Q3 2022 Infosys Ltd Earnings Call

January 12, 2022

Speaker 2: Ladies and gentlemen, good day and welcome to the Infosys Earnings Conference.

Ladies and gentlemen, good day and welcome to the Infosys earnings Conference call.

Speaker 2: As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation.

As a reminder, all participant lines will be in a listen only mode.

It will be an opportunity for you to ask questions. After the presentation concludes.

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Should you need assistance during the conference call basic in Illinois Freedom by pressing Star then fetal on you touched on Philly.

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I don't have the conference over to Mr. Sandeep.

Thank you and over to yourself.

Speaker 5: Thanks, Margaret. Hello, everyone, and welcome to Infosys Learning Squads to discuss Q3 FY22 results. I'm Sandeep from the Investor Licensing team in Bangalore. Let me begin by wishing everyone a very happy new year.

Thanks, Paul.

Good morning, welcome to the Pepper dining sponsors could discuss Qt effect indicators.

And can be something installations, even banking.

Let me begin by wishing everyone, a very happy new year.

Speaker 5: Joining us today on this earnings call is CEO and MD, Mr. Fahlil Parekh, CFO , Mr. Niranjan Roy, along with other members of the senior management team. We'll start the call with some remarks on the performance of the company by Fahlil and Niranjan. After that, we'll open up the call for questions. Please note that anything which we say that refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risks that the company faces.

I need to stay on this on each policy amendments with anybody.

And the spending and then joy along with other members of the senior management team.

Because it's on the Matson underperformed the company by selling them off.

After that we'll open up the call for questions.

But anything which we say.

I'll make a different sort of a forward looking statement, which must be done in conjunction with it for the company faces.

Speaker 5: A full statement and explanation of these RISCs is available in our filing with the ACC. It can be found on www.acc.gov. I'd now like to turn it over to Salil.

With an explanation of these red together, let me know if I leave you. The P. C. It can be found on www Dot if you don't really I'm.

I'd now like to Daniel let me finish.

Speaker 5: Thanks and good evening and good morning to everyone on the call. Wish you all a happy new year and trust you and your dear ones are well and safe. Thank you for making the time.

Hi, Sandeep.

Good evening and good morning to everyone on the call and wish you all a happy new year and trust.

Do you run a willing seller.

Thank you for making the time to join us today.

Speaker 5: I am delighted to share with you that we are in an extremely strong quarter with 7% sequential growth and 21.5% year-on-year growth in constant currency terms.

I am delighted to share with you that we had an extremely strong quarter with 7% sequential growth and 21, 5% year on year growth in constant currency.

Speaker 6: A year-on-year growth was the fastest we have had in 11 years.

Our year on year.

What was the fastest we have had in 11 years.

Speaker 6: The growth was broad-based across industries, service lines, and geographies, given by a differentiated digital and cloud capability.

The growth was broad based across industries service lines and geographies driven by our differentiated digital and cloud capabilities.

Speaker 6: Strong broad-based growth in a seasonally weak quarter is a clear testament to the enormous confidence clients have in us to help them accelerate their business transformation.

Our strong broad based growth in a seasonally weak quarter. It is a clear testament to the enormous confidence John Chad.

You had been extended reach their business transformation.

Speaker 6: This has been made possible by the relentless commitment from our employees through these challenging times. I'm extremely proud as well as grateful for the extraordinary effort in delivering success for our clients.

It should be made possible by the led chips commitment from our employees. She these challenging times I'm extremely proud as well as grateful for their extraordinary efforts and.

Delivering success for that time.

Speaker 6: Our growth has been accompanied by resilient operating margins at 23.5 percent. We delivered these margins while keeping in the forefront our focus on our employees with increased compensation and benefits.

Our group has been become even better.

Operating margins of 22, 5%.

Liberty's margins by keeping in default shrunk I'll focus on other employees with increased compensation and benefits.

Got it.

Speaker 6: Our digital business grew by 42.6% and is now 58.5% of our overall revenue.

Our digital business grew by 42, 6% and is now 68, 5% of overall revenue.

Speaker 6: Within digital, our cloud work is growing faster, and our cobalt cloud capabilities are resonating tremendously with our.

Did you did you give them a cloud work is growing faster.

And that cobalt cloud capabilities.

Tremendous ciguatoxin.

Some of the highlights I'll tried resolved.

Speaker 6: Some of the highlights of our results are revenues at $4.25 billion where the growth is 21.5% year-on-year and 7% sequential in constant currency.

Revenues of $12 two $5 billion that we.

We had a good 21, 5% year on year and 7% sequentially.

M C.

Speaker 6: broad base across all industries, service lines, and geographies. All of our segments reported strong double-digit.

Broad based across all industries service lines and geographies all of our segments reported strong double digit growth.

Speaker 6: large deals at $2.5 billion, onsite mix at 23.8% and utilization at 88.5%.

Large deals at two points I believe.

Onsite mix at 23.8% utilization at 88, 5%.

Speaker 6: operating margins strong at 23.5 percent, free cash flow at 719 million, attrition increased to 25.5 percent, a quarterly annualized attrition was flakish on sequential basis.

Operating margins were strong at 23, 5% free cash flow is 719 million.

You shouldn't increased 25, 5%.

Our quarterly annualized attrition was flattish on sequential basis.

Speaker 6: We had a net headcount increase of 12,450 attracting leading talent from the market.

We added net.

Its counting please.

416.

Attracting leading talent market.

Speaker 6: We've increased the annual college recruiting target to 55,000 and the London will comment more on this. We remain comfortable with our ability to support our clients in their digital transformation.

We've been pleased that our new college recruiting targets to 55 Thompson.

Jim will comment more on this.

You remain comfortable with that ability to support our clients in their digital transformation journey.

Speaker 6: Financial services grew at 15.5% in constant currency with broad-based growth across geography and steady D events. Various subsectors like lending, mortgage, cards, payments are seeing increasing demand. And clients are driving cloud transformation initiatives to build resilient and scalable platforms.

Financial services grew at 15.5% in constant currency with broad based growth across geographies and steady.

Yeah, he is sub sectors.

Mortgage payments.

Statements are seeing increasing demand and giants are driving cloud transformation initiatives to build resilience and scalable platform.

The retail segment growth was 19, 8% in constant currency.

Speaker 6: The retail segment growth was 19.8% in constant currency. Across sub-verticals, we see increased client spend on digital transformation, including digital supply chain, omni-channel commerce, and large-scale cost takeout initiatives to improve business resilience.

Cross shop vertical we see increased client spend on digital transformation, including digital supply.

E channel comments.

Large scale cost take out initiatives improved is it strategic.

Speaker 6: We signed six large deals in this sector, in this segment during the quarter.

We signed six large deals.

In this sector in this segment during the quarter.

Speaker 6: The communication segment grew at 22.2% on constant currency. Segment performance continued to improve with ramp up of recently won deals. Giant budgets are focused on digital and customer experience programs, increasing networking infrastructure, cloud adoption, and security, with emphasis on 5G rollout and innovation.

