Q1 2026 Infosys Ltd Earnings Call
Limited.
Sandeep Mahindroo: Good day and welcome to Infosys Limited Q1 FY26 Earnings Conference Call. 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 concludes.
Ladies and gentlemen.
Good day and welcome to enforcers limited q1 fee, 26 earnings conference call.
Operator: Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.
as a reminder all participant lines will be in the listen, only mode and there will be an option for you to ask questions after the presentation concludes
Should you need assistance during this conference? Call please signal an operator by pressing star then zero on your touchtone phone.
Sandeep Mahindroo: I now hand the conference over to Mr. Sandeep Mahindroo. Thank you and over to Mr. Mahindroo.
Please note that this conference is being recorded.
I now hand the conference over to Mr. Sandy Mahindra.
Mr. Mandro: Thank you and over to you Mr. Mandro
Salil Parekh: Hello everyone and welcome to Infosys earnings call for the first quarter of FY26. Joining us on this call is CEO & MD Mr. Salil Parekh, CFO Mr. Jayesh Sanghrajka, and other members of the leadership team. We'll start the call with some remarks on the performance of the company, subsequent to which we'll open up the call for questions.
Speaker Change: Hello everyone, and welcome to Infosys on this call for the first quarter of Phi 26.
Speaker Change: Joining us on this call is see you and Mr. Salal Park.
Salil Parekh: Please note that anything 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.
Speaker Change: Here for Mr. Jiang rajka, and other members of the leadership team. We'll start the call with some remarks from the performance of the company. Subsequent to, which will open up the call for questions.
Salil Parekh: A complete statement explanation of these lists is available in our filings with the SEC, which can be found on www.sec.gov.
Speaker Change: Please note that anything we say that refers to our outlook for the future, is a forward-looking statement, which must be read in conjunction with the risk that the company faces.
Salil Parekh: I would now like to pass on the call to Salil. Thanks Sandeep. Good evening and good morning to all of you. Thank you for joining us. We had a strong start to a financial year as revenues grew 2.6% sequentially and 3.8% year-on-year in constant currency terms. Growth was broad based with a large five industry groups and a large geographies growing year-on-year in constant current. Our large deals were at $3.8 billion, our operating margin was 20.8% and our free cash flow was at $884 million. The main drivers of our growth were our leadership in enterprise AI and our continued success in clients selecting us for consolidation.
Speaker Change: A complete statement, explanation of these risks is available in our filings with the ICC, which can be found on www.acc.org.
Speaker Change: I'd now like to pass on to call to
Speaker Change: thanks and deep, good evening and good morning to all of you. Thank you for joining us. We had a strong start to a financial Year. Ah revenues grew 2.6% sequentially and 3.8% year-on-year.
Speaker Change: In constant currency terms growth was broad-based with our last 5 industry groups and our large geography is growing year on year in constant currency.
Speaker Change: A large deals were at 3.8 billion.
Speaker Change: Our operating margin was 20.8% and our free cash flow was at 884 million.
Salil Parekh: We are seeing good demand for AI agents. We built 300 agents across business operations and IT areas. Our horizontal and vertical agents are helping our clients. Drive faster decisions, improve customer experience, and improve operational efficiency.
Speaker Change: the main drivers of our growth, were our leadership in Enterprise Ai and a continued success in clients, selecting us for consolidation,
Salil Parekh: Let me share with you some examples of where we're doing project work on Enterprise AI for our clients. and Oil and Gas majors using Infosys AI agents to enhance production quality in their refinery, orchestrate dynamic pricing in their retail stores, and automate their contract management system for efficient trading. A leading global manufacturing company is using Infosys AI agents across their supply chain to unlock productivity and cost benefits, and using Infosys AI agents to efficiently resolve issues related to malfunctioning equipment. A logistic company is using Infosys AI agents to transform customer care, operations and logistics and finance and accounting to become more efficient.
Speaker Change: We are seeing good demand for AI agents, we build 300 agents across business operations, and it areas our horizontal and vertical agents are helping our clients drive faster decisions, improve customer experience and improve operational efficiency.
Let me share with you some examples of where we're doing Project, work on, Enterprise AI for our clients.
Speaker Change: And oil and gas Majors using Infosys. AI agents to enhance production quality. In their Refinery orchestrate, Dynamic pricing in their retail stores, and automate their contract management system for efficient Trading.
Speaker Change: A leading Global manufacturing companies using Infosys AI agents across their supply chain, to unlock productivity and cost benefits. And using Infosys AI agents to efficiently resolve issues, related to malfunctioning equipment,
Salil Parekh: For a leading North American retailer, we are transforming in-store shopping into a frictionless, data-driven experience. Boosting Customer Satisfaction, Loyalty and Operational Efficiency. This is being done by integrating physical AI through intelligent automation and edge-based computer vision.
Speaker Change: And logistic companies using Infosys AI agents to transform customer care, operations and Logistics, and Finance and Accounting to become more efficient.
Speaker Change: For a leading North American Retailer, we are transforming in-store shopping into a frictionless, data-driven experience.
Salil Parekh: A global financial services company is using Infosys Enterprise AI solution with a fine-tuned large-language model. This system translates code and automates documentation. The solution increased developer productivity by 25% and automated 50% of business requirement creation in support of the modernization plan. Building on 19 leadership ratings we received in financial year 2025.
Speaker Change: A global financial services company is using Infosys Enterprise, AI solution with a fine-tuned large language model.
This system translates code and automates documentation, the solution increased developer productivity by 25% and automated. 50% of business requirement creation and support of their modernization plan.
Salil Parekh: We are now positioned Additionally, as leaders in Gartner's first generative AI consulting and implementer services, We are the only large India-based technology services company to be positioned as a leader.
Speaker Change: building on 19 leadership ratings, we received in financial year 2025, we are now positioned
Speaker Change: Additionally, as leaders in Gartner's, first generative, AI Consulting, and implemented services.
Speaker Change: Uh uh quadrant, we are the only large, India, based technology services company to be position positioned as a leader.
Salil Parekh: Based on our performance in Q1 and our current outlook, our guidance for growth for financial year 2026 is revised from the earlier guidance of 0% to 3%. Now it's 1% to 3% growth in constant currency terms. A margin guidance remains unchanged at 20% to 22%.
Speaker Change: Based on our performance in q1 and our current Outlook our guidance for growth for financial year, 2026.
Speaker Change: Is revised from the earlier, guidance of 0% to 3%. Now it's 1% to 3% growth in constant currency terms.
Jayesh Sanghrajka: With that, I'd like to invite Jayesh to share his comments. Thank you Salil. Good morning, good evening everyone and thank you for joining the call today. We have been able to successfully navigate a quarter of global uncertainty which is reflected in our holistic business performance. We delivered market-leading sequential growth, robust large-deal wins with strong net new, resilient operating margins, high single-digit EPS growth, and another quarter of free cash flow to net profits of over 100%.
Speaker Change: Imagine guidance remains unchanged at 20% to 22%.
Jesus: With that, I'd like to invite Jesus to share his comments.
Jesus: Thank you, sir.
Jesus: Good morning. Good evening, everyone. And thank you for joining the call today.
Jesus: We have been able to successfully navigate a quarter of global uncertainty which is reflected in our holistic business performance.
Jayesh Sanghrajka: Let me cover the key aspects of the results. Growth was strong and broad based. Revenue up 2.6% sequentially, including 0.4% from acquisition and 3.8% on a year-on-year in constant currency terms. Sequential revenue growth was achieved despite a significant reduction in third-party costs by 60 basis points to 7.3% of revenue. Sequential growth was once again driven by increase in realization thanks to progress in the project Maximus. Volume growth while muted was positive. Manufacturing grew in double digits in NFS and EURS grew above 5% year-on-year in constant currency. Amongst geography, North America grew ahead of the company at 2.9% sequentially in CC.
Jesus: We delivered market-leading sequential growth. Robust largely wins with strong net, new resilient operating margins High single-digit, EPS growth and another quarter of free cash flow to net profits of over 100%.
Jesus: Let me cover the key aspects of the results.
Jesus: Growth was strong and broad-based revenue up 2.6% sequentially, including 0.4% from Acquisitions and 3.8% on a year-on-year in constant currency terms.
Jesus: Sequential Revenue growth was achieved despite the significant reduction in third-party costs, by 60 basis points, 27.33 of Revenue.
Jesus: Sequential growth was once again driven by increasing realization. Thanks to progress in the project Maximus. Volume growth by muted was positive.
Jesus: Manufacturing grew in double digits in NFS and eurs grew above 5% year-on-year. In constant currency terms.
Jayesh Sanghrajka: On a year-on-year basis, Europe grew 12.3%, which is over three times the company average. Operating margins were at 20.8%, down 20 basis points QoQ and 30 basis points year-on-year. Sequential margin resilience was despite absorbing balance comp hike, higher variable pay, and investment in sales and marketing. Utilization including trainees went up 30 basis points QoQ at 85.2 and including trainees Up 80 by response to 82.7 EPS in rupee terms grew by 8.6% and in dollar terms grew by 5.8% YY. Our relentless focus on cash continues and is reflected in free cash flows of $884 million, which is 109% of net profit.
Jesus: how much geography North North, America grew ahead of the company at 2.9%, sequentially in CC,
On a year-on-year basis. Europe, grew 12.3%, which is over 3, 3 times the company average.
Jesus: Operating margin were at 20.8% down 20 basis points Q or q and 30 basis points year on year. Sequential margin resilience was despite absorbing balance comp hike, High variable, pay and investment in sales and marketing.
Jesus: Utilization, including trainees went up 30 basis points, cue, or Queue at 85.2 and including trainees.
Jesus: Up, 80 basis points to 82.7.
