Infosys Q4 24/25 (Media) Earnings Call Transcript

Quartr
Provided by Quartr
April 17, 2025
Skip to Participants
Operator

A very good evening, everyone, and thank you for joining Infosys' Fourth Quarter Financial Results. My name is Rishi. And on behalf of Infosys, I'd like to welcome all of you. Before we begin, I know we are slightly delayed, apologies for that, but I do request one question from each media house. Though there are lots of news today, but let's see what we can do best.

Operator

With that, I'd like to invite our Chief Executive Officer, Mr. Salil Parif, for his opening remarks. Over to you, Salil.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

Thanks, Rishi. Good evening and welcome. Thank you all for joining us. We've had an excellent year in financial year 2025, '4 point '2 percent growth constant currency terms, 21.1% operating margin, 100,000,000.0 free cash flow and INR11.6 billion in large deals. We feel the performance has been solid all around across the year.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

We're seeing growing demand from clients to partner with them on AI. They're moving from a use case approach to AI led transformation approach. This is using AI agents which are playing more and more of a critical role and we believe we have a very leading position in AI agents with over 200 agents we've developed. We continue with our strategic expansion and acquisition in the energy and consulting space in The U. S, acquisition in cyber security space in Australia and a new strategic partner becoming part of our joint venture in Japan.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So all three areas are areas where we have strategically looked to expand and we are further committed with this expansion in The U. S. In a very critical area for that market. We have a set of capabilities that support clients in their growth whether it's AI or cloud or digital and in the efficiency whether it's automation, cost reduction, lean and consolidation. So we feel well positioned in this environment to look at both growth and both cost areas as clients look at them.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

Based on what we see in the environment today and building on our large deal wins in the past quarters, our guidance for growth in financial year twenty twenty six is 0% to 3% in constant currency terms. The environment is uncertain and we will execute our plans with agility while keeping a close watch on changes. Our margin guidance for the financial year 2026 is at 20% to 22%. Thank you and then let's open it up for questions, Rishi.

Operator

Thank you, Salil. Joining Saleel is Mr. Jaish Sankarachka, Chief Financial Officer, Infosys. With that, the first question is from Ritu Singh from CNBC TV18.

Ritu Singh
Deputy Editor at CNBC-TV18

Saleel. How are you, Jaish. Quick word with your guidance of almost no growth in this year, 0% to 3%. If you could give us more in terms of commentary on what you're seeing. For instance, from DCS, we heard about delays in decision making.

Ritu Singh
Deputy Editor at CNBC-TV18

From Wipro yesterday, we heard one of the large clients paused a transformational deal. So what are you hearing? Are there ramp downs? Are there delays? Are there, you know, any sort of cancellations in large deals?

Ritu Singh
Deputy Editor at CNBC-TV18

Also for emphasis, in the last twelve to eighteen months, we've not seen any mega deals, you know, being announced. You know, what's happening in the market? Are some of these large deals drying up? What's your sense? You know, given that this puts larger reliance for you on discretionary spend picking up.

Ritu Singh
Deputy Editor at CNBC-TV18

You know, also in terms of sectors where you'd started to see shoots of recovery, for instance, last quarter, spoke about BFSI, etcetera. Is that continuing? Or given the uncertain environment, do you expect some sort of a reversal there? And just one question on the hiring and wages. The wages that were expected to be rolled out in the second phase in April, are you on track to do that?

Ritu Singh
Deputy Editor at CNBC-TV18

And your hiring plans for the year, you know, thousand that you'd indicated, you know, if that's also on track? Thank you.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

Okay. So thanks. A few questions. So first on the environment, I think we see there's uncertainty in the environment. We have several deals that we closed in the last quarter and the quarters before.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

Those are today moving into the appropriate next phases. We've not seen a change in that. We are seeing in areas where there's focus on changes which may come. There could be in industries where there are changes that could come because of the changes in the regulations, there could be an impact. Jayesh will comment a little bit about how we've constructed the guidance based on that.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

In terms of mega deals, we had two mega deals in the last financial year. We have a pipeline of mega deals today. What is sort of what we saw in the past when things of this nature happened, which is changes in the environment, there's also an interest with clients on cost takeout, automation and efficiency and consolidation. We will see how it plays out because it's only a few days as clients have looked at it, but we have seen large deals moving, meaning which we have closed, moving into the next phases as was evident.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Yeah, so I think what Salil said on the guidance, look, we run multiple models which run up to the guidance at various ends of the guidance, you know, bottom end, middle end, or the top end. The fact that we gave a three point guidance reflects there is uncertainty in the environment. At the bottom end of the guidance, we have baked in some some deterioration in the environment, some, you know, heightened uncertainty. At the top end of the guidance, we have assumed steady to marginally improving environment at this point in time. Coming to the the second question on wages, you know, we are on track on our wages, large part of the wages wage increments were rolled out in January and the balance is rolled out in April, effective first April, so we are on track on that.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

And in terms of FY '26 hiring, we we are we are expecting to hire 20,000 plus freshers.

