The Business Process Outsourcing (BPO) industry is facing an existential crisis due to AI. Firstsource Solutions (FSL) has chosen to cannibalize itself before the market does.
The “UnBPO” Strategy
Management has coined the term “UnBPO” to describe their shift to an AI-first architecture.
- The Thesis: Replace headcount with “relAI”—their proprietary suite of AI platforms.
- Results: Q2 FY26 revenue grew 20.1% YoY, proving that tech-led services grow faster than labor-led ones.
Earnings & Analyst Outlook
The street is bullish, but cautious.
- Estimates: Analysts forecast 19.1% annual EPS growth over the next 3 years.
- The Kicker: Margins. As they shift from “FTEs” (Full Time Employees) to “outcomes,” operating margins are projected to stabilize at 11.25-12%. This doesn’t look like a tech company yet, but the trajectory is rerating.
Investment Rationale
We believe the market is pricing FSL as a legacy call center operator. In reality, they are becoming a domain-specific vertical AI company for Healthcare and Banking.
- Strategic Acquisitions: The purchase of AccunAI (GenAI dev) signals intent.
- The Play: We are buying the transition. If they successfully reach their $1 Billion run-rate by Q4 FY26, the multiple expansion will be significant.