Jesus: EPS in rupee terms, grew by 8.6% and in dollar terms grew by 5.8% by
Jayesh Sanghrajka: This is the fifth consecutive quarter of free cash flows being over 100% of net profit. We expect FY26 free cash flows to be above 100% of net profit. Consolidated cash and cash equivalents stood at Rs 5.27 billion at the end of quarter after paying out final dividend for FY25. Yield on cash balance was 7.2% in Q1. ROE improved by 140 basis points to 30.4 due to dividend payout. Large deal wins were robust, comprising of 28 deals with a TCV of $3.8 billion, including 55% net profit. This includes multiple vendor consolidation deals with a combined TCV of over 1 billion including a mega deal with one of the largest global banks.
Jesus: Our Relentless focus on cash, continues and is reflected in free cash, flows of 884 million which is 109% of net profit.
Jesus: This is the fifth consecutive quarter of free cash flows being over 100% of net profit. We expect FY 26, free cash, flows to be above 100% of net profits,
Jesus: Consolidated cash, and cash equivalents stood at 5.27% at the end of quarter, after paying out final dividend for fi25, yield on cash. Balance was 7.2% in q1.
Jesus: Roi improved by 140, basis points to 30.4 due to Dividend payoffs.
Jesus: Last in winds were robust, comprising of 28 deals with a tcv of 3.8 billion, including 55% net. New,
Jayesh Sanghrajka: This reflects our deep-rooted client relationships and differentiated delivery capabilities.
Jesus: This includes multiple vendor consolidation deals with a combined, tcv of over 1 billion, including a mega deal with 1 of the largest global Banks.
Jayesh Sanghrajka: Vertical wise, we signed 9 deals in communication, 6 in EURS, 5 in manufacturing, 4 in financial services, 2 each in high tech and retail, region wise we signed 20 deals in America, 6 in Europe and 2 in Arudh For more information visit www.osho.com Headcount at the end of the quarter was 323,788, attrition increased marginally to 14.4 Operating margin for Q1 was at 20.8%, decline of 20 basis points sequentially.
This reflects our deep rooted client relationships and differentiated delivery capabilities.
Jesus: Vertical wise, we sign 9 deals in communication, speaks in URS 5 in manufacturing, 4 in financial services to each in high-tech. And Retail, the reason why we signed 20 deals in America 6 in Europe and 2 in r,
Jesus: At count, at the end of the quarter was 323,788 attrition increased marginally to 14.4.
Jayesh Sanghrajka: The major components of sequential margin change for the quarter are as follows. Headwinds of 100 basis points from Compensation Increase, Higher Variable Pay, partly offset by other salary related items, 30 basis points from Currency Movement, and 20 basis points from Sales Investment. Partly offset by tailwinds of 70 basis points from increase in realization due to maximus and seasonality, 40 basis points on account of lower amortization costs on intangibles, and 20 basis points from lower third-party costs, leading to 20 basis points drop in operating margin sequence. ETR for the quarter was at 28.9%. The effective ETR rate for the financial year 2026 to be in the range of 29 to 30%.
Jesus: Operating margin for q1 was at 20.8%, when decline of 20 basis points sequentially, the major components of sequential margin change for the quarter are as follows.
Jesus: Headwinds of 100 basis points. From compensation increase, higher variable, pay partly offset by other salary, related items, 30 basis points from currency movement and 20, basis points from sales investor,
Jesus: Increase in realization, due to Maximus and seasonality 40 basis points and account of lower amortization cost on intangibles and 20 basis points from lower third party cost.
Jesus: Leading to 20 basis, point drop in operating margin sequentially.
Jayesh Sanghrajka: While Q1 was steady, business environment remains uncertain due to lack of resolution on tariffs and geopolitical situations. Clients continue to be cautious in their discretionary spending, decisions reflecting delayed decision-making. Near term visibility remains good and we expect stronger H1 compared to H2 on account of normal seasonality as highlighted earlier. Coming to verticals, financial services saw good momentum this quarter in US with capital markets, commercial banking and wealth management seeing a lot of transformation opportunities. Agenting AI is playing a pivotal role with focus on areas like KYC, Onboarding and Portfolio Management. We are now the preferred AI partner for 10 of the top 20 clients in FS with many initiatives scaling from POC to production.
Jesus: ETR, for the quarter was at 28.9%, the effective at rate, for the financial year, 26 to be in the range of 29 to 30%.
Jesus: While q1 was steady business. Environment remains uncertain due to lack of resolution of tariffs and geopolitical situations client continued to be cautious in that description, spending decisions reflecting in delayed decision, making
Jesus: Near-term, visibility remains good. And we expect stronger H1 compared to H2 on account of normal seasonality as highlighted earlier.
Jesus: Coming to verticals Financial Services, saw good momentum. This quarter in us with capital markets, Commercial Banking and wealth management, seeing a lot of transformation opportunities.
Jesus: Agentic AI is playing pivotal role with focused on areas like kyc onboarding and portfolio management.
Jesus: We are now the preferred AI partner for 10 of the top 20 clients in efforts with many initiatives scaling from PC to production,
Jayesh Sanghrajka: We are partnering with GCCs both in setup and growth-led deals. While pipeline is strong, with new opportunities in vendor consolidation, cost optimization, and simplification, clients are cautious about decision-making due to volatile environments. Manufacturing segment continues to face challenges in automotive, industrial and Europe with decision-making delays and soft discretionary steps. While clients are re-evaluating their supply chains due to tariff uncertainty, we are helping them leverage technology across end-to-end life cycles from design to manufacturing to sales. Pipeline remains healthy with focus on cost take out and opportunities. We won a large deal in this vertical in Q1 to help a client set up a GCP.
Especially in agentic AI.
Jesus: We are partnering with gcc's both in setup and growth. LED deals, while pipeline is strong with new opportunities. And when the consolidations cost optimization and simplifications client are cautious about decision making due to volatile environment.
Jesus: Manufacturing, segment continues to face challenges in automotive industrial and Europe with decision making delays and soft discretionary side.
Jesus: While clients are evaluating the supply chains due to tariff uncertainty, we are helping them leverage technology across end to end life cycle from design to manufacturing to see sales.
Jesus: Pipeline remains healthy with focus on cost, takeout and opportunities.
Jayesh Sanghrajka: In auto, we are helping clients in rationalizing their footprints and in industrial, we are helping them in cost optimization. EURS vertical outlook remains mixed due to economic uncertainties. Pipeline for both large and mega deals remains strong. Our investment in industry, cloud, energy, transition, and AI-driven operational efficiency are driving growth and differentiating us in large. In energy, high-cost pressures due to oil price volatility are prompting clients to consolidate vendors for savings. In utilities, advancement in renewable energy, smart grid technology, and sustainability regulations are reshaping the market. In services, clients remain cautious about spending across CapEx and operations.
We won a large deal in this vertical and q1 to help a client set up a GCC
Jesus: In Auto we are helping clients in rationalizing. Their Footprints and in industrial, we are helping them in cost optimization.
Jesus: URS vertical Outlook remains mixed due to economic uncertainties pipeline for both large and mega deals remains strong. Our investment in Industry, Cloud energy transition, and AI driven operational. Efficiency are driving growth and differentiating Us in large teams.
Jesus: In energy. High cost pressures due to oil price. Volatility, we are prompting clients to consolidate vendors for savings.
Jesus: and utilities advancement in renewable energy, Margaret technology and sustainability regulations are reshaping the market
Jayesh Sanghrajka: In retail, uncertainty around tariffs has led to muted spending in large geographies, supply chain impact, and procurement. Budgets remain tight and decision cycles elongated. There is a slowdown amongst clients on discretionary spend, though our pipeline is strong. We are seeing strong commitment from clients to engage us as trusted partners for AI-first outsourcing and transformation deals in both IT and BPM services. Enhanced interest in AI is resulting in budget reallocation with discretionary spend expected to be self-funded through AI-led productivity benefits. Deals in the sector continue to leverage Topaz and AIMX platform capabilities.
Jesus: in Services client remain cautious about spending across capex and Opex
Jesus: in retail uncertainty around terrorists has led to muted spending in large geographies supply chain impact and procurement disruption.
Jesus: Budgets remain tight and decision Cycles elongated. There is a Slowdown in amongst client on prescription. Expense through de pipeline is strong. We are seeing strong commitments from clients to engage us as trusted partners for AI first, Outsourcing and transformation deals in both it and VPN services,
Enhance interest in AI is resulting in budgetary, allocation with discretionary spend expected to be self-funded through AI lead productivity benefits.
Jayesh Sanghrajka: Communications is facing growth challenges and increased OPEC measures amidst volatile macroeconomic and political lines. Clients are focusing on cost takeouts and vendor consolidation. There is strong focus on AI and customization to monetize 5G use cases. So ROI concerns are delaying newer investments. OEMs are aiming to profitable growth and are exploring all levers including tighter and reduced IT budgets and leveraging AI and automation. Growth for us is led by ramp ups of previously one large... Clients in high-tech remain cautious due to macro headwinds and geopolitical tensions leading to cost pressures and budget cuts. Discretionary programs are paused because of significant investments in Gen AI, GPU and AI.
Jesus: Deals in the sector. Continue to leverage topas and acts platform capabilities.
Jesus: Communications is facing growth challenges, and increase Opex measures, amidst, volatile, macro and macroeconomic and political landscape.
Jesus: Clients are focusing on cost, takeouts and vendor consolidation. There is strong focus on AI and customization to monetize 5G use cases.
Jesus: So, how do I concerns are? Dealing newer, Investments, oems are aiming to profitable growth and are exploring all levels, including Tighter and reduced. It budgets and leveraging, Ai and automation.
Jesus: Growth for us is led by ramp UPS. Our previously won last year
Jesus: Clients in, high-tech remains cautious due to macro, headwinds and geopolitical tensions leading to cost pressures and budget cuts.