Ritu Singh
Deputy Editor at CNBC-TV18

Sorry.

Ritu Singh
Deputy Editor at CNBC-TV18

Can you repeat the how many freshers?

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

20,000 plus, what we had said earlier, we are we are on track of that.

Ritu Singh
Deputy Editor at CNBC-TV18

You know, there were reports of emphasis laying off, you know, some of these fresh campus recruits because according to your own statement, there were three thirty seven of these as opposed to media reports of 700 plus, and you said that was because of their weak performance. If you could clarify, you know, I mean, what what exactly happened there? Are you not able to find the right talent? Is the number still, you know, what you'd said in your statement, is it larger? Just a statement from you on that.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So there, let me take that one. So first we made some statements, so those are, we stand by those statements. In addition to that, within Infosys, we have an approach for making sure that we have a rigorous way to train and then to assess and test individuals. This is a process that has been ongoing for the last twenty years within the company. At every time that the training batch comes in, they have three opportunities for testing and at each time if they succeed in that they stay on.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

After three attempts, we have now found a way that we have found other opportunities for them and also supported them in outside of Infosys in some training that can be offered to them. So that's the approach we have taken. In terms of the numbers, whatever the statements we've made in the past remain as they are.

Operator

Thanks Ritu. The next question is from Haripriya Sorebhan from NDTV profit.

Haripriya Sureban
Correspondent at NDTV Profit

Hi, sir. Salil, give us some idea on like you said, you remain confident on the current deal wins deal wins that you have. But do you see any kind of changes going forward in your conversations with the client? Any possibility of ramp downs or cancellations that you have visibility on right now? And on the fresh deal wins that you'd try to bank on further, what kind of deal wins would mostly come in?

Haripriya Sureban
Correspondent at NDTV Profit

Is this most towards the cost takeout side that you'd be expecting? And what's your read on the discretionary spending? Do you see that go down at least in terms of the sentiment? And would it pick later towards the year? And also, how many quarters are you expecting this uncertainty to stay on?

Haripriya Sureban
Correspondent at NDTV Profit

Because one of your competitors said at least towards the second part of the year, things should get better. Jaish, on the margins stayed on the narrow band, what are the levers that you'd have going forward? How do you plan to what are the impact that this current environment will have and how would that be baked in?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So on the environment, what we see is it's an uncertain environment and as Jayesh shared, we've taken different scenarios to look at the way we've put together the guidance. In terms of specifics, as of now, we have seen the deals that we have won in the recent quarters are now continuing to ramp. My view is we will see because of the changes in the economic outlook, there will be some discussions which will be focused on more consolidation, more cost pressures with clients, but at this stage, we have not seen change in that. However, the guidance has factored in what we anticipate in different scenarios because all of this is happening in the last few days. On margins.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

On the margins, know, if you look at FY '25, we have expanded margins by 50 basis points. That's a clear reflection of our endeavor, which we had said at the beginning of the year to improve margins. We have improved margins despite multiple headwinds. We had a full year impact of the comp that we did in the previous year in November. We have paid higher variable pay to our employees, we had many of the large deals ramping up during this period.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

We did an acquisition, so there was an acquisition related impact, and despite all of those headwinds, we have been able to increase our margins by 50 basis points, so that's just a clear reflection of what we have been doing. And we do see opportunities in terms of, you know, increasing from VBS in terms of pricing, etcetera, in terms of lean automation of doing more productivity, increasing near shore in multiple of geographies, etcetera. So there are opportunities to improve margins from where we are today.

Operator

Thank you. The next question is from Chandrashrikanth from MoneyControl.

Chandra Srikanth
Deputy Executive Editor at moneycontrol

Hi, Salil. Just wanted to understand the zero to 3% guidance. Does it bake in impact of tariffs? How much of it is happening because of GCCs? Have there been any project delays, cancellations?