The communications segment grew at 22.2% constant currency.

<unk> performance continued to improve.

With ramp up of recently won deals John budgets budgets offshore some digital and customer experience programs.

These big networking infrastructure cloud adoption unsecured.

With emphasis on five G rollout and innovation.

Speaker 6: Energy, utilities, resources, and services vertically continues at steady performance with 13.6% constant currency growth and five large deal wins.

Energy utilities resources and services to a degree.

For us its steady performance with 13, 6% comps got cheap loan and five large deal wins.

Speaker 6: We have seen gradual improvement across various businesses as consumer spending continues to increase and clients focus on increasing technology transformation around areas like customer experience, cybersecurity, and workload migration to the cloud.

The gradual improvement across various businesses.

Consumer spending continues to increase and clients focus on increasing technology transformation around areas like that somebody expedient cyber security and.

Workload migration to the cloud.

Manufacturing segment growth accelerated to 48, 4% in constant currency.

Speaker 6: Manufacturing segment growth accelerated to 48.4% in constant currency with continued ramp-up of the Daimler-B.

Okay.

With continued ramp up of the Daimler Dee.

And steady momentum and new deal wins.

Speaker 6: We see across the broad improvement within various subsectors and geographies and expect client focus to continue in areas like smart manufacturing, IOT, digital supply chain and connected products.

We see across the broad.

Within various sub sectors, and geography, and expect client focus to continue in areas like smart manufacturing Iot digital supply chain and connected products.

Speaker 6: High tech growth improved during the quarter to 18.9% in constant currency. Clients are seeing renewed momentum in terms of spending on digital transportation programs linked to customer, partner, and employee engagement.

Hi Tech growth improved during the quarter to 18, 9% in constant currency.

The team continued momentum in terms of spending on digital transformation programs linked to customer partner and employee engagement.

Speaker 6: Life Sciences segment performance also improved further to 29.2% growth. Adoption of digital health, telehealth, and patient access programs are resulting in significant uptake of cloud, IoT, patient-facing applications, patient portals, and next-generation CRM boards.

The life Sciences segment performance also improved for the <unk>.

99, 2%.

Adoption of digital habits daily habits, and patient access programs are resulting in significant up vehicles cloud Iot patient facing applications patient Boltzmanns and next generation generation CRM book.

Speaker 6: We had a very strong performance on our income tax program in India, over 5.8 crore or 58 million tax returns were filed using the new system by the deadline of December 31.

We had a very strong performance on our income taxes than in India. Although.

Over 5.8 Civil War or 58 billion tax returns were filed using the new system.

The deadline of December 31.

Speaker 6: 2021. On the last day, over 46 lakh or 4.6 million tax returns were filed, and during the peak hour over 5 lakh or 500,000 tax

2020, but on the last day or 46 lack of $12 6 million tax returns with fine and during the peak out over five lack of 500000 tax returns were filed.

Speaker 6: We are proud to be supporting the digital strategy for India and for the government and working on this program for future modules that will be developed.

We are proud to be supporting the digital strategy for India and for the government.

Working on this program for future module that will be dependent.

Speaker 6: Across digital services in Q3, we have been ranked as leader in 12 digital service-related capabilities from artificial intelligence and automation, cloud services, IoT, engineering, modernization, and big data and analytics.

Across digital services in Q3, we have been ranked as a leader in twin digital service related capabilities from artificial intelligence and automation cloud services Iot.

Engineering modernization and big data and analytics.

Speaker 6: A strong overall performance stems from four years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continuing re-skilling of our people and deep relationships of trust our clients have with us.

The strong overall performance stems from four years of sustained strategic focus on areas of relevance for our clients and digital and cloud can you re skilling of our people and deep relationships of trust our clients have with us.

Speaker 6: With the strong momentum in the business and the robust pipeline, we are increasing our annual revenue growth guidance.

With this strong momentum in the business and the robust pipeline.

Annual revenue growth guidance.

Speaker 6: from 16.5% to 17.5%, moving up to 19.5% to 20% in constant current.

From 16, 5% to 17, 5% moving up to 19, 5% to 20% in constant currency.

Speaker 6: Our operating margin guidance remains at 22% to 24%.

Our operating margin guidance remains at 22% to 24%.

Speaker 6: With that, let me hand it over to Nilanjan for his update.

With that let me hand, it over to the London or his update.

Speaker 5: Thanks, Salil. Hello, everyone, and thank you for joining the call. Let me start by wishing everyone a very happy and safe 2022.

Thanks, Pat and Hello, everyone and thank you for joining the call and let me talk by wishing everyone a very happy in 'twenty.

2022 .

Speaker 5: Q3 was another successive quarter of continued acceleration in revenues at 7% constant currency Q1Q growth and 21.5% constant currency year-on-year growth, the highest year-on-year growth in the last 11 years.

Let's see whether my best.

Quarter of continued acceleration in revenue at 7% constant currency growth and 21.

Constant currency year on year growth the highest year on year growth in the last 11 years.

Speaker 5: Despite the Q3 seasonality, we registered strong broad-based growth across fields and verticals. Our largest geography, North America, grew at 21.4 percent, while growth in Europe accelerated to an impressive 27.2 percent year-on-year in constant currency terms. Retail, communication, manufacturing, and life sciences also saw 20 percent or higher year-on-year growth in constant currency.

Despite the Q3 seasonality you will get strong broad based growth across yoga and verticals.

Our largest geography North America grew at 21, 4% while growth in Europe accelerated dwindling.

Seven 2% year on year in constant currency.

Retail communications manufacturing and life Sciences also for 20% or higher year on year growth in constant currency.

125 large deal.

Speaker 5: and largely using those with over 15 million PCV, totaling $2.5 billion of PCV, six in retail, five each in financial services, communication, and energy, utilities, resources, and services, two in manufacturing, and one in high tech and life science.

And large deals being dosed with over 15 million P. C D link to $5 billion off the T V.

<unk> IV in financial services communication and easy.

He is a default didn't brotherhood.

And matter of fact thing and one high Tech and lifetime.

Speaker 5: Region-wise, 16 were from the Americas, 7 were from Europe , and 2 from ROW.

We can buy 16 were from the Americas, Kevin Welcome Europe and to come out of them.

Speaker 5: The share of new deals increased from 3% to 44% within the large deal number.

The share of new deals increased in Q3 to 44 pathetic already 4% within the largely numbers.

Speaker 5: Client metrics improved further with 100 million client counts increasing to 37 and an increase of 8 year on year. We added 111 new clients in the last quarter. Operating parameters remained robust. Utilization was 88.5%, slightly lower than the previous quarter, easing some of the supply side pressures. On-site efforts mixed in sub-marginally to 23.8%.

Client metrics improved further with 100 million blind count increasing to 37, an increase of eight year on year, we added 111, new clients in the last quarter.