Jayesh Sanghrajka: Driven by our Q1 performance and our current assessments of the rest of the year, we have revised our FY26 revenue guidance to 1-3% in concert currency. This continues to assume a reduction in third party revenues versus FY25 based on existing deals and new deals in the pipeline. Our operating margin guidance for the year is 20-22%. We will continue to keep a close watch on economic environment and its impact on client budgets and re-assess our guidance as we progress during the year.
Jesus: Discretionary programs are paused because of significant investments in Jai GPU, and AI.
Speaker Change: Driven by a Cuban performance and our current assessments of rest of the year. We have revised our fy2 guidance. Revenue, guidance to 123% in constant currency terms.
Speaker Change: This continues to assume a reduction in third party revenues versus fi25 based on existing deals and new deals in the pipeline.
Sandeep Mahindroo: With that, we can open the floor for questions.
Operator: Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two Participants are requested to use handsets while asking a question. Ladies and Gentlemen, we will wait for a moment while the questions queue assembles.
Speaker Change: Our operating margin guidance for the year is 20 to 22%. We will continue to keep a close watch on economic environment and its impact on client budgets and reassess our guidance as we progress during the year with that, we can open the floor for questions.
Speaker Change: Thank you very much.
Speaker Change: We will now begin with the question and answer session.
Speaker Change: Anyone who wishes to ask a question, may press star and 1 on their touchdown telephone.
Speaker Change: If you wish to remove yourself from the question queue, you may press star and 2.
Speaker Change: Participants are requested to use handsets, while asking a question.
Speaker Change: Wait, for a moment while the question queue assembles.
Ankur Rudra: First question is from Ankur Rudra from J.P.Morgan. Please go ahead. Hi, thank you. So, I mean, clearly good to see a refreshing revenue print here. Key question is on your organic growth momentum on a year over year basis for the quarter. It's, you know, it's quite strong, probably 3.3 and a half percent, 3.4%. Overall growth was about 5% last quarter. So the question is, you know, why are you still point is hiding for like 2% at the midpoint? What is it that you're seeing that makes you feel that the year over year growth trajectory on constant currency will weaken given the solid signing you've had?
First question is from anurudra, from JP Morgan. Please go ahead.
Ankur Rudra: Or ask another way, you know, why drop the upper end of the guide here? Thank you. Okay, appreciate it.
Anurudra: Hi. Thank you. Uh, so I mean clearly good to see a refreshing Revenue, print here. Uh, key question is on your organic growth momentum on a year-over-year basis for the quarter. It's, you know, it's quite strong, probably 3.3 and a half percent 3.4%. Overall growth was about 5% last quarter. So the question is, you know, why are you still pointing for like 2% at the midpoint uh what is it that you're seeing? That makes you feel that the year-over-year growth trajectory on constant currency will we can give in the uh solid signings you've had.
Anurudra: Or ask them another way. You know why drop the upper end of the guide here. Thank you.
Anurudra: So I answered, this is J here. Um, you know, as we had said, at the beginning of the year, at the lower end of the guidance, we had baked in, you know, heightened uncertainty at the higher end of the guidance, we had baked in steady to improving uh environment. Uh, while q1 was strong, you know, if you look at the environment, underlying hasn't really changed uh Q2 we we are not really seeing the signs of significant environment. Changes direct situations, they may still remains uh you know escalated. Um, the geopolitical situation hasn't really changed and that this is the part of the year, q1 and Q2.
Anurudra: Put together is the strongest part of the our our year seasonally, right? So looking into all of that, our current guidance at the bottom, end expects, uh, you know, continuing uncertainty or elevated level of 170, and the upper end bakes in a steady environment at this point in time. This is based on what we see today.
Ankur Rudra: Maybe a couple of questions on AI. Are there any kind of margin or pricing trade-offs you see when you engage with clients on, you know, in renewals, or maybe even out of turn, where the expectation is some of the benefits of AI is baked into their contracts? Are you also proactively taking this to clients?
Anurudra: Okay, appreciate it.
Anurudra: Maybe a couple of questions.
Ankur Rudra: That's part number one. Part number two is there seems to be a lot of significant increase in vendor consolidation. And I think it's AI is part of any of those contracts as well. Do you think that is potentially increasing the replaceability of vendors such as yourselves, because of more user-generative AI?
Thank you.
Anurudra: I, um, are there any kind of margin or pricing trade-offs? You see when you engage with clients on, uh, you know, in renewals, uh, or maybe even out of turn. Where the expectation is, some of the benefits of AI is baked into their contracts. Uh, are you also proactively taking this to clients as part number 1 part? Number 2 is, uh, there seems to be a lot of significant increase in Vendor consolidation, and I think it's AI is part of any of those contracts as well. Do you think that is potentially increasing the replaceability of vendors such as yourselves, uh, because of more user generative? AI, thank you.
Salil Parekh: Hi Uncle, this is Salil. I think on the first part... What we see with enterprise AI now is there are In many cases those are situations where either the clients are seeking it themselves or we are bringing it to clients in a view to make things more efficient and in doing so we typically get an ability because I think our enterprise AI work is quite solid to do other things both in enterprise AI but in other areas with the client. So that's how we are seeing that piece of the work going on.
Sal: Hi, I'm good. This is Sal. Uh, I think uh, on the first part
what we see with Enterprise AI now is, uh, there are
Sal: Areas where there's uh good productivity benefits uh and especially as we're deploying agents or setting up whole Enterprise AI platforms for clients, uh, using Foundation models. And then there are some areas where we are seeing uh, new opportunities for Revenue.
Sal: So on the first part, uh, typically there are productivity gains, uh, and those are shared between clients, uh, and ourselves.
Sal: uh, in many cases, uh,
Sal: those are situations where
Sal: Uh, either the clients are seeking it themselves. Or we are bringing it to clients in A View to make things more efficient, uh, and in doing. So we typically get uh, an ability because I think our Enterprise AI work is quite solid to do other things both in Enterprise AI but in other areas with, with the clients so that that's how we are seeing uh uh, that piece of the work going on now.
Salil Parekh: The other question, Salil was on, do you think there's any kind of increase in replaceability of vendors because we hear a lot more of vendor consolidation now and is that helped by, yeah, in any way? So there, what we're seeing is, at least in the ones that we have benefited from, of which Jayesh mentioned, a good number of them in the Q1 large deals, and just looking at those as a sample set, we see that clients have looked at where they have seen companies are not bringing them good AI solutions in the recent past, solid delivery, or where they're looking at some of the smaller companies coming out.
Speaker Change: The the other question s was on, do you think there's any kind of increase in replaceability of vendors? Because we hear a lot more of vendor consolidation now, and is that helped by yeah, in any way.
Speaker Change: so there, what we are seeing is at least in the ones that we have benefited from uh of which Jesus mentioned uh a good good uh number of them in the q1, large deals and just looking at those as a sample Set, uh, we see that clients have looked at
Speaker Change: Uh, where they have seen?
So those are the areas where because of our strength of delivery, we feel quite positive that we on net are benefiting. I don't think it's making it easier or more difficult but that track record Whether you brought that AI innovation to the client, whether you've delivered in a way that has worked for them over the past, and whether you have scaled to do a lot of different things, because clients are looking at multi service capability, and that is helping with the large client.
Speaker Change: I don't think it's making it easier or more difficult, but that track record,
Speaker Change: Whether you brought that AI Innovation to the client, whether you've delivered in a way that is worked for them over the past. And whether you have scaled to do a lot of different things because clients are looking at multi-service, uh, capability, that is helping with the large clients for us.
Ankur Rudra: Thank you, appreciate it, best of luck. Thank you.
Speaker Change: Thank you, appreciate it. Best of luck.
Kumar Rakesh: Next question is from the name of Kumar Rakesh from BNP Paribas. Please go ahead. Hi, good evening and thank you for taking my Before I get to the question, just a clarification on the guidance part, which you spoke about, Jayesh, just now. So your revision of guidance, especially the top end of the organic group, is just a reflection of change in the macroeconomic environment assumptions and not necessarily how you look at the deals ramping up or the impact of third party or any of the operational related issues. Yeah, I mean, see, at the beginning of the year, we had already called out the third party and the lower third party of that.
Speaker Change: Thank you.
Speaker Change: Next question is from 9 of Kumar rahesh from BNP paraba. Please go ahead.
Hi, good evening, and thank you for taking my question. My before I get to the question, just a clarification on the guidance part, which you spoke about JHS now. So your your revision of guidance especially the top end of the organic growth. It's just a reflection of change in the macroeconomic environment assumptions and not necessarily how you look at the deals, ramping up or the impact of third party or any of the operational related issues, right?
Jayesh Sanghrajka: So that factor does not change. We had also called out on the top end of the guidance, we expect steady to, you know, marginally improving, improving environment. Now, we have not seen the environment improving in Q1. One month, almost one month of Q2 is gone. The challenges with respect to tariffs, the challenges with respect to geopolitical environment continue. Clients still remain on a wait and watch with respect to discretionary spend, you know, or whether it comes to deal signing, the cycles remain elongated. So I think from all of that perspective, what we are saying now is the upper end of the guidance, we are expecting the steady environment.
Speaker Change: Yeah, I mean see at the beginning of the year, we had already called out the third party and the lower third party of that. So that factor does not change. Uh and we had also called out on the top end of the guidance, we expect steady to, you know, marginally improve improving environment. Now we have not seen the environment improving in q1, um, 1 month, almost 1 month of Q2 is gone. The challenge is with
Jayesh Sanghrajka: And that is what is baked in, in the guidance. Having said that, just to clarify, you know, if you look at Q1 and YOY on Q1, the third party costs on a YOY basis was flattish, right? So when you compare a YOY growth and then extrapolate that for the full year, there would be a headwind from that perspective when you look at a full year basis growth on a third party. Got it. Thanks.