Chandra Srikanth
Deputy Executive Editor at moneycontrol

If you can give us a sense of that. And are there verticals or niche platforms that you're building, which has outcome based pricing? And is it time to let go of this 20% margin threshold? How are you sort of going to win deals in the current environment? And between US and Europe, where do you see more uncertainty right now?

Chandra Srikanth
Deputy Executive Editor at moneycontrol

Thanks.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So on the guidance, Jaish will give a view on the platforms. Let me start off, and then we can come to the other ones. I think we are very clear with AI that there's a huge change in how agent based platforms are being created. So we have now work we are doing with clients where these are being leveraged. We have examples in telco clients.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

We have examples in financial services clients. We have examples in services companies. It's quite broad based what we are seeing on platforms. It's also building on the small language model that we built in financial services leveraging finical. We have also started to do work across other industries where we will build these sort of models.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So we see a lot of the platform activity expanding, and we think that that's something that we are well positioned to execute on. On the guidance?

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Yeah.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

So on the guidance, you know, as I said earlier, there are multiple models that we have built. At the bottom end for the guidance, we have assumed, you know, heightened heightened impact from from all the micro environment, and on the top end of the guidance, we have assumed steady to marginally improving, you know, environment. It's very difficult to split out how much of that is because of tariffs, how much of that is because of GCC, but on the overall environment, when I look at, at the bottom of the guidance, we have factored in some increasing uncertainty.

Reshab Shaw
Senior Correspondent at moneycontrol

Rishabh here, Money Control. So in the last fiscal, you said you'll hire 15,000 to 20,000, which you're on track. And this year, we see that you have added over 6,000 personnel for this fiscal. So where did are you losing out mid management to GCCs? If you could add a color on that.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Yes, so overall headcount has increased by 6,000. We have hired 15,000 freshers, so the balance is obviously the attrition at various levels that has happened, and the attrition is across multiple factors and multiple opportunities that people get outside, it could be GCCs, it could be competition, it could be employees going for further studies, there are multiple of those factors that play out there.

Operator

Thank you. The next question is from Shilpa Fadnis from The Times of India.

Shilpa Phadnis
IT editor at The Times Of India

Hello, sir. We gather that Infosys has set up an internal business unit focused on GCC specifically. It's called the Project Altius. Can you shed more light on that? And we hear there's a new internal leader who's also going to be there.

Shilpa Phadnis
IT editor at The Times Of India

The cost of deploying AI is also huge. If you can talk about the economic benefit of AI has a longer gestation cycle. So is it too early to read into it whether there is an impact at the developer level and the project level? Can you throw some light on that? And secondly, you know the gestation cycle especially for productivity gains, more more and more customers are demanding that.

Shilpa Phadnis
IT editor at The Times Of India

Is it putting pressure on IT companies, especially with forward pricing on productivity gains? More customers are asking that this is going to put more pressure on the run part of the business. Can you throw some light on that?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

Let me start off with respect to GCC. Over the last several years, we've had attention on working very closely with GCCs, and working with clients, either to help to set up, or to scale, or do different models for GCCs. Recently, we announced a very large win in GCCs with the services business, with an airline business. So we feel quite good. There is no new unit or anything, it's something which is there across all of our go to market areas, and also with many of our service line because the interaction with GCC is quite spread out.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

Then I think the question was on the productivity. Most clients are looking for significant productivity benefits. Now, in the area of customer service, it's quite clear what that is, and we are participating. We don't have a large voice business or anything. We are participating in a joint ops and tech projects with clients where those type of benefits are visible, and we are in a position to commit.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

What we are doing is making sure we share with clients what we are able to deliver, and what is visible for us. They might sometimes meet with or not meet with what the clients are looking for. On terms of the investments in AI on the productivity of the, like the developers and so on. So there's some good examples. If you look at Finacle, it's our own product.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

There we have seen, because the code base is very uniform and we built it over the years in different places, 20 to 25% productivity benefit with tools that we've built on public models. We've also seen for example, with some clients on user interface development, similar types of benefits through AI. So we see huge impact to that. Overall, it's different because then we are working with different client situations or some times it's higher, sometimes low, but we know that this sort of AI work, we we have some great opportunity in. There are about 400 AI projects that we are working on where we see a lot of these sort of benefits that we are sharing with clients.

Operator

You. The next question is from Bina Parmar from the Economic Times.

