IT services company Happiest Minds Technologies is now increasingly relying on its Generative AI Business Services (GBS) and AI services vertical to boost growth. Revenues from the segment rose close to 50% quarter-on-quarter in Q3 FY26.
The GBS revenue grew from nearly ₹16 crore in Q2 to nearly ₹24 crore in the quarter ended December 31, 2025.
The company said the sharp acceleration in GBS came as enterprises embedded AI deeper into core workflows and platforms, rather than treating it as an experimental add-on.
“GBS and AI services saw strong momentum, with revenues growing close to 50% quarter-on-quarter, as customers moved decisively from pilots to production deployments,” Joseph Anantharaju, Co-Chairman and CEO of the company, said during the earnings press briefing, linking the performance to clearer customer intent around measurable outcomes, productivity, and time-to-value.
For Q3, Happiest Minds earned ₹587.6 crore in revenue from operations, up 10.7% year-on-year, with constant-currency growth of 1.2% sequentially and 7.1% annually.
However, just like its competitors, the new labour codes weighed heavily on its bottomline. The company reported profit after tax of ₹40.3 crore—down 19.6% year-on-year—after absorbing a one-time wage-code charge of ₹22.3 crore.
Happiest Minds did not disclose the number of AI or large deals signed during the quarter, but highlighted several AI-led wins across FMCG, insurance, healthcare, retail and education.
This momentum in GBS also marked an operational milestone. According to Sridhar Mantha, CEO of Generative AI Business Services at Happiest Minds, the unit turned Q3 profitable, supported by improved utilisation, scale and execution discipline.
“We now have 32 GenAI and agentic AI use cases that have moved beyond pilots into production-grade deployments, with several scaling across customers and verticals, creating repeatability and operating leverage,” he said during the post-earnings conference.
From GBS to ‘AI-First’
The GBS build-out has now become the launchpad for Happiest Minds’ most sweeping strategic reset since its inception.
In March last year, the company announced 10 strategic changes in order to deliver a 10% growth rate over four years. It included creating the GBS vertical, led by Mantha and Praveen RP.
That, in turn, has led to what Chairman and Chief Mentor described as the company’s 11th strategic initiative. “The creation of GBS laid the foundation for our 11th strategic initiative, AI-First, which we are formally launching today,” Soota said.
“AI-First itself is supported by 11 strategic programmes which will lead to an expansion of Happiest Minds’ market size and share,” he added.
An immediate question, he acknowledged, is how this translates into growth. “When we announce Q4 results, we will give you these numbers and expect to show a significant increase in the guidance over and above the 10% growth we have already committed for four years,” Soota pledged.
At the centre of the AI-first pivot is a rebranding from “Born Digital. Born Agile.” to “AI First. Agile Always.”, signalling that artificial intelligence will sit at the core of every solution while retaining speed and customer-centricity, according to the leadership team.
The AI-first shift is being executed through 11 linked initiatives spanning brand, platforms, delivery models, talent, reporting and industry focus.
These include a rebranding from “Born Digital. Born Agile.” to “AI First. Agile Always.”; the launch of an agentic AI-led AI Services Delivery Platform and a horizontal AI platform for application modernisation, infrastructure, and IT operations; and a move from generic GenAI to agentic AI across applications, modernisation, and ITSM.
The strategy also emphasises repeatable, solution-led sales offerings with a stated $50-million revenue ambition over three years.
Operationally, the company plans to double its AI talent ahead of demand, begin formal reporting of AI and AI-led revenues from Q1 FY27 with three-year targets, and sharpen its AI focus on healthcare, edtech, and retail/CPG.
Additional elements include building AI-native healthcare solutions (covering clinical systems, diagnostics and AI-enabled Ayurveda), adopting non-linear, outcome-linked pricing models, rolling out an AI-native engineering and SDLC model combining agents with human governance, and offering enterprise transformation built around agent-based AI workforces.
On whether the workforce pyramid will change, Mantha said the company has set up a new Centre of Excellence under the Office of the Chief Digital Officer to embed specialist roles directly into projects and avoid siloed delivery.
While acknowledging industry-wide concerns about the future of entry-level hiring, he said Happiest Minds expects its workforce structure to remain largely unchanged in the near term, with fresh engineers continuing to be hired alongside more experienced professionals.
When AIM asked about which partnerships bolstered GBS, Mantha said that the company continues to deepen its relationship with Microsoft. It is part of the Microsoft Partner Advisory Council based in Redmond, giving it early visibility into platform roadmaps and new agentic capabilities.
Meanwhile, Happiest Minds is evaluating new partnerships to be finalised over the next few months, particularly with fast-growing startups in the agentic AI space. To support this, Anantharaju said the company has set up a dedicated AI Services Delivery and Lifecycle Centre of Excellence that works closely with the GBS unit to identify and integrate new technologies.
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