Speaker Change: Respect to tariffs the challenges with respect to uh, geopolitical environment continues clients still remain on a wait and watch with respect to discretionary spend, uh, you know, or whether it comes to, uh, deal signing, the Cycles remain elongated. So, I think from all of that perspective, what we are saying now is the upper end of the guidance. Uh, we are expecting the steady environment, uh, and that is what is baked in, uh, in the guidance. Having said that just to clarify, uh, you know, if you look at q1 and what, why on q1, the third party cost on a y y basis was flattish, right? So when you compare a yoy growth and then extrapolate that for the full year, uh, there would be a headwind from that perspective. When you look at a full year, uh, basis growth on the third party part,
Kumar Rakesh: And just the first question around the revenue piece. So in this quarter, you spoke about that there has been pricing and productivity benefit of about 70 bps in the first quarter. Can you just give some details around that? Where are we getting that? And through the year, you spoke about that the third party will come down on a full year basis further, but from first quarter level, will it further come down from these levels? So, you know, if you look at the pricing, we've spoken about it earlier, you know, in terms of the Project Maximus, the value based selling within Project Maximus, there are multiple tracks within Project Maximus.
Got it. Thanks um and and just the first question around the revenue piece. So in this quarter you spoke about that. There has been pricing and and productivity benefit of about 70 Pips in the first quarter. Can you just give some details around that? Where are we getting that? And through the year, you spoke about that. The third party will come down on a full year basis further, but from first quarter level, will it further come down from these levels?
Jayesh Sanghrajka: And I think they are they have helped. The 70 basis points is a combination of both the benefit on back of Project Maximus as well as some part of seasonality, right? Because in this quarter, you have higher working calendar days, you know, some part of furlough flashback also happens. So, you do get that benefit also. So, partly it is on account of seasonality, partly it is on account of the Project Maximus that has helped. But, you know, when you look at full year basis, last year, we did talk about three and a half percent in terms of the pricing that we got because of the amount of furlough that was included.
So, uh, you know, if you look at the pricing, uh, we've spoken about it. Uh earlier uh, you know, in terms of the project Maximus the value based selling within project Maximus, there are multiple tracks within project Maximus and I think they are, they have helped the 70 basis. Points is a combination of both. The, the benefit on backup project Maximus as well as, uh, some part of seasonality, right? Because in this quarter, you have higher, uh, working calendar days. You know, some part of fellow flush pack also happens. So you do get that, uh, benefit, uh, also. So partly it is on account of seasonality partly, it is on account of, uh, the project maximums, uh, that is help. But, you know, when you look at full year basis, last year we did talk about uh, 3 in our first.
Speaker Change: Of.
In my mind, we remember this and we look at it with honor.
Speaker Change: that, that
Speaker Change: in my mind, we
Speaker Change: This. And
Speaker Change: quarterly color on this, looking at the
Unknown Executive: People who know these names directly go to reach them quickly and get them confirmed and it will take them 65-90 minutes to get to them.
Speaker Change: The.
Speaker Change: Expect.
Speaker Change: To be better than we know.
Unknown Executive: Thank you for attending today's webinar. We are one of the first companies few years back to call out Europe as an opportunity. We have made on back of that hypothesis investments in Europe and that has helped us win some of the very, very large and mega deals in Europe. So that has definitely helped from the growth in Europe perspective. There are consolidation deals that we have won as well in Europe, so that has helped. And over a period of time, you know, Europe is also opening up from outsourcing perspective. So you know, that is also helping in growth.
Speaker Change: Uh and over a period of time. Uh you know Europe is also opening up from Outsourcing uh perspective. So uh you know that is also helping uh in growth process.
Unknown Executive: And going forward, sustainability of this strong growth in Europe, you remain confident on that. I think there are enough, there are opportunities in Europe, now whether it will continue growing you know beyond the company growth or not I don't think we are giving a guide on that but at where we are standing today we are seeing opportunity in Europe and many of the large deals stretching in Europe as well as the pipeline containing good amount of large deals in Europe.
Speaker Change: And going forward sustainability of this strong growth and Europe. So you remain confident on that.
Speaker Change: I think.
Speaker Change: There are.
Great, thanks a lot.
Speaker Change: It will continue growing uh you know beyond uh the company growth or not. I don't think we are giving a guide on that but where we are standing today we are seeing opportunity in Europe uh and many of the large be sitting in Europe um as well as the pipeline containing uh good amount of large dates in Europe.
Speaker Change: Great. Thanks a lot.
Unknown Executive: Thank you.
Abhishek Kumar: Next question is from Abhishek Kumar from JM Financial. Please go ahead. Yeah, good evening. Thanks for taking my question. I have a question on vendor consolidation. This has been going on for last, at least a couple of years now. Do you think there has been a shift in, you know, the vendors we are competing with? Maybe earlier, it was the longer tail of small vendors, which these enterprises had added post COVID. And you think now it has shifted to more larger like, like peers, and therefore, you know, the fight to hold on to your turf and add more becomes a bit more challenging and kind of puts pressure on our margins?
Speaker Change: Thank you.
Abishek Kumar: Next question is from 9 of abishek, Kumar from JM Financial, please go ahead.
Abishek Kumar: Yeah, hi. Good evening. Uh, thanks for taking my question. I have a question on um, been consolidation. Uh, this has been going on for last at least a couple of years now.
Speaker Change: Uh, do you think there has been a shift in, uh, you know, uh, the the vendors we are competing with, uh, maybe earlier it was the longer tail of small vendors, uh, which these Enterprises had added postco. And you think now, it has shifted to more larger like like peers and therefore, um, you know, the the fight to hold on to your Turf and add more
Speaker Change: Uh, becomes a bit more challenging and, uh, kind of, uh, puts pressure on our margins.
Salil Parekh: So based on that, I think first in vendor consolidation what we are seeing is the range of options that clients have and in that sense, it's something that has been ongoing for some time, even beyond the last 2-3 years. Now what we are seeing is... Infosys is benefiting from this from the perspective of Thank you for listening. The work we are bringing to clients, especially what we have done in the last couple of years in enterprise AI, and the consistency that we have shown across all of our other offerings over that time frame. All of those elements come together and that's where we see clients selecting us and these are with respect to some large other companies and some mid-sized small other companies as well.
Speaker Change: On that. Uh, I this is I think from gender consolidation. What we are seeing is, there's the range of options that clients have
Speaker Change: And in that sense, it's something that the ongoing for some time even Beyond last 2.
Speaker Change: 3 years.
Speaker Change: now obviously,
Speaker Change: Benefiting from this.
Speaker Change: perspective of
Speaker Change: the type of,
Speaker Change: Work, we are bringing to clients and what we've done in the last couple of years and Enterprise data.
Speaker Change: We've shown across all of our other offerings over that time frame, uh, that in the past, we've talked about we also have today, Automation, and lean. All of those elements come together. And that's where we see
Salil Parekh: In terms of pricing... We see that there is that sort of usual approach, which is focused on productivity. So it's not any different when there's a consolidation or where there's something new. But over time, there's an expectation of productivity improvement.
Speaker Change: These are with respect to some large uh other companies and some midsize small, other companies as well. Uh, in terms of pricing,
Abhishek Kumar: And we are, in that discussion, quite mindful of what are the benefits we can provide through automation, lean, and all the enterprise AI work we're My second question is on, you know, on your seasonality, you're probably the only company who's saying that H2 will be weaker than H1. Most of the others are hopeful of a rebound in second half. So is it just seasonality that is, you know, driving this kind of a view? Or do you think, you know, some of the large business which are helping us in sectors like communication, they kind of get into steady state, and therefore the visibility, given the large deals last year were weaker than the year before, the visibility from deals ramping up in the second half is lower?
Speaker Change: BC that there is that sort of usual approach, which is focused on productivity, so it's not any different when there's a consolidation of where there's something new, but over time, there's an expectation of productivity Improvement and we are in that,
Speaker Change: Discussion quite mindful of what are the benefits we can provide through automation lean uh and and all the Enterprise AI work we're doing.
Speaker Change: All right. Uh, my second question is on, uh, you know, on your seasonality, you're probably the only company who's saying that H2 uh, will be weaker than H1. Uh, most of the others are hopeful of a rebound in second half. So is it just seasonality? That is, uh, you know, driving uh, this kind of a view or do you think
Uh, you know, some of the large deals which are helping us, uh, in sectors like communication, they kind of, uh, get into steady state and therefore, the visibility given the last deals last year, where weaker than, uh, the year before, uh, the visibility from deals ramping up in the second half is lower.
Abhishek Kumar: So Abhishek, it is also a factor of what you deliver in H1. So, you know, if your H1 is relatively in line with what you are expecting, then the usual seasonality will come in. If you have seen a higher pressure on H1, then your hope on H2 is better. So I think you have to see that all of those commentary in line of the performance of H1 and H2. I think our Q1 has been strong. You know, if you look at compared to all the results in the market, I think we have delivered strong performance.
Also a factor of what you deliver in H1, right?
Speaker Change: So, uh,
Abhishek Kumar: And that makes us believe that we would have a usual seasonality in the market.
Speaker Change: You know, if if if your H1 is relatively in line with what you are expecting, then then, the usual 3 seasonality will come in. If you have seen a higher pressure on H1, then your Hope on H2 is better. So, I think you have to see that all of those commentary in line of the performance of H1 and H2. I think our q1 is, uh, has been strong. Uh, you know, if you look at compared to all the results in the market, I think we have delivered strong performance, um, and that, that makes us believe that we would have a usual seasonality in the, in the model.
Thank you and all the best. Thank you.
Speaker Change: Thank you and all of us.
Bryan Bergin: Next question is from line of Bryan from TD Coven please go ahead. Hi, thank you for taking the question. I wanted to ask on geography. So Europe obviously very strong while North America was up slightly. Can you comment on North America? Do you have visibility to an improvement in growth there? Bryan, I think North America remains an important part of our business. It's the largest geography for us. At this point in time, we are seeing opportunity in pockets, especially in the financial services in North America, etc. But there are pockets of geographies, manufacturing, retail, etc., which remain challenging.