Beena Parmar
Assistant Editor at The Economic Times

Hi. Hi, Salil. A few things. You mentioned about productivity benefits being passed on. Could you tell us what kind of percentage of revenue cannibalization are you seeing because of that?

Beena Parmar
Assistant Editor at The Economic Times

And you mentioned about mega deals as well. Which sectors and spaces are these in? And what is your outlook on the different sectors? Which sectors are likely to be the most impacted because of the ongoing uncertainty? Jaish, you mentioned about increase in pricing, a probable increase in pricing that's still there for you.

Beena Parmar
Assistant Editor at The Economic Times

While you've seen active loss of clients in your number of clients, and this is also across most deal sizes, Where do you see this increase in pricing that you were likely to see given the competitive environment and the uncertainties that continue? And lastly, what is the impact on the margins? Like what really led to the margin impact in this quarter, and what are the headwinds or tailwinds rather headwinds in the quarter ahead?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So let me start off on the productivity side. I think is no sort of number specifically in terms of what is changing in that. There are productivity benefits that we see, for example, in customer service in the range of 30 to 40% that we mentioned On software development, there are different ranges. And in each situation, clients look at it from a different perspective. Some of it becomes part of a discussion where they want to consolidate multiple partners, and where we are a beneficiary, that changes how much we can apply automation, lean, or AI into that.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

But in general, we have seen last year 4% growth. So when you put everything together with all this, we have still seen growth, and that's the sort of momentum that we have seen with the deals that we had. And then we've then put together the guidance as as Jaish was sharing on what we look at different scenarios like that. On the industries, Jaish will share a little bit of how we see the perspective. What we do see, for example, with the current situation, there's starting to be some impact that we'll see in consumer products with one of the changes that are coming about.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

However, we see in many of our industries, for example, in energy, utilities, we see continuation of what's going on in financial services. We still see with deregulation and strong first quarter that the clients have had, the calendar first quarter, we see that continuing on. All of this, however, will have to sort of watch on a regular basis because not all the analysis and decisions have been made, so as those play out, we will see what other impact there is.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Yeah, so if I go back to your other question on pricing, I think pricing is across all the sectors. It's about how do you price it? You know, we have had multiple tracks that we are running under the project Maximus, know, whether it's about new age pricing, whether it's about chain request, rotating our employees, deploying, you know, high heightened lean automation in in projects to get better productivity, which will mean better pricing in a way. So all of that has reflected in the pricing. It's not necessarily going and asking a higher price of what we were doing yesterday.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

It's about all of this coming together and reflecting in a pricing, and that's what has helped, and we do see opportunity going forward as well. On the margins for this quarter, our margins were 30 basis points lower quarter on quarter. The biggest headwind we had was because of the comp that we had announced, large part of our employees got compensation increase effective January 1, and that impacted by 140 basis points. We had 40 basis points on account of amortization of intangibles for the acquisition that we made, so those were the headwinds that was offset by lower post sale customer support, 80 basis points, 20 basis points on currency, 30 basis points on project Maximus, and 20 basis points because we had a lower third party cost, so all of that put together reflected on 30 basis point decline on our margins. Thank you.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Sorry?

Beena Parmar
Assistant Editor at The Economic Times

Outlook on

Beena Parmar
Assistant Editor at The Economic Times

margins.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Outlook on margins as Salil said earlier, our margin range remains 20% to 22%. We ended the year with 21.1% with an endeavor to increase margin going forward.

Operator

Thank you, Bina. The next question is from Jas Bardia from The Mint.

Jas Bardia
Journalist at Mint

Good evening. Just a couple of questions. One, if I look at your large deal DCV, it's down 34% year on year. Now does it imply that FY 2026 can be a little choppy in terms of growth considering the company started off strong in terms of deal wins? Is on how India and growth markets kind of offset the slowdown blues for one of your peers.

