both Threat and Opportunity
China features prominently in KPIT’s medium-term plans, not just as a market but as a learning ground. Tikekar outlined a four-pronged China strategy: absorbing learnings from the country’s EV ecosystem, helping global OEMs defend market share in China, supporting Chinese OEMs expanding overseas, and selectively partnering with domestic manufacturers.
“Traditional services will not work there. Chinese OEMs are super-efficient, and the time to market is very rapid,” he says. KPIT is entering the market with AI-infused solutions and products, and has begun to see early traction over the past three months, with expectations of healthier growth in the next financial year.
Sable adds that AI infusion—both within vehicle software and across development processes—is a key transformation lever in markets such as China, where features like autonomous navigation have become table stakes.
The India Focus and EU Trade Tailwinds
While global OEM spending remains subdued, KPIT is seeing relative strength in India, both as a delivery base and as an end market. Tikekar notes that the proposed EU-India free trade agreement could indirectly boost demand, particularly for premium European automotive brands such as BMW, Mercedes-Benz, JLR and Porsche, as customs duties on high-value vehicles are reduced.
“For us, the more business they get in India, the more opportunity there is for us to help them localise products and create specific experiences for Indian consumers,” he says, adding that the company’s solutions-led model would protect margins even as it scales in the domestic market.
Results and Leadership Changes
For Q3 FY26, KPIT reported revenues of $181 million, with 9.4% year-on-year growth in rupee terms and 1.9% quarter-on-quarter growth. EBITDA margin stood at 20.6%, despite partial wage hikes during the quarter, while net cash remained healthy at ₹900 crore.
However, the company reported a year-on-year decline in net profit for the third quarter, largely due to a one-time provision linked to the new labour code.
The quarter also saw several governance and leadership changes. The board appointed Sable as chief operating officer, formalising his role in driving the transition to a solutions-led, AI-driven delivery model.
Parag Shah, founder and partner at Amara Partners and former Mahindra Group executive, has joined the board as an additional independent director, bringing experience in scaling technology-led businesses and strategic partnerships.
KPIT is cautious on near-term visibility but confident about the medium term. The company does not provide formal guidance, but Tikekar said FY27 would be better than FY26, as KPIT doubles down on solutions and products, deepens its presence in India and China, and expands into adjacent areas such as trucks, off-highway vehicles, micromobility and defence.
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