Thank you.
Speaker Change: Next question is from line of Brian from TD, Co please go ahead.
Speaker Change: America was up slightly. Can you comment on North America? Do you have visibility to an improvement in growth there?
Salil Parekh: At the same time, when you look at the large deal wins that we signed this quarter, 20 of them came from North America, 6 in Europe, and 2 in ROW. So we do see opportunities, both in terms of large deals, cost takeout, as well as consolidation, etc.
Speaker Change: Brian, I think North America remains an important, um, you know, part of our business. It's it's the largest, uh, geography for us. Uh, at this point in time, we are seeing opportunity in Pockets specially in the financial services uh, in North America Etc. But there are pockets of uh, you know, geographies of manufacturing retail, uh, Etc. Which which are your main challenging, uh, at the same time, when you look at the large deal wins, uh, that we signed this this quarter, uh, 20 of them came from, uh, from North America, uh,
Speaker Change: 6 in Europe and 2 in RW. So we do see opportunities both in terms of large deals cost takeout as well as uh you know consolidation in North America.
Salil Parekh: Okay, and then as a relief to the smaller deals in the past, you've commented on small deal activity. Can you just give some comments on how that progressed during the quarter? So we do not comment on a small deal on a regular basis. There was one quarter where we saw a heightened activity in the small deal. That is where we did call that out because we thought it was relevant information from an investor perspective. At this point in time, our overall pipeline continues to remain strong. Within that, the large deal pipeline is also strong. We have delivered $3.8 billion, which is a 44% increase on a sequential basis.
Speaker Change: Okay. And then as it relates to the smaller deals in the past you've commented on small deal activity, can you just give some comments on how that progressed during the quarter?
It is 55% net new, so I think all of those are positive aspects of the deals and pipelines. Okay, understood.
Speaker Change: So we we do not comment uh on a small deal. Uh you know, on a regular basis, there was 1, 1 quarter where we saw a heightened activity in the small lead that is where we we did call that out because we thought it was relevant information for my investor perspective at this point in time. Our, our overall pipeline continues to remain strong, uh, within that the last day of pipeline is also strong. We have delivered 3.8 billion dollars, uh, which is 44%, increase on a sequential basis. Uh, you know, 55% net new. Uh, so I think all of those uh, are, uh, you know, positive aspects of of the deals and Pipelines.
Jonathan Lee: Thank you.
Speaker Change: Okay, I understood. Thank you.
Jonathan Lee: Next question is from Jonathan Lee from Guggenheim Partners. Please go ahead. Great, thanks for taking our questions. Just a clarification on what you had called out earlier in terms of what's contemplated in the range of outcomes. Is it fair to assume that the midpoint of your outlook contemplates slight deterioration in demand environment? Jonathan, you know, as I said earlier, we, we build multiple models that lead us to multiple ends of the guidance, right? It's not necessary to, to converge. These models are not built to converge on a midpoint of the guidance that that's an outcome of it.
Speaker Change: Thank you.
Speaker Change: Next question is from the land of Jonathan Lee from Guggenheim Partners. Please go ahead.
Jonathan Lee: Great, thanks for taking our questions. Uh, just a clarification on on what you would call that earlier. In terms of, you know, what's contemplated in the range of outcomes, is it fair to assume that the midpoint of your outlook contemplates, flight deterioration and demand environment.
Salil Parekh: At the lower end of the guidance, we have baked in, you know, high higher uncertainty from where we are today. At the upper end of the guidance, we have baked in, you know, stable environment, and there will be multiple models that that will lead us to various midpoints of various middle points of the guidance in between. And that's how the guidance band is arrived at always. The midpoint just becomes an outcome of the two ends of the guidance.
Well, Jonathan, uh, you know, uh, as I said earlier, um, we we build multiple models that lead us to multiple ends of the guidance, right? It's not necessary to to convert these models are not built to converge on a midpoint of the guidance that
Jonathan Lee: That's an outcome of it at the lower end of the guidance. We have baked in, uh, you know, High higher uncertainty from where we are today at the upper end of the guidance. We have baked in, you know, stable environment. And there are there will be multiple models that, that will lead us to various midpoints of various middle points of the guidance in between. And that's how the guidance band is arrived at. Always the midpoint just becomes an outcome of the 2 ends of the guidelines.
Thank you for that, Carter.
Salil Parekh: And just as a follow up, can you help decompose what you saw in terms of client demand as you progressed from April through June, and whether any of those trends have continued into July? Hi, this is Salil. I think on client demand, what we see is huge interest in AI, and especially what we are providing as agents, and what we are able to do with large enterprise AI platforms, what we're doing with small language models. Those are places where there's demand, there's discussions, and then actual project work everywhere. Part of larger programs. Then we saw more and more interest in the consolidations that we have already discussed.
Speaker Change: Thank you for that caller. And this is a follow-up. Can you tell the compose what you saw in terms of client demand? As you progressed from April, through June and whether any of those Trends have continued in July,
Si: Uh, hi. This is Si I think on client demand. Um, what what we see is, uh, huge interest in, uh, Ai and especially what we are providing as agents, uh, and what we are able to do with, uh, large Enterprise AI platforms, what we're doing with small language models, uh, those are places where there's demand, uh there's discussions and then actual Project work everywhere.
Speaker Change: Uh, part of larger programs.
We've seen good attention on cost and efficiency. We've seen strong interest, for example, in the foundations of enterprise AI, on cloud and data and analytics type of areas, especially some of the newer areas on the new SAS data model data platform. Then we've seen very good traction on enterprise application areas where there's movement to new generations of SaaS platforms on enterprise scale. So those are the things where we're seeing some interest. And then we see, because of the economic environment, especially if we look at logistics or consumer products or some aspects of manufacturing, auto and so on, we see some constraints that have come in in this current environment.
Speaker Change: Uh, then we saw, uh, more and more interest, uh, uh, in the consolidations that we have already discussed. We've seen good attention on cost and efficiency. We've seen strong interest, for example, in the foundations of Enterprise AI on cloud and uh, data and analytics type of, uh, areas, especially some of the newer areas on the new, SAS data model data platforms.
Speaker Change: then we've seen very good traction on Enterprise, uh,
Salil Parekh: So it's been a mix of those sorts of.
Speaker Change: That have come in uh, in in this current environment. So it's been a mix of of those sorts of things.
Thanks for the call, Salil. Thank you.
Speaker Change: Thanks for the call.
Nainav Surinder Goyal: Next question is from Nainav Surinder Goyal from Citi. Please go ahead. Yeah, hi, Salil, Jayesh, good evening. And just one question. And sorry to kind of focus on the same point.
Speaker Change: Thank you.
Speaker Change: Next question, is from Land of surindra. Go from City, please. Go ahead.
Nainav Surinder Goyal: So the slight lowering of the upper end of the organic guidance, is it due to taking a more conservative view of the environment, or something that you actually saw on the business, ramp downs, lower ramp ups, discretionary, declining faster, not picking up something on the business, or is just taking a more cautious, conservative view of the environment? Thank you. No, Suren, I think it goes back to the commentary I gave in Q1, the beginning of Q1, we did say that the upper end of the guidance does bake in, you know, slightly improving environment, right? Having had a benefit of one quarter gone and a stronger visibility of Q2, we don't see, you know, the environment changing significantly.
Yeah. Hi uh Scholl J is good evening and just 1 question and sorry to kind of focus on the same point.
Speaker Change: Uh, so the slide lowering of the upper end of of the organic guidance, is it due to taking a more conservative view of the environment or something that you actually saw on the business, ramp down slower, ramp UPS, discretionary, declining faster, not picking up something on the business, or it's just taking a more cautious, conservative view of the environment. Thank you.
Jayesh Sanghrajka: And that's also visible from all of the results. So all of that factor is baked in, in the upper end of the guidance today. Today, what we are baking at the upper end of the guidance is a steady environment, right? And as I said earlier, the H1 is stronger for us than H2. So once the stronger part of the period is gone, as an uncertain environment, our ability to, you know, change the guidance in a positive manner at the upper end gets that much more restrained. Yeah, so same thing, right, the client behavior in terms of, you know, decision making, the discretionary spends, that's happening on the on the accounts, various accounts.
Speaker Change: No, sir. I think, uh, it goes back to the commentary. I gave in q1. Uh, the beginning of q1. We did say that the upper end of the guidance does baked in, you know, slightly improving uh environment, right? Uh, having had a benefit of 1 quarter gone and a stronger visibility of Q2, uh, we we don't see, you know, the environment changing significantly and that's also visible, uh, from all other results. So, all of that back that factor is baked in in the upper and lower guidance today, today we what we have baked in at the upper end of the guidance is a steady environment.
Right. And as I said earlier, the H1 is stronger for us than H2. So once the stronger part of the period is gone as an uncertain environment, our ability to uh, you know, change the guidance in a positive manner at the upper and uh, gets that much more restraint, right?
Yeah, yeah. No. No. So I understand that, but it's a lowering that I'm talking of. Did you like, how did you kind of arrive at that conclusion? What did you see, which tells you that the environment is not improving? I'm just trying to understand the data points behind that.
So we all of those are anecdotes, data points that we get when we do a ground up models, you know, in terms of where we stand. Understood. Thank you.
Yeah, so same thing, right? The client behavior in terms of, uh, you know, decision making, um, the discretionary spends, uh, that's happening on the, on the accounts various accounts. So, we all of those are anecdotal data points that we get, uh, when we do a ground up models, uh, you know, in terms of where we stand,
Speaker Change: Understood, thank you.