Jas Bardia
Journalist at Mint

Now suppose this happens in two of your largest geographies, say, The U. S. And Europe, is there a plan B in place to keep the growth going for Infosys?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

On the large deals, what we have seen in this past year is we've had 11,600,000,000.0 of large wins with 56% of net new wins. Now what that translates to is, Jayesh was sharing in another point, one of the highest we've seen in several years and higher than the previous year. So we feel it gives us some outlook into the future in this financial year with that sort of a win mix. Having said that, again, as Jayesh was sharing earlier and I shared, on the guidance, we've taken a view on different scenarios building from the low to the high and slightly broadening, expanding to three points the range of the guidance. In terms of other markets, first, we had a very strong growth in Europe in the year that is just finished.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

We see that we have increased the percentage of our revenue in Europe over the years. We've made several investments and scaled up in different geographies in Europe, so that's a good market for us. With the changes in the environment, we will sort of see what develops. We have a good business in India, but it's a small business, and we have a good business in other markets, for example, in other parts of Asia. But relative to our overall size, still a small business.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So the way the environment develops is what will drive, and as the range that we we shared, how we've constructed the scenarios, will drive the guidance there.

Operator

Thank you. The next question is from Avik Das from the Business Standard.

Avik Das
Associate Editor at Business Standard

Salud Desaiit. A couple of questions to you and couple to Jaish. Salad, if you could throw some light upon the BFSI business, while you did talk about some green shoots emerging in the third quarter, small deals coming back, which shows discretionary spend. Considering the impact of the tariffs, mainly perhaps on the manufacturing and the retail, do you see any impact on the BFS as well as turning conservative in terms of spending both in cost optimization as well as in the discretionary spending part? And also, as you bank on large deals and you have a pretty robust pipeline, given the uncertainties, do you think that large deals, at least for this fiscal, will take longer time to actually materialize?

Avik Das
Associate Editor at Business Standard

Will that going to be a challenge? Jesh, one question was, will margins come under pressure as vendor consolidation takes place in this uncertain environment? What sort of margin pressure do you anticipate, if at all? And considering the guidance that you have provided and also you talked about hiring 20,000 freshers this fiscal, just trying to balance these, like what gives you the confidence that you can actually go ahead with that strong hiring numbers for this year? Thank you.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So on financial services, again, first point is that we are in an uncertain environment. Having said that, what is for our end clients, their own results, what have been declared, have been fairly strong. So in some ways, that volatility has helped some trading business and so on. We see from our client base looking into the first quarter that there is activity, there is good good amount of work that we are seeing. So we are not seeing something that has changed in financial services.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

Now as things stabilize on the overall economic environment, we will get a better sense of what the eventual full year will look like, but this is what we see on financial services today. I think on the deals, typically, first the pipeline is we have a good large deals pipeline. What typically we've seen in the way we built our business portfolio is when there's high economic growth, we have digital, we have cloud, we have new AI now. When there's more cost focus, we have efficiency, automation, consolidation, and productivity through AI. So we have both of those levers, and typically, when there's more cost attention as they might be in this environment, we will see large opportunities for cost takeout and consolidation, and we feel quite well positioned as we've done in the past to benefit from that.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

far, again, things have changed in a short period of time in terms of what can happen with the economic outlook. So in that period of time, we have not seen anything, but it is a very short period of time. So for us to get a sense, we will see how it goes. But sometimes, again, this is from the past, when there's a cost imperative, also sometimes decision making is quicker to say, look, can we get a cost take out done quickly? So we don't know.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

We will see how that plays out.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Yeah. On the other two questions, I'll answer the last one first, which is on the hiring. If you look at the 20,000 hiring that we're talking about, it's the growth. It's a combination of attrition, backfilling the attrition and the growth. We had 14% attrition this quarter, and if you look at the math, it adds up with the guidance that we have had, so we are very confident at this point in time of hiring 20,000 freshers through the year, in line with our guidance.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

And on the vendor consolidation and the pricing impact, I think if you look at last few years, and we've been getting, gaining market share, it's a clear reflection that we have been on the positive side of the vendor consolidation, and that gives us a confidence that we would be able to retain the pricing and the pricing power there.

Operator

Thank you, Jayesh.

Operator

The next question is from Sanjana B. From the Hindu business line.

Sanjana B
Technology Reporter at The Hindu BusinessLine

Hi, good evening, gentlemen. So Saleel, are you at all looking to reduce your reliance on The U. S. Markets amid all the uncertainties that are prompted by the tariff discussion? If yes, what are some other geographies that you're concentrating on?