Operating parameters remained robust.

Utilization was 88.

Slightly lower than the previous quarter, you think some of the supply side pick up.

Onsite effort mix in top marginally to 23.8%.

Speaker 5: Q3 margins remain resilient at 23.5%, a marginal drop of 10 basis points versus previous quarter.

Q3 margins of the majors immune tech landscape.

Martin you drop off 10 basis points with the biggest quarter.

Speaker 5: the major components of the sequential margin movement were as below.

Major components of the sequential margin movement was below.

Speaker 5: 80 basis points impact due to comp hikes and promotions and other employee interventions.

80 basis points impact you'd be comprised in promotion and other employee intervention.

Speaker 5: 40 basis points, in fact, due to the utilization decline. These were offset by about 20 basis points benefit due to the rupee and other cross-currency movements. 50 basis points benefit due to cost optimization. And another 40 basis points benefit due to SGA leverage and other one-offs included therein.

Basis points impact that you could do utilize it can decline.

These were offset by about 20 basis point benefit due to the rupee another tough currency movement.

The basis point benefit due to cost optimization, and then another 40 basis points benefit.

Another one off.

Darin.

Speaker 5: Q3 EPS grew by 11.2% in dollar terms and 13.1% in rupee terms, on a year-on-year basis. Although DSO increased to 71 days due to higher seasonal billing, an increase of 5 days versus the last quarter, it is still a reduction of 2 days versus Q3 of prior year.

U P. P. S grew by 11, 2% in dollar term and cutting 0.1 dependent repeat them Oh My God.

Although DSO increased to 71 days due to higher seasonal billing and increase of five days what is the last quarter. It is still a reduction of food is what you'd see us right.

Speaker 5: Free cash flow for the quarter was healthy at $719 million. Free cash flow as a percentage of net profit was 93% for Q3 and 104% for the nine months to date. Yield on cash balances improved to 5.29% compared to 5.13% in Q2. Our balance sheets remain strong and debt-free. Consolidated cash and investments at the end of the quarter stood at $4.28 billion after paying over $850 million of interim dividend during the quarter.

Free cash flow for the quarter was $719 million.

Cash flow was a person figure of net profit was 19, 3% for Q3 hundred and 4% for the nine months to date.

You can go on cash balances improved to $5, two 9% compared to five 1% in Q2.

Balance sheet remains strong and debt free consolidated cash and investments at the end of the quarter stood at $4 2 billion after paying $815 million of interim dividend during the quarter.

Speaker 5: Return on equity increased further to 30.4%, an increase of 3% over Q3 of the prior year, given by robust performance and consistent capital return through share buyback and increased dividend payout.

Return on equity increased further to 34% an increase of 3% and three of the prior year driven by robust performance and consistent capital return.

On the back of increased dividend payout.

Speaker 5: On the employee front, voluntary long-term 12-month attrition increased to 25.5%, and as Pamil commented, while LCM attrition continues to increase due to the tail effect, quarterly annualized attrition was sluggish compared to Q2.

On the employee fans won't be long term.

They shouldn't increase to 25, 5%.

And that's the Lille commented while ultimately.

The increase due to the tail effect quarterly in light of Cushing with flattish compared to Q2, we will continue to invest in all aspects of talent retention, including compensation promotion and incentive learning and career progression.

Speaker 5: We will continue to invest in all aspects of talent retention, including compensation, promotion, skill incentives, learning, and career progression.

Speaker 5: We have also simultaneously increased the pace of hiring, talent re-skilling, and the usage of subcoms to prevent any impact on client commitment.

We have also simultaneously increase the pace of hiring talent Reskilling and do you think that's a problem to prevent any impact on client commitments we.

Speaker 5: We have added over 12,450 employees, talented employees on a net basis in the last quarter, which is the highest ever.

We have added over 12000.

Employee talented employees on a net basis in the last quarter, which is the highest ever.

Speaker 5: Global college graduate hiring program for this fiscal has been increased to over 55,000 versus the previous quarter number of 45,000.

Globally College graduate hiring program for this fiscal has.

Has been increased to 55000 versus the previous quarter number of 45000.

Speaker 5: In India, over 93% of insurgents have received at least one dose of the vaccine.

India over 93% up in portions of the PD, one or both of the vaccine.

Speaker 5: Over 90% of our employees globally are presently working in remote environments due to the heightened precautions against the new variant.

Over 90% of our employees globally at present, we're working in remote environment due to the.

Hyphen precaution against the new variant.

Speaker 5: Driven by robust demand environment and a continued market share gain, we are further increasing our revenue guidance by 522 to 19.5 to 20% in constant currency terms from 16 and a half to 17 and a half earlier. And the margin guidance remains unchanged at 22 to 24%. With that, we can open the call for questions.

Driven by robust demand environment, and our continued market share gains yes.

Well I think increasing our revenue guidance for FY 'twenty to the 19, 5% to 20% in constant currency terms from 16 into hospice, having been in the Hopper earlier and the margin guidance remains unchanged at 24% with that we can open the call for questions.

Speaker 2: Thank you very much. We will now begin the question and answer session.

Thank you very much.

Again, the question and answer session.

Speaker 2: If anyone who wishes to ask a question, may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 1 on the touchtone telephone.

Any one who wishes to ask a question.

On the Dutch tone telephones.

If you wish to remove yourself from the question queue.

Todd.

Participants are requested.

Asking a question.

Anyone who would like to ask a question. Please press star one at this time.

Speaker 2: Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Ladies and gentlemen.

While the question queue.

Yes.

The first question is from the line of.

From JP Morgan. Please go ahead.

Speaker 5: Thank you, happy new year to everybody. Excellent numbers for the quarter. Clearly, very, very strong growth for the third quarter. Could you maybe start with elaborating where the incremental...

Thank you how can you have to have your body excellent numbers for the quarter clearly a very very strong growth for the third quarter could you maybe start with elaborating that would be incremental.

Speaker 7: came from versus the previous Foliar focus, why was the difference so sharp?

Execution came from.

As the previous full year forecast was a difference of shop.

Hi, uncle <unk>, sorry, you broke up a little bit you said there was the incremental.

Speaker 7: Hi, uncle, this is Salim. Sorry you broke up a little bit. You said, where was the incremental? Where the incremental surprise came from. The full year guidance has been increased very sharply, given the performance in the quarter. Where did the surprise come from? Oh, yeah.

The incremental surprise came from the the full year guidance has been increased very sharply given the performance in the quarter, but it does surprise comes from Oh, yeah.

Okay sure.

Speaker 6: So there, I think, what we are seeing in the quarter and then all through the year.

I think what what we have seen in the quarter and then all through the year.

Speaker 6: is the demand environment remains extremely strong.

Is the demand environment remains extremely strong.

Speaker 6: and then more and more traction on the digital and the cloud program.

And then more and more traction on the digital and the cloud programs and this is where we saw the most impact.