Rishi Jhunjhunwala: Next question is from the line of Rishi Jhunjhunwala from IIFL. Please go ahead. Yeah, thanks for the opportunity. Two questions here. Firstly, if you look at, you know, the overall wage hike impact that has played out over the past two quarters, almost 240 basis points, it seems like it is, you know, relatively higher than where, you know, the industry has been. And of course, you know, the growth has been fairly muted for us and for the industry as well. So just wanted to understand the thought process behind that kind of a wage hike. And is it fair to assume that with that, we would not see any other action in FY26?
Speaker Change: Thank you.
Speaker Change: Next question is from the line of Hera from iifl. Please go ahead.
Speaker Change: Yeah, thanks for the opportunity, 2 questions here. Um firstly, if you look at, you know, uh the overall Vijay impact that has played out over the past, 2 quarters, almost 2 240 basis points, it seems like it is um, you know, relatively higher than where uh you know the industry has been. Um and of course, you know, the growth has been uh fairly muted for us and for the industry as well. So just wanted to understand the thought process behind that kind of a wage hike and
Speaker Change: And is it fair to assume that uh with that? We would not see any anything any other action in Phi, 26?
Jayesh Sanghrajka: So, Rishi, the wage hike has been phased out, as you know, and as you mentioned, in two phases, large part of our organization, up to middle level of the employees got a wage hike in January, and the rest of the employees got the wage hike effective 1st April. What I call out 100 basis points in this quarter is a combination of wage hikes, as well as the higher variable pay that we paid to our employees. So that's a combination of both of those factors. We haven't really split that out. But that is the overall wage hike.
Speaker Change: The way I have been phased out as you know, uh, and as you mentioned into 2 phases, large part of our organization up to middle level of the employees, got a wage hike in January and the rest of the employees, got the wage act effective. First April, what I called out. 100 basis points in this quarter is a combination of wage hikes as well as a higher variable pay that people paid paid to our employees. So that's a combination of both of those factors.
Jayesh Sanghrajka: The wage hike, as we said at the beginning of the year, are relatively similar to the wage hike that we have done in the earlier years in terms of percentage of the And coming to the second part of your question, I think too early. We just have begun the year. We have had the wage hike effective this quarter. We haven't really decided when and when about the next wage hikes at this point in time. We take all the factors when we consider the wage hikes, including market scenario, inflation, peer practices, etc. etc. We will take a call at appropriate time.
Speaker Change: We haven't really split that out but that is the overall wage hike. The wage hike. As we said at the beginning of the year, um, our relatively similar to the wage hikes that we have done in the earlier years in terms of percentages Etc.
Speaker Change: And coming to the second part of your question, I think too early we just have, uh, begun the year. Uh, we have had, uh, the wage hike effective this quarter. Uh, we haven't really decided, uh,
Speaker Change: When and uh, when about the next wage hikes at this point in time.
Fair enough.
Speaker Change: We we take multiple factors when we consider the wage rights uh including markets scenario inflation, dear practices, etc, etc. We will take a call at appropriate time.
Jayesh Sanghrajka: And the second question is, you know, some of these vendor consolidation and GCC kind of deals that we have won, just wanted to understand, you know, are these, you know, any different in nature when it comes to the kind of upfront investments that are required either on the P&L side or on the balance balance sheet side versus, say, some of the large deals we have done a few years ago? . If you look at the commentary that I gave in terms of cash flows, we are still continuing to believe that we will generate 100% plus conversion of our free cash flow to net profit, right?
Speaker Change: Fair enough. Um, and the second question is, uh, you know, some of these vendor consolidation and GCC kind of deals, uh, um, that we have won, uh, just wanted to understand, uh, you know, are these, um, you know, any different in nature when it comes to the kind of upfront Investments that are required either on the pnl side, or on the balance balance sheet side versus say, some of the large deals we have done few years ago.
Jayesh Sanghrajka: We've already had five very strong quarters of cash generation and we're still expecting to that continue for the rest of the year. So obviously, these are not impacting our balance sheet or cash flow from that point of view. We expect these to be the regular deals with the regular, you know, contours of the deals. These are not significantly different from that. Understood. All right.
Speaker Change: Continuing to believe that we will generate 100% plus uh conversion of a free cash flow to net profit, right? We've already had 5, very strong quarters of cash, generation. And we, we still expecting to that continued for the rest of the year. So, obviously these are not impacting our our balance sheet or cash flow from that perspective, please. We expect these to be the regular deals with the regular, uh, you know, Contours of the deals. So these are not significantly different from that perspective.
Abhishek Pathak: Thank you.
Speaker Change: Understood. All right. Thank you so much.
Sandeep Shah: Next question is from line of Sandeep Shah from eQuery Securities. Please go ahead. Yeah, thanks.
Speaker Change: Thank you.
Speaker Change: Next question is from 9 of sepia from Equity Securities. Please. Go ahead.
Salil Parekh: Thanks for the opportunity and congratulations on a very solid quarter. Just Salil wanted to understand the commentary about vendor consolidation deals has been bullish, not by just you or others. And it seems that Infi is winning higher share versus some of the peers. So considering that, and this may continue going forward, one can assume that TCV can continue to remain healthier in the coming quarter as well because vendor consolidation deals are larger inside.
Speaker Change: Yeah, thanks. Thanks for
Speaker Change: And congratulations on a very solid quarter. Uh, this s wanted to understand, uh, the uh, commentary about. Vendor, consolidation means has been bullish not by just you or others and it seems that in fees, winning higher share versus some of the peers. So considering that, uh, and this may continue going forward, 1 can assume the tcv can continue to remain healthier in the coming quarter as well, because vendor consolidation means are, uh, larger inside
Salil Parekh: Hi, this is Salil, I think. Typically, we don't give a comment on the large deals value in the future quarters. As Jayesh was sharing earlier, the pipeline for large deals is in a good place. We see that we are benefiting from, as you were describing, on consolidation and then some of the other areas on AI, enterprise AI. So we don't have like a view on what that value will be for the next three quarters by quarter. But overall, we feel good in where the pipeline is. Megadeals in that pipeline, but that's that's where sort of we would leave it.
Speaker Change: Uh hi. Um, this is said I think um
Speaker Change: Epically we don't give a comment on the large deals value in the future quarters. Uh as Jesus was sharing earlier, the pipeline for large deals is uh in a good place.
Speaker Change: uh, we see that we are benefiting uh from as you were describing on consolidation and then some of the other areas on uh, AI Enterprise AI,
Speaker Change: Um, to be, we don't have like a view on what that value will be for the, uh, the next 3 quarters by quarter. But overall, we feel good, uh, in where the pipeline is, we see,
Speaker Change: Uh, Mega deals in that pipeline, uh, but that that's that's where sort of, we would leave it.
Salil Parekh: Okay, fair enough. And just in terms of what will change for clients to start spending on discretionary apart from improving macro, any discussion with the client implies or gives you any hope for green shoots possible on the discretionary side, may not be near term, but maybe by the fag end of FY20. So there, again, we have not, in that sense, have a view on, you know, where, where, or when that would happen. What we do see is clients are quite comfortable in working with us on enterprise AI programs, on cloud, on data analytics, on enterprise applications.
Speaker Change: Okay.
Speaker Change: And uh, just
Speaker Change: change for clients to start spending on discretionary apart from improving. Macro any discussion with the clients implies or gives you any hope for green shoots possible on the discretionary side may not be near term but maybe by the time end of the 526.
And this what we've discussed a little bit in more depth on the consolidation programs. There's still quite a lot of attention on cost and efficiency. So we will see, you know, how, how and when the clients change, change their thinking on on some of the other points you mentioned.
Speaker Change: Today, uh, again we we have not uh, in that sense have a view on you know where where, uh, when that would happen, what we do see is uh clients are quite comfortable in working with us on Enterprise AI programs on Cloud on data analytics on Enterprise applications. Uh and this what we've discussed a little bit uh in in more depth on the consolidation programs, there's still quite a lot of attention on cost and efficiency. Uh, so we will see, you know, how how and when uh the clients change change their thinking on on some of the other points you mentioned
Salil Parekh: Okay, okay. And the last question, Girish, I think in the press, you also mentioned that the aspiration to improve EBIT margin in this year over last year continues to remain, with the 1Q being lower than 21.1%, which was the margin in FY25. Is it fair to assume we can still aspire to improve margin Q1Q in the rest of the three quarters, that will take us to better margin on a YOY in FY26? So what would be the levers apart from likely decline in the third party equipment for service delivery? It's only one-fourth of the year which has gone behind.
Okay. Okay. Okay. And the last question there is, uh, I think in the Press, you also mentioned that the aspiration to improve a bit margin in this year over last year continues to remain with the 1q being lower than 21.1%, which was the margin in uh, fi25. Is it fair to assume we can still aspire to improve marginally on you in the rest of the 3 quarters, uh, that will take us to better margin on our voy next 526. So what would be the levers apart from likely decline in the third party uh equipment for Service delivery?
This is a part of the year where we also have rolled out a competition increase. So that's a large headwind that we have absorbed in the quarter as we got into the year. As we go further down, there are multiple tailwinds in terms of Project Maximus, value-based selling, etc. So that will help for sure. The third party, as it reduces, will help on margins. At the same time, there will be headwinds from the mega deals or the deals that will ramp up in terms of transition, etc., that we'll incur where we don't get revenue but we'll incur costs, etc.
Speaker Change: Only it's only 1/4 of the year which has gone behind. This is the Year. This is the part of the quarter or part of the Year where we also have rolled out, uh, a compensation increase, right? So, that's, that's a large headwind that we have absorbed, uh, in the quarter. Uh, as we as we got into the year as we go further down. Um, you know, there are multiple Tailwind in terms of project Maximus, you know, uh, value based selling, uh, Etc. So that will help for sure. Uh, the third party as as it comes as it reduces will help on margin.
Jayesh Sanghrajka: So these are factors that one will have to balance as we go through the year. At this point in time, as I said earlier in the press also, our aspiration remains to improve margins from where we are.