Sanjana B
Technology Reporter at The Hindu BusinessLine

And from a sectoral perspective, are you at all seeing some initial tailwinds? If yes, what are those? And while some of your peers reported some softness in Europe, you said that you've seen some growth in the geography. Could you elaborate on what worked for you to prompt this growth?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

first on The U. S, I mean, we've just announced an acquisition in The U. S. In energy and in consulting. We remain in a longer term view positive on tech technology changes and positive on the markets we are in.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

We may see some uneven activity in the short term, medium term, but in the longer term, we do, and that's one of the signals for us that we made the acquisition. Having said that, we are looking to expand in other geographies in addition to what we're doing in the years. For example, the Japan announcement, we have a new partner who's joined our joint venture or the acquisition in Australia. So we are quite positive in the medium to long term on technology, how it will change, how AI will impact it, and our role in all of that. We will see how it develops with the current uncertainty and how long that takes to change.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

On Europe, we also commented last quarter, which holds today, that while Europe overall, we have done well for the year, the automotive sector in Europe, we had already talked about, we had seen some slowness. And that continues in what we are seeing even as we see the outlook today.

Operator

Thank you. The next question is from Sai Ishwar from Reuters News.

Sai Ishwarbharath
India Company News Correspondent at Reuters

Hi gentlemen. My first question is that I wanted to know like why you've just given 4.2 cc growth last year. So it's kind of below the guidance. So I just wanted to know what went wrong in that aspect, so it's not met the guidance given last quarter. And also, it's been repeatedly asked, I just wanted to know, in terms of projects, have you seen any delays or pauses or any ramp downs or anything of that sort or cancellations?

Sai Ishwarbharath
India Company News Correspondent at Reuters

Thank you.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So I'll start with the second one. At this stage, we have not seen, having said that, all the changes have happened in a very short period of time, but the large deals that we've won in the last few quarters are continuing in their trajectory as we had anticipated at this stage.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

On the On the guidance for this quarter, you know, we declined three and a half percent, which was obviously higher than what we anticipated at the beginning of the year, but large part of that was on the back of, you know, third party costs and revenues because, you know, pretty much two third of our decline was on on the back of that, and that Those are the deals which typically happens towards the end of the quarter, and some of them slipped through that. So that is what is reflected both in lower third party cost and lower revenue for us.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

That's what

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

I'm saying. So because you had a lower third party cost, you had lower revenue towards that, so that was one reason. And the second reason was Q4 generally has a seasonality in terms of lower working and calendar days, and the volumes was lower. But two third of that 3.5% decline was on the back of lower third party cost and revenue.

Operator

Thank you. The next question is from Patmini Dhruvaraj from the Financial Express.

Padmini Dhruvaraj
Senior Correspondent at The Financial Express

Hi. So are you seeing any structural changes in large Omega deals in terms of tenure scope or pricing, especially with Gen AI? And since this tariff talk started, are you did you see any changes in your client's budget for CY twenty five?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

On the large deals and generative AI, so it's been, let's say, an ongoing change through the last several quarters where almost lot of large deal discussions have some part of generative AI in it. So there is not now too many deals, large deals, or any deals that we are doing which has not got some part of generative AI. So that's one sort of qualitative change because it's part of every discussion whether it's on productivity, whether it's on solving a specific area which is related to process, on engineering, customer service. So variety of elements, generative AI is very much part of it, and they are making a big difference in how those deals are developed now. In terms of the budget and the clients, we've there are client discussions where clients are starting to see maybe some initial pressure.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

We've not seen any changes, but there are ongoing discussions on what could be the nature of those things. As it has been quite recent, as we see the time moving on, we will have a better view on it. But keeping that overall change in the economic environment is how we built the guidance with the broader range that we've put in place.

Operator

Thank you. The next question is from Rukmini Rao from Fortune.

Rukmini Rao
Consulting Editor at Fortune India

Gentlemen, a few questions. One, Sunil, could you please call out, how much of business does Infosys do when it comes to public sector in The U. S. And current exposure maybe in the quantum of revenues from The U. S.

Rukmini Rao
Consulting Editor at Fortune India

Geography, how much of it is what kind of exposure you essentially have to public services contracts with The U. S? And also given that we saw Accenture and others probably contracts getting rescinded, are there any such fears? And being a non U. S.

Rukmini Rao
Consulting Editor at Fortune India

Headquartered company, do you see any sort of disadvantage going forward in bidding for contracts, which may involve like U. S. Government? Or in general, if there is any sort of disparaging sort of if it's going to be difficult for non U. S.

