Annual Report 2016-17

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Management Discussion and Analysis

The following discussion is based on the audited consolidated onancial statements of Persistent Systems /imited, and

its following subsidiaries and step-down subsidiaries:

1) Persistent Systems Inc

2) Persistent Systems Pte. /td

3) Persistent Systems France SAS

4) Persistent Systems Malaysia Sdn. Bhd.

5) Persistent Telecom Solutions Inc. (step-down subsidiary)

6) Akshat Corporation (d.b.a. RGen Solutions) (step-down subsidiary)

7) Aepona /imited (step-down subsidiary)

8) Valista /imited (step-down subsidiary)

9) Aepona Software (Private) /imited (step-down subsidiary)

10) Aepona Holdings /imited (step-down subsidiary)

11) Aepona Group /imited (step-down subsidiary)

12) Valista Inc. (step-down subsidiary) (dissolved on June 28, 2016)

13) Persistent Systems Me[ico, S.A. de C.V. (step-down subsidiary)

14) Persistent Systems Israel /td. (step-down subsidiary)

15) Persistent Systems Germany GmbH

In this report, Persistent Systems and its subsidiaries and step-down subsidiaries collectively have been referred to as

“the Company”, repecting the onancial position in the consolidated onancial statements. The onancial year 2016-17 has

been referred to as “the year” and the onancial year 2015-16 has been referred to as “the previous year”.

Global economic outlook

After seeing a slight dip in 2016, global IT spending is e[pected to increase by 1.4 % this year, according to recent

research from Gartner. The Gartner :orldwide IT spending forecast projects moderate to impressive growth in all

leading sectors. Enterprise software will account for the biggest increases, at 5.5 %, followed by IT services at 2.3 %.

Any e[pansion in technology spending will greatly depend on ever-shifting global political and economic conditions.

Digital along with Internet of Things (IoT) and Data continue to lead

Digital Business and the Internet of Things continue to reshape the way humans and machines interact to enhance

both business and our lives. Artiocial Intelligence and machine learning have reached a critical tipping point and will

increasingly augment and e[tend virtually every technology enabled service, thing or application. Systems can learn

and change future behavior, leading to the creation of more intelligent devices and programs. The lines between the

digital and physical world continue to blur creating new opportunities for digital businesses.

Digital disruptors have forced traditional businesses to overhaul their business models and allocate budget

disproportionately to digital. The success of digital disruptors has also given rise to digital ecosystems that amplify the

reach of the business. To take advantage of these ecosystems emerging in healthcare and onancial services, Persistent

has embarked on building a digital e[periences platform that enables a convergence of data - in many cases IoT (sensor)

data, Application Programming Interfaces (APIs) and digital e[periences. Our belief is that enterprises, large and small,

will embark on a continuous transformation by design to play in an increasingly software driven world, and become

software driven businesses.

Persistent expects an accelerated demand from enterprises to leverage digital ecosystems for innovation and

growth.

In terms of market potential, IDC forecasts that the worldwide market for IoT solutions will grow from $1.9 trillion in 2013

to $7.1 trillion in 2020. An IoT platform implies the integration of a set of different functionalities provided by individual

components. The functionalities involved can be broadly classioed as data capture from sensors, transfer of the data

over networks, storage of the data at various stages, analysis of this data, and applications that make use of this