Speaker Change: Uh, at this point in time, you know, as I said earlier, in the Press, also, our aspiration remains to improve margin from where we are.
Okay, thanks and all the best. Thank you.
Speaker Change: Okay, thanks and all the best.
Nainav Deborah Singhal: Next question is from Nainav Deborah Singhal from Nuwama. Please go ahead. Yeah, hi. Thanks for taking my question. And congrats again for a solid growth in this quarter. So Salil, my question was on basically, again, the outlook that you provided that we haven't seen much things improving. And that is why the guidance stands where it is. Now, in your conversation with the clients, I mean, what is the deduction that we have that look the tariff was probably one of the most important reasons that we had the guidance when we gave at the end of Q4.
Speaker Change: Thank you.
Speaker Change: Next question is from 9 of Labor, single from noama. Please go ahead.
Salil Parekh: The 9th of July deadline has come and passed. Now, we are looking at the August 1st deadline. We had a trade deal with Japan. Do you think that over the next few months or quarters, maybe if these trade deals get finalized, the client spending could come back quickly. And basically, they might look at restarting electricity spend also. Or do you think it is more structural in nature? It will also be weighed down upon how the U.S. economic growth picks up, how the basically clients are looking to spend on all the other factors? Is it a mix of all?
Or do you think an improvement on the tariff scenario could restart the spend that have been put on hold?
Yeah. Hi, uh, thanks for taking my question, and congrats again for a solid growth in this quarter. Uh, so certain my question was on basically, again, the Outlook that you provided that, uh, we haven't seen much, uh, things in improving. And that is why the guidance stands where it is now in your conversation with the clients? Uh, I mean, what is the, uh, deduction that we have that look with Tariff was probably 1 of the most important reasons that we had the guidance, uh, when we gave at the end of Q4, uh, the uh, 9th July deadline has come and passed. Now, we are looking at the August 1st deadline. Uh, we have a trade deal with Japan. Do you think that over the next few months or quarters? Maybe if these trade deals, get finalized? Uh, the client is starting. Uh, the client spending could come back uh quickly. And basically, they might look at uh, restarting the decision you spend also or do you think it is more structured in nature? It is, it will also be weighed down upon how the US economy growth picks up, how the the basically clients are looking to spend on all the other factors is it
A mix of all or do you think an improvement on the RF scenario, could restart the spend that have been put on hold?
Salil Parekh: This is Salil. I think You know, those are sort of important questions. What we see is There is an interest with clients across industries to essentially leverage massively the new enterprise AI technology. A lot of that for productivity, a lot of that for new ways of doing business, which will spur their own growth and spur and expand revenue for us. The foundation of that is, you know, much more attention to be on the cloud, much more attention to have a strong sort of data infrastructure, and then much more attention to have even enterprise apps on onto the cloud environments.
Salil: Um, this is salil.
Speaker Change: Uh, I think
Speaker Change: You know, those are, uh, sort of important questions. Um, what we see is, um,
Speaker Change: there is an interest with, uh, clients across Industries to, uh, essentially leverage massively. The new Enterprise AI technology, uh, a lot of that for productivity. A lot of that for a new ways of doing business, which will spur their own growth and, and, and, and spur and expand, uh, revenue for us.
Speaker Change: The foundation of that, uh, uh, is is, you know, much more attention to be on the cloud, uh, much more attention to, uh, have a strong sort of data infrastructure.
So all that, like interest is there. And then there is also, you know, the view of awareness, sort of GDP growth and economic activity go. And so Our view is to make sure that we play, you know, today, there's an interest in cost and efficiency, we see some benefits of consolidation, we play that as an activity, because we have strength there, in addition to enterprise AI and the other areas. And we try to make sure that we are well positioned for that. The other points in terms of timelines, you know, we look at it this year, based on what we see, and then at the end of next quarter, and so on every quarter, as we see things, which are different or the same, so that we then, you know, update what we're looking at, in terms of the overall activity.
Speaker Change: Uh, and then much more attention to have even Enterprise, uh, uh, apps on onto the cloud, uh, environments. So all that like interest is there. And then there is also, you know, the the view of awareness sort of uh, GDP growth and economic activity. Go, uh, and so
Speaker Change: Uh, I, I've used to make sure that we play, you know, today, there's an interest in cost and efficiency. We, we see some benefits of consolidation. We, we play that, uh, as a as a activity because we have strengths there in addition to Enterprise Ai and the other areas and we try to make sure that we are well, positioned for that, uh, the the other points in terms of timelines, you know, we, we look at it for this year based on what we see and, and at the end of next quarter. And so on every quarter as we see things which are different or the same, so we we then, you know, update what what we are looking at, in terms of the overall activity,
Salil Parekh: Co-Hotel, Co-Hotel.
Now, since just one last one bit from my side, since you touched upon the interest in AI, is the current AI cycle very similar in nature to the digital adoption cycle that we saw in 2015-16? Do you think clients are, the interest of the client, the level of interest of clients is pretty much the same, the trajectory that the industry took at that point of time in the sense that initially we had our, the industry's IMS and other revenues cannibalized by the cloud adoption, and then gradually it picked up momentum. Do you think the AI cycle could also play out in a similar manner?
Speaker Change: Got it, got it. And now since just 1 last 1 bit from my side, since you touched upon the interest in AI uh is the current AI cycle, very similar in nature to the digital adoption cycle that we saw in 2015 16.
Salil Parekh: Any thoughts on that would really help. So there, I mean, my view is, every sort of big technology shift has a way of Enterprise clients making decisions in different ways. So whether it's that cycle or the one before that, with everything on the internet or the one before that. So each tech cycle has had a way of playing out. So one of the factors we see, because large enterprises have, you know, already a landscape of different technologies. So for anything to make a big impact, it needs, of course, the technology is distinctive, which we think enterprise AI is, and it has to then work with the ecosystem and then make an impact there.
Speaker Change: Uh, do you think clients are the interests of the client? The level of interest of clients is pretty much the same. The trajectory that the industry took at that point of time in the sense that initially we had our, uh, the industries IMS and other revenues cannibalized by the cloud adoption. And then gradually, uh, it picked up momentum. Do you think the, the, the AI cycle could also play out in a similar manner? Any thoughts on? That was really helpful?
Today. I mean, my my view is, uh, every sort of big technology shift. Uh, has a way of, uh,
Speaker Change: uh, Enterprise clients making decisions in different ways.
Uh, so whether it's that cycle or the 1 before that uh, with with everything on the internet, or the 1 before that, so each each text cycle is had a way of playing out so what are the factors? We see? Because large Enterprises have, you know, already a landscape of different Technologies. So for anything to make a big impact
So I don't have a view on like, you know, will that be looking like the one in the past or how similar or different it is. But what we do have a view on is, we see a tremendous interest in an enterprise AI from clients, we see foundational capabilities that they need, which we are good at, cloud data, etc, which we think will help. And we are also pretty good at enterprise AI. So we are more prepared, you know, as that plays out now, like the timeline of that, and the scale, at the end, you know, the enterprise tech, let's say landscape is much larger today than it was in that 10 year ago period.
Salil Parekh: So there's a lot more things which need a change. So generally speaking, that gives me a good sort of feeling about the future. But like, you know, to try to put that as it's similar, different is more difficult.
Speaker Change: You know, will that be looking like the 1 in the past, or how similar or different it is. But what we do, have a view on is we see a tremendous interest in, in, in Enterprise AI from clients, we see foundational capabilities that they need which we are good at cloud data. Etc. Which we, we think will help and we are also pretty good at Enterprise AI. So we are more prepared, you know, as that plays out. Now the like the timeline of that uh, and the scale at the end, you know, the Enterprise Tech. Uh, let's say landscape is much larger today than it was uh, in that uh, 10 10, 10 year ago, period. So there's a lot more things which need uh, a change. So, so generally speaking that gives me a good good sort of feeling about the future but like, you know, to try to put that as a similar, different is more more difficult for me.
Thank you so much for that comprehensive answer and wish you all the best. Thank you.
Thank you so much for that comprehensive answer and I wish you all the best.
Apoorva Prasad: Next question is from the line of Apoorva Prasad from Franklin Templeton. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Next question is from the line of apurva Prasad from Franklin Templeton. Please go ahead.
Apoorva Prasad: Yeah, Salil is the outlook that you have for the rest of the year, more a function of Spend Velocity Related Client Uncertainty or is it more of the Structural AI Related Productivity Loss Factor? Can you repeat that please? What was that? Velocity something? Yeah, Puro, if you can repeat the question? Yeah. Am I audible now? Yeah, go ahead. Yeah, yeah. I'm asking if the implied outlook for the remaining part of the year, is this more a function of macro and client tech overall spend related uncertainty that you're referring to? Or is it more of the structural AI related productivity pass back?
Apurva Prasad: yeah, uh, someone uh, uh, is the Outlook that you have, for, for the rest of the year, know, the function of
Speaker Change: Spending velocity.
Speaker Change: Related client uncertainty or is it more of the structural AI related productivity prospects?
Speaker Change: Can you repeat that, please? What was the velocity something? If you can repeat the question,
Speaker Change: Yeah.
Speaker Change: I mean, audible now
Speaker Change: Yeah, yeah, yeah. Go ahead.
Speaker Change: Yeah, yeah. Yeah. I'm asking if if the the implied outlook for the remaining part of the year, is this more a function of
Speaker Change: Macro and client Tech, overall spend related uncertainty that you're referring to.
Apoorva Prasad: You did share some numbers of 5 to 15% related benefits are being passed in through AI programs. All right, and if I still want to understand the AI related productivity that the impact that you're facing already, is there any geo or vertical specific trend that you see here? Perhaps more, maybe on North America and high tech? Is there any such trend across geographies and verticals? On the AI, we see, you know, good adoption in many places. So there's not like one thing which will stand out. But one of the sort of comments we shared earlier was All right.