Speaker 6: This is where we saw the most impact in the quarter in Q3, where we had this really strong growth of 7%, and therefore the overall guidance jumping up by 3%.

In the quarter in Q3, maybe you had this really strong growth two 7% and therefore, the overall guidance jumping up by 3% in terms of verticals as I was sharing earlier, it's really draw base of course, we are very strong momentum in manufacture.

Speaker 6: In terms of verticals, as I was sharing earlier, it's really broad-based. Of course, we have very strong momentum in manufacturing. That was something that we were looking forward to. There's also good momentum that we're seeing in financial services given it's our largest vertical and in life sciences that I described before. Retail is starting to come back nicely as well.

Oh that was something that we were looking forward to there's also good momentum that you're seeing in financial services, given it's our largest vertical and in life Sciences that I described before are retailers starting to come back nicely as well as I just mentioned yoga again will stand out.

Speaker 6: As Niranjan mentioned, Europe , again, was standout. Those are some of the elements that gave us a good outcome in Q3, and then the support for expanding the margin for the full year. Sorry, the guidance for the full year. Thank you.

Those are some of the elements that gave us a good outcome in Q T N than just support for expanding the margin for the full year I'm sorry, the guidance for the.

Thank you Sal and send them the growth trajectory has continued.

Speaker 8: on a year-over-year basis for the last six quarters consistently.

On a year over year basis for the last six quarters consistently.

Again.

Breaking.

Speaker 7: Apologies, let me try again if you can get time. Growth project.

Paul Let me try again.

Time growth trajectory.

Speaker 2: I'm afraid sir, your voice is not clear. I would just request you to please check your phone line and read.

I'm afraid I'm sorry, your voice is not clear I would just request you to please check your phone line.

Speaker 2: In the meanwhile, we'll move to the next question, which is from the line of.

And then Meanwhile, we'll move to the next question, which is from the line of Moshe.

From Wedbush. Please go ahead.

Speaker 9: Hey, thanks have been here and congrats on very strong results one.

Hey, Thanks, happy new year, and congrats on very strong results one.

This is we just reported Q3, but are you ready to talk a bit about the entire calendar year down the road.

Speaker 10: But are you ready to talk a bit about the the entire calendar year down?

Speaker 10: What do we, what's changed in terms of visibility and maybe.

'twenty two what do we know what has changed in terms of visibility maybe I guess the biggest question is gonna be if this is sustainable down the road and what can you kind of talk about in terms of color to give us that comfort.

Speaker 10: The biggest question is going to be if this is sustainable down the road and what can you talk about in terms of color to give us that comfort?

Speaker 10: And then on top of that, maybe you can talk a bit about some of the cushion and margins and what sort of levers that you have in the model.

And then on top of that maybe you can talk a bit about some of the cushion and margins and what sort of levers that.

But you have in the model.

Speaker 9: Especially as some of the bench continues to benefit from the off-campus recruiting that's been pretty well

Especially as some of the some of the bench continues to benefit from the off campus recruiting that's been pretty robust. Thanks a lot.

Speaker 6: Thanks, Moshe. This is Salil. I'll start off with the first part and then Niranjan will comment on the margin levers. Of course, as you referenced, we have guidance through March 31.

Thanks Moshe this is ilene I'll start off with the first part and then the London will come back.

On the margin you guys.

Hum.

Of course.

As you trading.

We have guidance through March 31.

Speaker 6: March 31 of this year. The color for this calendar year.

Masthead, you're one of this year the color for this calendar year.

Broadly.

Speaker 6: We see the demand environment remaining strong. The client budgets are looking good.

See the demand environment should be ending strong decline budgets are looking good.

Speaker 6: Our overall pipeline is the largest we've had in a very long time. The number of large deals that we were able to close at the London share, 25 large deals, each over $50 million for a total of $2.5 billion.

Overall pipeline is the largest be bad.

In a very long time.

A number of large deals that we would be able to close at the luxury Sharon.

25 large deals each over 15 million.

Two and a half billion.

Speaker 6: and 44% of these are net new. So all of those things are giving us good confidence for what we see going ahead. Of course, we will have our guidance for our financial year in April .

And 44% of these are net new.

All of those things are giving us a good confidence with what we see going ahead of course, we will.

Have a guidance for the for all financing deal in April .

The logic or would you.

Speaker 5: Yeah, excellent. Hi, Moshe. So on the margins, like I mentioned earlier, they were quite resilient for the quarter. I think a couple of things I just want to call out, of course, you know, in Armory, you know, cost leavers, you know, whether it be on-site offshore makers.

Thanks, Alan I'm Okay.

The margins are like I mentioned earlier, there were quite resilient for the quarter.

A couple of things I guess I wanted to call out or possibly more in the Ahmadi Oh it'll cost me was you know whether you're on site offshore mix. It we put a meg.

Speaker 5: It's the pyramid, whether it's automation. Of course, these are some things which we're continuously deploying. Going ahead, of course, Subcon Corp for us has really ramped up. And that's an area we will continue to look ahead.

It's automation of course these are something that we continuously deploy going ahead of cost of corn golf ball I think when you ramped up and that's one area that we can do to look ahead.

Speaker 5: The other thing is, of course, pricing, and it's important to talk about that as the higher costs are now feeding into our new deals, et cetera. I think that should hopefully have a benefit.

Other thing is of course pricing and it's important to talk about bad debt.

<unk> talked about not eating into our new deal, except all I think that could hopefully have a benefit.

Speaker 11: And of course, as digital talent starts getting priced in, we are able to show value to our clients in terms of the digital transformation. Now, again, this is something we have started recently. It will take time to kick in, and we've talked about it in the last quarter as well. But really, that is the focus if we can start getting into both our cost side and also making sure that we are not leaving any three cents and dollars on the table as part of our pricing negotiations. Thanks, guys. Good luck.

And of course as digital talent stop getting by skin, yeah, It making sure more value to our clients in terms of the boutique transformation. Now again. This is something we are talking you can eat it will take time to kick in and you've talked about in the last quarter as well.

But really that is a focus if he can get start getting into both our cost side and also making sure that we're not leaving any you know we think $10 on the table as part of our pricing negotiation.

Thanks, guys. Good luck.

Thank you.

Next question is from the line of <unk>.

<unk> from Dnb.

Please go ahead.

Speaker 12: Hi, good evening everyone and thank you for taking my question. Congratulations on a great set of numbers. My first question fell in was around...

Hi, Good evening, everyone and thank you for taking my question. Congratulations on great set of numbers. So my first question Phil It was our own now going into this calendar year. So everyone else two largest peers. So far have indicated really strong growth to continue through this year. So looking at our portfolio of capable.

Speaker 12: Going into this calendar year, so one of the largest years of ours have indicated a very strong growth to continue through this year. So looking at our portfolio of capabilities and offerings, do you see that we are well aligned to meet or beat their growth numbers, or do you see that we need some intervention to build up our own capability to continue this strong growth going ahead?