Rukmini Rao
Consulting Editor at Fortune India

Headquartered companies to compete? And two, also, can you specifically call out which are perhaps the gloomiest of the business segments given the guidance? Are there any specific business segments that you see probably doing really badly in FY 2026? Also, Jayesh, the technical subcontracting cost has gone up by about, what, 3.5% year on year, right? Is that some sort of a strategy where your head count remains low and as and when you require you get people to do work that needs to be done?

Rukmini Rao
Consulting Editor at Fortune India

If some sort of color that you can give on the correlation, if there any exists? And also, your top five client revenue has declined by about 50 bps. Any specific reason is that like a client specific thing or are there ramp downs or anything happening with those top five clients of yours? Thank you.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

Let me start off. I think we have very small, almost immaterial in terms of public sector US. So in that sense, we have, let's say, no impact from some of the things we've seen or read about other peers. We we feel in that sense,

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

we we

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

don't have something large. We have something very small, and therefore, not not no impact on that at all.

Rukmini Rao
Consulting Editor at Fortune India

Contrary US, you know, in in US as an Indian company or non US

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So we don't we don't have a lot of those we we don't have a lot of work in that area. We have a very, very small business in that area. So it's not really material whether the impact happens or not happen. But so we are not in that in that space that much. I think so first our structure is not exactly that, but our structure is well designed today to work with Canada and The US and actually across North America because the individual is not is not one box, the structure we've set up, but it's not a subsidiary in that sense.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Yeah. On the subcontractor cost, I think the the better way to look at it is on a full year basis. If you look at full year basis, our subcontractor cost has come down. If you look at percentage terms, because our revenue has declined this quarter, you will see a slightly distorted picture there, but if you look at full year basis, our subcontractor cost has consciously been coming down, and that's been one of the tracks of Maxima's that we've been driving as well. We use subcontractor pretty much, you know, where there are short term projects or where there are niche skills, where the talent needs to be fulfilled, so that's the reason we use subcontractor, there's nothing.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Why are top

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

five five

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

clients? I don't think there's again anything specific to read that. It's, you know, it's again a factor of that lower revenue that we got because of seasonality or the third party cost, but that's the reason why you would have seen similar drop in the top five clients as well.

Operator

Thank you, Rupini. The next question is from Uma Khanan from the New Indian Express.

Uma Kannan
Journalist at The New Indian Express

Hi, good evening. Given the present uncertainty and Yale led transformation that you spoke about, are you finding it challenging to retain your existing clients? I mean, like number of projects from your existing clients. And another one, you spoke about SLM and agentic AI. So I want to understand what kind of opportunities are you seeing and what is the overall scale of this?

Uma Kannan
Journalist at The New Indian Express

And what is the nature of work like? Is it more discretionary oriented or cost or efficiency?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So there, first on the AI, I think there there's a huge move, and we are part of it in terms of working with our clients on AI transformation, which is driven a lot by agents. We've built 200 agents, they're being deployed within clients. There are different areas where these are being used. So take an example, we are doing something with a global company, a European based company, helping them look at AI as a platform across their entire workspace, and looking at where they can improve or make benefits which could be in the range of 70% in some of their processes. We're working with a telco where we're doing this constructing a complete generative AI platform using agents that we've developed to make sure that the whole enterprise is improving its customer service activities.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So the work we're doing in agents, I feel is quite leading. It's part of our Infosys Topaz, and we have a lot of attention with our clients where we're making those transformations. Other question Yeah.

Uma Kannan
Journalist at The New Indian Express

The first question was about, like, are you finding it challenging to retain more projects from your existing clients?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So, there, we are working very well with our existing clients. The projects are going on. This change in the environment has happened recently. We will see there are discussions, as I mentioned, where on anecdotal basis, clients are looking at how that will impact their business. We want to make sure that we see that through as more clarity emerges on what the overall impact will be, but taking all that into account, we made sure that we put that into the guidance that we provided.

Uma Kannan
Journalist at The New Indian Express

Just one question on employees, like, now ten days of work from is mandatory, right? So are you planning to make it like five days, like some of your competitors have done it, and what kind of feedback that you are receiving from your employees?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So they first, what we have done is, there are several clients of ours who have a different sort of prescription on work from home, and work from office. At the company level, we are flexible with our employees on what they can do. There are some parts where there is a department or a division where we've given flexibility to that department to say that in certain projects, we would like to have people coming in. Having said all of that, the flexibility has been hugely appreciated by the employees, and we are seeing on a weekly, monthly, quarterly basis an increase in the employees who are coming into campus and working. So we with the today.