Good evening offerings SKU feedback.

To meet or beat peer group numbers or do you see that we need from intervention to build up our own capability to continue this strong crude swing at it.

Speaker 6: Thanks for that question, I think.

Okay. Thanks for that.

Question I think.

Speaker 6: In terms of our capability set.

In terms of capability set.

Speaker 6: We have a strong portfolio across digital and cloud. Our Cobalt set of capabilities is resonating extremely well with our client. We see the growth in digital really a reflection of the focus we've had on making these choices over the past four years and positioning the portfolio for when a client is at worst looking

We have a strong fit for you.

Digitally.

Our COBOL capabilities.

Capabilities and scale.

Extremely vary with time.

The growth in digital.

The selection of the focus we've had on making these choices over the past four years and positioning the portfolio for windows.

On most looking for would be.

Speaker 6: We also see the cloud capabilities faster growing than our digital capabilities.

We also see the cloud capabilities faster than.

And then our digital capability, so, yes, we're well positioned.

Speaker 6: So yes, we are well-positioned to benefit from this. In addition to that, we have a strong set of capabilities in automation, in modernization. We've even seen our cost services, which is now stable this quarter in terms of growth. It's not shrinking. So our view is that our set of capabilities and portfolio

We benefit from this.

In addition to that we have a strong set of capabilities in automation and modernization.

You can see in our core services, which is now stable this quarter in terms of growth its not shrinking.

Our view is that I've kind of capabilities and portfolio.

Uh huh.

Speaker 6: reflecting what our client expectation demands are. And we have the ability to meet all of those from the capability perspective.

Reflecting what that client our expectation.

Demand Oh, and we have the ability to meet all of those from the capability perspective, we also have the capacity.

Speaker 6: We also have the capacity which we expanded recruiting at the college level and our ongoing recruiting ability to attract talent, which is helping us to deliver on our projects on a regular basis. So we feel quite good about our position as we go ahead into the next year as well.

Our expanded recruiting.

At the college level and the unbeliever recouping ability to attract talent, which is helping us to deliver on our projects on a negative basis. So we feel quite good about how we're positioned as we go ahead into the next year as well.

Speaker 12: Thanks for that, Salil. My next question is around the margin guidance plan, which we have 22 to 24%, and currently we are trending to the upper end of that. So how should we see that? What is it an indication of? Is it that you want to keep a flexibility with yourself in anticipation of any large deal or any cost handling potentially coming from that? Or is there an indication that you're looking at some major cost handling which are going to come in coming quarters, and hence you are maintaining this margin guidance?

Thanks for that my next question was around the margin guidance language, we have 22, 84% and currency if you're trending too.

So how should we see that what is it an indication or is it that you want to keep a flexibility with Joe since varian anticipation of any large ski or any cost potentially coming from that or is there any indication that you are looking at some major cost trends, which are going to come in coming quarters commensurate beginning this month.

Okay.

Right.

Yeah.

Speaker 5: Yeah, so I think the margin guidance for us is really a comfort range within which we operate. So we really don't, you know, fine-tune that as a year progressor. So this is a band which we are happy to be in. It was 21 to 23, you know, just before COVID. Now we are 22 to 24. So that's more like a, you know, a real product rather than anything else.

Yeah, So I didnt give margin guidance, but I think really our comfort range.

And it didn't really operate well, we really don't know a fine tune that is where you have to pay for because bank, which we are happy to be in 'twenty, one 'twenty three.

The post Covid now we've got plenty to Paul.

So that's more like a you know oh.

Well rather than anything else and I think looking ahead, we continue our focus.

Speaker 5: And I think looking ahead, we continue to cost focus. We know the cost headwinds, potentially in terms of employees, et cetera, could be traveled into the next year. But like I said, we have a very robust cost optimization and a cost new lever which we continue to deploy. So we've been quite confident on this.

A cost headwind potentially in terms of employees.

Could be followed into the next year, but like I said, we have a very robust cost optimization.

We believe we can continue to play well, we remain quite confident on that.

Speaker 12: Okay, so more of a reflection of flexibility that you want to keep with yourself. Got it. Thanks a lot for those answers. I'll call back. Thank you.

Okay. So more of a reflection of flexibility that he wants to keep secure sorry, I got it. Thanks, a lot for those answers I fall back.

Thank you. The next question is from the line of Keith Bachman from BMO capital markets. Please go ahead.

Speaker 13: Yes, thank you. I want to pick up on that line of questioning. If you could just talk about the puts and takes as you see margins over the course of the next three, four, five quarters, really calendar year 22. And I wanted to see if you could address what you think the impact would be for a few things. So, for instance,

Yes. Thank you I wanted to pick up on that line of questioning if you could just talk about the puts and takes as you see margins.

Over the course of the next three or four or five quarters really calendar year 'twenty, two and I wanted to see if you could address what you think the impact would be for a few things. So for instance.

Speaker 13: One of the headwinds this quarter was utilization. How should we be thinking about utilization trends during calendar year 22?

One of the headwinds this quarter was utilization what how should we be thinking about utilization trends during calendar year 'twenty two.

Speaker 13: Number two, could you speak to, I think you said attrition was flat sequentially, how do you think about...

Number two could you speak to I think.

He said attrition was flat sequentially.

How do you think about.

Speaker 13: attrition trends over the course of calendar year 22. Do you think that they can move lower or is the market such that demand is so strong that attrition will probably remain elevated? And then number three...

Attrition trends over the course of calendar year 'twenty. Two do you think that they can move lower or is the market such that demand. So strong that attrition will probably remain elevated.

And then number three would be.

Speaker 13: You just brought up travel or any other issues that we should be thinking about that may impact calendar year 22 margins and any other issues you want to bring up and that's it for me.

You just brought up travel or any other issue.

As you said, we should be thinking about that may impact Calvin's every year 22 margins and any other issues you want to bring up and that's it for me. Thank you.

Yeah. So I didn't get yeah, we don't give up the margin guidance for the next year.

Speaker 5: Yes. So I think that we don't give up the margin guidance for the next year. Now, having said that, looking at the headwinds, which we actually face pretty much every year, you have your compensation hikes, you have clients.

Now having said that we are looking at would be headwind, which we actually have pretty much every year you have the compensation hikes you have clients coming.

Speaker 5: coming back for discounts on renewals, and some of that you offset with the cost optimization programs that we run. And I mentioned that a bit earlier in terms of whether it's a pyramid, whether it's upcon, whether it's automation. Blue lever, which you're looking at, is pricing. So that's something which we're continuously working on and remain quite confident. Of course, travel is one thing which is quite unknown at this moment in terms of when does it come back. All right.

Coming back from the phones on renewal.

I hope that you all set.

The cost optimization program.

And I mentioned that the bigger lever in terms of it has.

Upon whether it's automation.

Really like if youre looking at is pricing, so that's something which continues to be working on and remain quite confident.

Look one thing we could fight unknown at this moment in terms of when does it come back even if it comes back to come back to pre COVID-19 levels.

Speaker 5: Even if it comes back, does it come back to pre-COVID levels or does it stay at a slightly lower level? So we'll have to watch out for that really.

Together with a slightly lower level, so we'd have to watch out for that.

Speaker 5: In terms of attrition, I think it's a larger industry issue, it's not peculiar to us.

In terms of a kitchen I think it's a larger industry issue, it's not clear to us.

Speaker 5: Fundamentally, I think it's largely stemming from that the volume increase for this industry fundamentally has to come from fresh air, right?

Fundamentally I think it's largely stemming from that volume increase public industry fundamentally has to come from cash that was like otherwise. It's a zero sum game in terms of somebody enters a fishing is my luck.

Speaker 5: Otherwise, it's a zero-sum game in terms of somebody else's attrition is my lateral, and my attrition is somebody else's lateral. So as long as the sexual intake starts increasing, because first they have to come into training, then they go into production after three or four months.

Pushing that somebody else electrical.

Long IP de stocking cleaning because they have to come into training when they go into production after three or four months and that will take time for this industry to start absorbing and I think that's something which will help them be efficient in the medium term and like I said, we have seen attrition a flattening sequentially on a quarter annualized basis.

Speaker 5: And that will take time for this industry to start absorbing. And I think that's something which will help the nutrition in the medium term. And like I said, we have seen nutrition flattening sequentially on a quarterly, annualized basis.

Speaker 5: And looking ahead, we are seeing some positive signs, but it's too early to say whether it will dramatically come down.

And looking ahead, we are seeing some other defined with me too early to say, whether it'd be magically comes out.

Speaker 5: But like I said, as special feed into the system, we should see the overall environment in terms of attrition in the market really working.

But like I said as efficiency.

The fact that feed into the system, we should see the overall environment in terms of attrition in the market are really working.

Speaker 13: Okay, okay. But any comments specifically on, is utilization, you think, a helper, hurt, or neutral, just broadly? And as part of that, I noticed your offshore percent of labor increased year over year. Is that also a trend that you think continues, given the dynamics in front of you? And I will see before or thereafter.

Okay, Okay, but any comments specifically on utilization.

I think it help or hurt or neutral.

Just broadly and as part of that.

Just your offshore protect per cent of labor.

Labor increased year over year is that also a trend that you think continues given the dynamics in front of you and I will cede the floor thereafter.

Speaker 5: So, in terms of utilization, of course, this is higher than what we would normally like to be. We would rather operate at an 85, 86%. But having said that, even if we bring this down in the future, in terms of cost...

So in terms of utilization of cost is higher than what we would love to tell me like me.

Operator.

But having said that it wouldn't be David.

Our future in terms of its largely offshoring because all the 70.

Speaker 5: It's largely off-shoring because all the effort is, you know, 75% of our effort is sitting there. So, utilization doesn't have directly linked to the margin because of the way the offshore costs operate. So, that's one factor. I think there was a second question on?

75% of that if I kept thinking therefore.

Utilization.

But it could be linked to the margin because of the way be awful close up there. So that's one factor.

The second question on.

Speaker 5: On site also. I think in the long run, if you see, I think.

Onsite offshore I think there's a long way I think.

Long run if you see I think COVID-19 why this happened with huge impact on demand I think the entire ability for fly.

Speaker 5: COVID, why this had this huge impact on demand. I think the entire ability for.

Speaker 5: this supply side to be delivered in a remote environment really for me to shine out, because really that is.

Fly sites will be delivered with more than violate any sign.

I know it was really that has opened up the eyes of many of our clients that we thought it was doesn't have to be done.

Speaker 5: opened up the eyes of many of our clients that really every sort of work doesn't have to be done.

Speaker 5: Near shore it can be done, you know, I mean on-site it can be done in near shore locations.

Yeah sure it can be gotten.

I mean on site it can be done in the actual location. It can be done offshore and I think the beauty of that is particularly we believe this will help the industry and much more larger all floating at an overall level and of course, a part of that benefit will be more shifting more work offshore location. So I think this is a good sign I think they can be short term impacts like we've seen this quarter.

Speaker 5: it can be done offshore and I think the beauty of that is secularly we believe this will help.

Speaker 5: the industry in much more larger offshoring at an overall level and, of course, part of that benefit will be shifting more work to offshore locations. So I think this is a good sign. I think there can be short-term impacts like we've seen this quarter, you know, 10-20 basis points here and there. But the secular trend, we think, will continue to see that the, you know, the large labor markets available in India.

10, 20 basis points here and there, but the secular trend we think will continue.

You will see that the you know the.

The labor market that we live in India.

Speaker 13: will open up a lot more of offshoring opportunities. Terrific, Manny. Thanks. Congratulations.

Open up a lot more offering opportunities.

Terrific. Many thanks congratulations.

Thanks.

The next question is from the line of.

From UBS. Please go ahead.

Speaker 14: Thanks for taking my question and congratulations on a very impressive quarter.

Thanks for taking my question and congratulations on that.

Okay.

Speaker 14: My question is on pricing. Salil, we've seen now several quarters of strong demand, and it looks like we are looking at another year, looking at the run rate that we're exiting the calendar with of pretty strong demand as well. And we just discussed supply in the last few comments that you made. How do you see pricing really trend in the next 12, 18 months? Is there an opportunity for this to go up on a like?

My question is on FIFO.

Now a better quarter for us talk a lot.

Okay.

For calendar with a pretty strong demand overall.

Okay.

And the last for Colorado.

How do you see typhoon.

Fair enough.

Sure.

Yes.

Speaker 6: I think on pricing first, we've seen some level of stability in what we saw in the specific deal that we closed in Q3 versus Q2.

Oh hi.

Thanks for that question, because it's a little bit.

Pricing for us.

We've seen some level of stability and what we saw in those specific deals that we closed in Q2.

Is Q2.

Speaker 6: On the longer term, as I have shared in the past, we have put in place a very focused effort.

On the longer term.

But as I mentioned in the past we've put in place.

We are focused on.

Speaker 6: on communicating the value that we are helping create with our clients through the digital program.

We do think that value.

Helping create with our clients to the digital programs.

Speaker 6: We're also seeing, as we shared, wage increases. We've done two of them in the last 12 months. And broadly, we are seeing large enterprises for the first time in a very long time.

We have also seen.

Sure.

Wage increases <unk> been in the last 12 months.

And broadly.

A large enterprises.

First time in a very long time, I've seen inflation in that daily environment.

Speaker 6: increasing inflation in their daily environment. And so I'm more open to having these discussions.

And so are more open to having these discussions.

Speaker 6: With these factors in mind, we will see some more value that we can bring in through communicating and demonstrating our digital impact that we're creating through those programs. And that, while it will not be immediate, but over the next several quarters, in my view, will help us to build out more resilience in the margin trophies.

With these factors in mind.