Operator

Thank you, Uma. The next question is from Sonal Chaudhry from the Deccan Herald.

Sonal Choudhary
Business Correspondent at Deccan Herald

Sonali, hello, Jaish. I wanted to ask that even though you've given guidance and you will continue to watch out with whatever is going on in the macroeconomic environment, when do you foresee a recovery, if you could shed some light on that? You've said that there's no pressure in European markets. Oh, as per energy is also doing well. However, will you play with caution given of whatever is going on right now?

Sonal Choudhary
Business Correspondent at Deccan Herald

And on margins, again, that would be hard to play out given that rupee is also depreciating and among other factors. So is there any strategy at play to make it better? Yeah.

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So on the time horizon, what your first question is, we don't have a view on it, but we will keep track of what is going on and how that plays out and how it affects economic growth or other factors, which then will have an impact on our business. But we don't have a view on the time horizon.

Jayesh Sanghrajka
Jayesh Sanghrajka
Chief Financial Officer at Infosys

Yeah. On the margins, you know, currency would generally benefit. So if rupee is depreciating, you know, the short term, it does benefit. But outside of the currency, we have launched Project Maxima, as we have said earlier, and there are multiple tracks within that, right from value based selling to, you know, efficient pyramid to challenging portfolio, etcetera. All of those tracks are working well, which has resulted in margin expansion this year of 50 basis points, and our endeavor is to improve margins from where we are today.

Sonal Choudhary
Business Correspondent at Deccan Herald

On the European market and any of the segments, if you would play with caution?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

On Europe, as I said, first we had good growth in the financial year that just ended. We also shared that there are areas, for example, automotive in Europe where there is some slowing, so that we are watchful of. Outside of that, we've not made any other comments on that.

Sonal Choudhary
Business Correspondent at Deccan Herald

Just one quick question. This is regarding the layoffs and sort of a behavior that was called out by the employees who failed the test and were sent out. During the last quarter, Rishiv had asked you a question regarding one of the folks who had spoken something over LinkedIn, and you had said that an equal treatment is given to everyone, so, but yeah, the behavior here was entirely different. Anything that you'd, Infosys would like to comment on that?

Salil Parekh
Salil Parekh
MD, CEO & Director at Infosys

So there, you know, what we've had at Infosys over the years has been an approach where we want to make sure that the new employees that are joining from college get the appropriate training, and then they have three attempts to make sure that they have taken that training in, and then can contribute to our clients in the way we want that to happen. As we have now looked at what has been going on with the employees, We've made sure that they have other opportunities sometimes within Infosys, and we have supported for them if we can find a way for them to do training outside Infosys. So we are making sure that we do everything to get them ready, and yet be at the standard that Infosys has kept, and this has been going on for the past twenty years in the way the high quality of delivery that Infosys is known for, and that our clients are expecting from us.

Operator

Thank you, Sonur. With that, we come to the end of this Q and A session. We thank our friends from media. Thank you, Salil and thank you, Jayesh. Before we conclude, please note that the archived webcast of this press conference will be available on the Infosys website and on our YouTube channel later today.

Operator

Thank you and please join us for some high tea outside.

Executives
    • Salil Parekh
      Salil Parekh
      MD, CEO & Director
    • Jayesh Sanghrajka
      Jayesh Sanghrajka
      Chief Financial Officer
Analysts
    • Ritu Singh
      Deputy Editor at CNBC-TV18
    • Haripriya Sureban
      Correspondent at NDTV Profit
    • Chandra Srikanth
      Deputy Executive Editor at moneycontrol
    • Reshab Shaw
      Senior Correspondent at moneycontrol
    • Shilpa Phadnis
      IT editor at The Times Of India
    • Beena Parmar
      Assistant Editor at The Economic Times
    • Jas Bardia
      Journalist at Mint
    • Avik Das
      Associate Editor at Business Standard
    • Sanjana B
      Technology Reporter at The Hindu BusinessLine
    • Sai Ishwarbharath
      India Company News Correspondent at Reuters
    • Padmini Dhruvaraj
      Senior Correspondent at The Financial Express
    • Rukmini Rao
      Consulting Editor at Fortune India
    • Uma Kannan
      Journalist at The New Indian Express
    • Sonal Choudhary
      Business Correspondent at Deccan Herald
Powered by Quartr
Earnings Conference Call
Infosys Q4 24/25 (Media)
00:00 / 00:00

Transcript Sections