We see we will see some more value that we could bring in.

We're communicating and demonstrating our digital in fact that they created through the spring.

And that while it will not be immediate but over the next several quarters in my view would help us to build out.

<unk> resilience in the margin profile.

Got it.

Speaker 14: You earlier enumerated your skills and capabilities, but if you were to kind of think of any future investment that you're going to make, in which direction would you kind of direct that investment to in terms of your skills?

And you know what he says you are.

Eric Frankel for vehicle.

What's the kind of Cingal.

Uh huh.

The Oklahoma.

Okay.

Well that's helpful.

From a cultural.

Okay.

So today is the biggest.

Speaker 6: So today, the biggest drive within our clients is really cloud. Our Cobalt capabilities are very strong, and we are constantly announcing it. Whether we look at the public cloud partnerships, we have also a very strong ecosystem of private cloud partnerships.

Jai within our clients is really cloud.

Our COBOL.

Capabilities I'm very strong that we are constantly analysis.

Whether you look at the public cloud partnerships. We have also very strong ecosystem of private cloud partnerships.

Speaker 6: And we have a good ecosystem with the SAP players, extremely strong cloud-native, cloud-first development. And those will be really the first area where we are already leading, but we will continue to grow.

We have a good ecosystem with this.

There is extremely strong cloud native cloud first development.

Those will be really the first area.

Where we are already doing.

But he will continue to grow.

Speaker 6: Then you have the areas which focus on cyber security, which focus on data and analytics, and which focus on IoT. Those are the areas which we are seeing this incredible traction with our clients.

And then you have the areas of which focus on cyber security, which focus on data and analytics.

Pigs, which focuses on Iot.

Yeah Yeah.

This incredible traction with Tech Giants.

Speaker 6: There is a very strong interest in modernization and automation, leveraging artificial intelligence and machine learning. We continue to build that out. Our approach is going to be to drive all of these through our current margin flow.

Yeah.

Very strong authorization and automation are leveraging artificial intelligence and machine.

They need to build that out either.

Our approach in Boynton Beach drive all of these through our current budget.

Speaker 6: So that's what we'll drive through, as opposed to any new plays for him.

So that's what the drive thru as opposed to any new blades.

Yes.

Speaker 14: One last bookkeeping question. Your other segment had a big swing this quarter. Is there anything particular that we should be looking at here? Any one-offs or is it something, and if not, what drove that?

Oh, one last book keeping question.

Those segments had a big quarter.

Okay.

Anyone else.

And knock on.

Okay.

[noise], yeah. So I think that that's cutting our film India, we have some seasonality with some of our clients operate.

Speaker 15: Yeah, so I'll take that, so that's coming from India, we have some seasonality with some of our clients towards the quarter end, and that you'll see also in the geography sector of India. Got it, thank you.

Corporate and that Greenfield.

If you take the whole thing.

Got it thank you and Michelle.

Thank you.

The next question is from the line of Ashwin Mehta from Ambit capital. Please go ahead.

Uh huh.

Speaker 2: Sorry to interrupt you Mr. Mehta, I would request you to come closer to the phone.

Congrats on good.

A question to come closer to the phone.

Yeah.

Okay.

Sorry can you hear me better.

Please go ahead.

Yeah I had one question on the third party bought out items.

As far as service delivery dark.

I M seems to have gone up by almost $71 million this quarter at almost 1.8% they'll say bad news. So just wanted to check.

What does this pertain to.

Is it is it possibly at a later date.

Well, there's a you would have done in some of our large skus.

Yeah.

Uh huh.

Yeah go ahead.

Speaker 5: Yeah, so I think, as we're looking at many digital end-to-end transformations, whether it's, you know, IT as a service...

Yeah. So I think as we're looking in many digital end to end confirmation.

He has a thought of it.

Speaker 5: full-stack transformation, we've involved infrastructure, staff, data.

Food fact constellation we've involved in that.

You know.

Yeah.

Data with a full stack conservation and in many cases, we've enrolled infrastructure and software as well so you've got bundled deal.

Speaker 5: So it's a full-stack transformation, and in many cases, these involve infrastructure and software as well. So these are bundle deals, which are end-to-end transformations, and we think they're very, very important as well.

And Duane confirmation that we think they are very very important that's really going ahead. When we look at these digital transformation. So I think.

Speaker 5: going ahead when we look at these digital transformations. So I think as part of our overall yield profile, we continue to see these deals giving up increased yield.

Part of our overall yield profile, we continue to see.

These deals giving up.

Our increased deal.

Speaker 5: visibility into the organization IT infrastructure and allowing us future deals ahead once we are pretty much front and center in the IT landscape. So that's what these are.

Visibility into the organization infrastructure, and allowing us to future deals I had once we had pretty much content.

People are definitely that.

Speaker 16: Okay, fair enough. And just one last question in terms of our margin outlook over the near term. Do you think with the attrition starting on a quarterly annualized basis normalizing, the interventions that are required possibly go down in the near term so that we can possibly make a higher exit at the end of this year so that we can maintain margins in the next year as well?

Okay, Okay fair enough and just one last question in terms of it doesn't last margin outlook over the near term do you think with the exploration starting to Oh, no on a quarterly annualized basis normalizing.

Interventions.

Wired, possibly go down in that in the near term so that we can possibly make Ohio. Thanks Nick.

At the end of this year.

Wouldn't be maintained margins in the next get isn't it.

Speaker 7: Yeah, so like I said, we haven't seen a decline as yet. These are flat things. And we probably will start inching off. So we will continue to do what it takes to invest behind our employees. Because we know this is more than the comfort range we should be happy in. So I think it's premature to say when this will really come off. But as of now, we are focused on doing all these interventions. This quarter, like we mentioned, 80 basis points of our margin was behind these employee interventions. OK, thanks a lot.

Yeah. So like I said, we haven't seen a decline is yet to be reflecting and yes, probably we'll talk and kick off for a week. We will continue to do what it takes to invest behind our employees.

Because we know this is more than the comfort that we could be happy and so.

So I think it's premature to say when this will really come off but as of now we are focused and doing all these interventions. This quarter. It sounds like we mentioned 80 basis points of our margin wasn't behind even putting into them.

Okay. Thanks, a lot congrats again in August .

Speaker 2: Thank you. The next question is from the line of Sandeep Agarwal.

Thank you.

Next question is from the line of Sandeep from Edelweiss.

Please go ahead.

Yeah, Hi, good evening to the management team happy new year and tanks.

Speaker 5: Yeah, hi. Good evening to the management team. Happy New Year and

Speaker 5: Thanks for taking my question. First of all, congratulations on a very good set of numbers. So, Salil, I have a very simple question. If you see now, you know, our core, which is 41, 42% of the businesses.

Thanks for taking my question first of all congratulations on a very good set of numbers hopefully you'll have a very simple question cause. He now you know a lot of core.

Now, which is a 41, 42% of that business is stabilizing on a year over year basis. It is probably a little growth is there, but digital continues to be at 40% plus growth.

Speaker 5: stabilizing on a year-over-year basis, it is probably, a little growth is there, but digital continues to be at 40% plus growth. So if this trend continues next year, maybe our core will become 32, 33% of the overall pie. So what is your sense from a long-term perspective, where do you see this core stabilizing, or do you think it will be very unfair to see them separately, and in next two, three years, you think everything will converge together? So any idea, anything which you can share on that front would be very helpful.

This trend continues next year, maybe you know our quarterly become particularly hard to keep us in terms of what alpine. So what is your sense from a long term perspective, where do you see this quarter stabilizing or do you think it would be very unfair too.

I'll see them separately and in next two three years, you think everything will converge together. So any idea I mean are things that you can share on that tend to be really helpful.

Speaker 6: Yeah, so thanks for that question, Mr. Khalil. First, as you pointed out, the digital growth is very strong at over 40%, at 42%. And that shows the resilience, the demand profile, and the portfolio, which is overlap.

Yeah. So thanks for that question.

First as you pointed out the digital growth is very strong at over 40% at 42% and that shows the resilience of the demand for the.

The demand profile in that portfolio, which is overlapping.

Speaker 6: The key for the core, instead of looking at the percentage of the business, the key for us is really that core is now stable with a very small growth. So we didn't see the decline that we had for some quarters.

Oh good.

The key for the call.

Instead of looking at the percentage of the business and the key for US is really the corn is now stable with a very small group.

We didn't see the decline that we had for some quarters.

Speaker 6: And this makes it extremely strong for us.

And this makes it extremely strong Twitter is we have probably the best capability and automation automation and modernization across the industry and reached abuse right everyone else is quality still shrinking osbornes be stable or possibly.

Speaker 6: We have probably the best capability in automation and modernization across the industry, and with this...

Speaker 6: While everyone else's score is still shrinking, ours will be stable or possibly even have a small uptick. And that means we'll be the most competitive in this area. So I'm really looking at this as a very positive step. We of course have to maintain this and we have to keep building out our automation capabilities. So if we succeed in that, I think that has a very good outlook for us in the quarters ahead.

Even I was small uptake and that means we'd be the most competitive in this area.

I'm really looking at this as a very positive step we of course have to maintain this and we have to keep building out an automation capabilities to succeed in that I think that is a very good outlook for us in the quarters ahead.

Speaker 2: Yes, thanks. That's very helpful and best of luck for the current quarter. Thank you. Thank you. The next question is from the line of Nithin Padmanabhan from.

Yeah. Thanks, that's very helpful and best of luck for the current quarter. Thank you.

Thank you. The next question is from the line of.

Okay.

Please go ahead.

Yeah, Hi, good evening, everyone and thanks for the opportunity I had two questions.

Speaker 12: The first is on the employee side of

The first is on the employee side of things I think the part if you look at the employee cost under cost of revenue was simply being as a percentage of revenue was actually below what it used to be equal it and a lot of the growth its actually been added on the sub con side of things.

Speaker 12: I think over the past, if you look at the employee cost under cost of revenue, it's consistently been as a percentage of revenue is actually below what it used to be pre-COVID. And a lot of the growth has actually been added on the sub-con side of.

Speaker 12: And even if you look at the numbers, it looks like most of the additions are all freshers

And even if you look at the numbers it looks like most of the additions that all specialists.

Speaker 12: So, keeping this dynamic in mind, I just wanted to understand as we go forward and maybe Attrition sort of normalizes, how do you see this subcontractor evolving from an operational perspective? Do you think you will have to hire these subcontractors directly onto your roles and would that involve a slightly higher cost? How should one think of this dynamic overall was the first question.

So keeping this dynamic in mind just wanted to understand as we go forward and maybe if there's some sort of normalizes.

How do you see this sub con sort of evolving from an operational perspective.

Do you think you'll have to hire these are sub contractors directly onto your Roes are and would that involve a slightly higher cost how should one think of the dynamic overall.

What's the first question.

Speaker 12: The second question was around the digital proportion of the business has meaningfully gone up. And if you look into the next year, I'm sure it will be even higher. From that perspective, does it mean that our ability to sort of garner price increases will be far higher going into next year than what we see today? Thank you.

The second.

Second question was around a digital.

The digital proportion of the business has meaningfully gone up.

And if you look into the next year I'm I'm sure it'll be even higher.

From that perspective does that mean that out of the ability to sort of gone off price increases.

We've fought higher going into next year other than what you see today. Thank you.

Speaker 5: So I'll take the first question on Subcon, really, and as Salil said, the demand environment is so strong that we don't want to leave anything on the table. And therefore, whether it's through Subcon, whether it's through lateral or pressure, we will first intend to fulfill that demand.

Well I'll take the first question on the sub con.

And as Alan said the demand environment is so strong that we don't want to leave anything on the table and therefore.

Upon whether it's through lateral loss ratios.

We intend to fulfill that demand and a thoughtful over a period of time, we will optimize that entire structure.

Speaker 5: And of course, over a period of time, we will optimize that entire structure, so whether it is a program to rehire some of these sub-cons, some of them we will, of course, elapse and they will get new lateral hires, some we will promote from within. So that dynamic will play itself out over the next year, but at the moment, it's critical that we don't leave any demand on the table, and of course, this will remain an optimization lever for us. We were one of the lowest in the industry at about 6.9.

There's a program to be higher based upon some of them we will.

We lap them they didn't get new lateral hires and we will come more from the dental that dynamic will play itself out over the next year, but at the moment. It's critical that we don't leave any demand on the table and of course. This will remain our optimization lever for US we were the one of the lowest in the industry at about $6 nine equal weight and we are I think.

Speaker 5: and we are above 11% now, but this is a lever we will have over the medium term to optimize.

11% now, but this is a lever we will have the medium term to optimize.

I mean.

On the pricing.

Speaker 6: As the digital work will increase, what we have been putting in place, which is demonstrating to our clients the value creation through digital, will give us a larger opportunity for that because the revenue will be larger. So I think your assumption is absolutely valid. We will have an additional ability to do that as long as we execute on that.

As the digital World.

<unk>.

What we have.

Putting in place which is a.

Demonstrating through all kinds of value creation through does it too.

That's a larger opportunity.

All of that because the revenue will be larger so I think yes.

Function is absolutely valid we will have in addition to that.

To do that.

We execute on that.

Speaker 12: Perfect, thanks for that. Just a clarification on the first answer, so on the first one considering pressure additions are so strong this year and subcon is so strong, does it mean that next year our ability to add as many pressures will be a little more inhibited in the sense that we'll need to focus a little more on laterals next year? Is that a way to think about it?

Perfect. Thanks for that just a clarification on the first and so oh. So on the first one considering fresher listings are so strong this year and sub con. So strong does it mean that next year or the ability to add as many trade shows now have you been little more elevated in the sense that we need to focus a little.

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