Speaker Change: Or is it more of the structural AI related? Uh, productivity Passback? Uh,
Speaker Change: Uh, you did share some numbers of 5 to 15% related benefits that are being passed in, uh, through AI programs.
Speaker Change: Hi, this is Josh here. This is, this is more about the macro uncertainty, uh, that we are seeing right. As I talked earlier, uh, we haven't really seen the environment improving from, from where we were at the beginning of the year. Uh, the Tariff related, uncertainties still continue. The geopolitical uncertainty is still there. The client Behavior hasn't changed many.
Speaker Change: Any other clients are still in a wait, uh, wait and watch mode, uh, when it comes to discretionary spending Etc. So we haven't really seen the environment changing, uh, in the most, uh, strong part of, uh, the period seasonally strong part of our, uh, our business.
Speaker Change: All right, and and if I still want to understand the AI related productivity, that the impact that you're facing already? Is there any uh go or vertical specific thread? That you see here? Perhaps more uh, maybe on North America and high-tech. Is there any such Trend across geographies with verticals?
Speaker Change: Uh on the AI. Um we we see you know, good adoption in many places. So there's not like 1 uh thing which will stand out but 1 of the sort of comments we shared, uh, earlier was
Now we have become the AI strategic partner. It's a key, I would say, positional advantage that I think Infosys has.
Like in financial services. If you look at our large largest clients, uh, half of them, now we have become the AI strategic partner, so it's a key, key key. Uh, like I would say positional advantage that that I think, uh, Infosys has
Salil Parekh: All right. Thank you.
Speaker Change: All right.
Ashwin Mehta: Next question is from Nainav Ashwin Mehta from Ambit Capital. Please go ahead. Hi, thanks for the opportunity.
Speaker Change: Thank you.
Two questions. One, Jayesh, in terms of depreciation and amortization going down by almost 50 bits, what has been the driver of that? And the second is in terms of SG&A bump up that we've seen, which is almost 90 bits this quarter. So is it more sales aggression that is driving it? Or are there any, say, one off events, which possibly led to a material bump up? Sorry, can you hear me?
Ashwin Ma: Next question is from Ashwin. Ma from Ambit Capital. Please go ahead. Uh, hi. Thanks for the opportunity. 2 questions 1. Uh, J. In terms of the depreciation and monetization going down, the almost 50 bits. What has been the driver of that? Uh, and the second is, in terms of sgna bump up that we have seen, which is almost 90. So, is it more sales aggression? That is driving it? Or are there any, uh, say 1 of events, which possibly led to a material bump up?
Speaker Change: Sorry, can you hear me?
Jayesh Sanghrajka: On the depreciation and amortization, if you recollect last quarter, we had a one-off on account of, you know, amortization of intangibles with respect to one of our acquisitions, that is impacted by 40 basis points, so that is what, not the reversal of it, but the lack of it this quarter, you know, on a quarter-on-quarter walk shows up as 40 basis points, delta pretty much, and the balance has some part of the currency impact as well. On the SG&A, it's a multiple factors. Of course, comp increase that we did in Q1 has an impact. The variable pay that we did has an impact.
Uh, yeah, I can hear you.
The hiring for the S&M mainly, you know, to improve our growth trajectory, which is what I called out as 20 basis points as safe investment in a margin work. So that has an impact. The investment that we have done in terms of brand building, and we had some events this quarter. So that also impacted. So I think all of that is reflected in the SG&A.
Speaker Change: Amortization if you recollect, last quarter, we had a 1-off on account of you know amortization of intangibles with respect to 1 of our Acquisitions that that has impacted by 40 basis points. So that is what the, the not the reversal of it. But the lack of it, this quarter, you know, on a quarter and quarter, work shows up as 40 basis points, uh, Delta pretty much and the balance has some part of, uh, the currency impact as well, uh, on the sgna it. It's a, it's a multiple factors, uh, of course, comp increase that we did, uh, in in queue. Uh, q1 has an impact. The variable pay that we did, uh, has an impact, uh, the hiring for, uh, the SNM mainly, uh, you know, to um, to improve our growth trajectory, uh, which is what I called out as 20 basis point as States investment in a margin work. So that is an impact. Uh, the investment that we have done in terms of brand
Abhishek Pathak: Okay, thanks Farah and all the best for the next one.
Speaker Change: Buildings and we had some events uh this quarter so that also uh impacted. So I think all of that uh is reflected in SDA.
Speaker Change: Uh okay thanks uh Farah and all the best for the next 1.
Thank you.
Abhishek Pathak: Next question is from the line of Abhishek Pathak from Motilal Oswal. Please go ahead. Yeah, hi, team. Morning and congrats on a good quarter. A couple of questions just the firstly on the inorganic contribution. So the 40 bps impact that you're referring to, is this entirely, you know, from the acquisitions with consolidated in this quarter? Because if I were to assume some residual impact from intake, the full year inorganic number comes out to be slightly higher. So just that clarification will be helpful. And the second question is, there was a commentary around how discretionary spends are being kind of bankrolled entirely by the savings made by AI.
Speaker Change: Thank you.
Next question is from the line of abishek Pak from motilal losal please go ahead.
So just wondering, you know, is this is this going to be sort of a structural trend where, you know, there is going to be a cannibalization going forward, regardless of how the demand improves? Will the clients expect us to, you know, just just keep self funding the discretionary initiatives basis these gains or, or is there sort of you know, a more structural demand recovery built in, let's say, post the next 12 to 18 months, where the clients do need a serious amount of investment in their data and their tech stack to basically modernize? So those are two questions.
Abishek Pak: Yeah. Hi team. Uh, morning and congrats on a good quarter. Uh, a couple of questions just uh the firstly on the uh inorganic um contribution. Uh, so the 40 bibs impact that you're referring to uh, is this entirely, um, you know, from the Acquisitions and Consolidated in this quarter because if I were to assume some residual impact from uh intake the full year in organic member comes out to be slightly higher. So just that clarification will be helpful. Uh and the second question is um uh uh uh there was a commentary around how uh, discretionary spends are being uh kind of bankrolled uh entirely by the savings made by AI. So just wondering, you know um uh is this is this going to be sort of a structural Trend where um, you know, uh, there is going to be a canalization going forward, regardless of how the demand improves with the clients expect us to. Um, you know, just just keep self-funding the discussion initiatives, uh, bases, these gains, or, or or is there some sort of
Abishek Pak: You know uh a more uh, structural demand recovery built in. Let's say a a post the next 12 to 18 months. Uh where the clients do need a serious amount of investment in their data and their Tech stack to basically modernize. So now uh those are 2 questions. Thank you.
Abhishek Pathak: Abhishek, the 40 basis points that I talked about is sequential. So 2.6% includes 40 basis points of on account of acquisitions. These are the acquisitions that we made in this quarter, the MRE and the missing link in Australia. So that is contributed around 40 basis points out of the 2.6%. Right, I think I was just referring to your comment in the press conference that you said even the full year impact will be 40 bits and hence the Yeah, so Intec was, you know, pretty much 10 out of the nine, I mean, 12 months in the last year.
Abishek Kumar: So abishek, the 40 basis point that I talked about is sequential. So 2.6% includes 40 basis points of on account of Acquisitions. These are the Acquisitions that we made in this quarter, the uh, M and The Missing Link, uh, in Australia. So, that is contributed around 40.6%. Um, India, I think there was last year, right? Uh, I think I was just referring to your comment in the press conference that you said, even the full year, impact will be 40 bits and hence the confusion.
So if you look at full year basis, it's not significantly. So that's the reason I said it's similar, you know, similar impact on a full year basis. If you add 2-2.5 months of Intech and whatever, you know, 11 months of MRE and machine learning. Clear? Yeah. Got it. Thank you.
Yeah. So in Tech was, you know, pretty much, uh, 10 10 10th significantly. So, that's the reason I said it's similar, um, you know, similar impact on a full year basis. Uh,
Abishek Kumar: If you if you add 2 months of 2 to 1/2 months of intake, and uh whatever uh you know, 12 11 months, of M and Missing Link.
Abishek Kumar: Yeah, yeah, of course. Thanks.
Keith Bachman: Next question is from Nainav Bachman from BMO. Please go ahead. Hi, thank you.
Abishek Kumar: Thank you.
Speaker Change: Next question is from 9, of Bachmann from BMO. Please. Go ahead.
This is Keith Bachman from Bank of Montreal. My first question is your headcount was was relatively flat quarter on quarter, including software professionals. How do you think about headcount trends through the year? You know, we were able to increase our utilization this quarter by 30 basis points. So that helped. Part of our growth, as I mentioned earlier, came on back of the pricing increase, including the seasonality in the business So that has helped as well. But as we go forward, you know, whatever volume growth will come in, considering where that we are operating at a peak, peak headcount, that would need additional headcount, you know, either through subcontractors or our own employees in terms of effort.
Speaker Change: All right, thank you. This is Keith Bachman from Bank of Montreal. Uh, my first question, is your head count was was relatively flat. It, it a quarter on quarter,
Speaker Change: Uh, including software professionals.
Speaker Change: How do you think about headcount?
Speaker Change: Uh, Trends through the year.
Speaker Change: So keep, uh, you know, we, we were able to increase our, uh, uh, utilization this quarter by 30 pages point. So that helped, uh, part of our growth. As I mentioned earlier, came on back of, uh, the pricing increase, uh, including the seasonality in the business. So so that has helped as well. But as we go forward, uh, you know, whatever volume growth will come in considering where that we are operating at a peak, uh, Peak headcount that would need additional. Uh, headcount uh, you know, either through subcontractors or our own employees in terms of efforts,
Salil Parekh: Okay, perfect. And then my second question is And the reason I asked about headcount, I just didn't know if you'd be able to break the cycle a little bit on growing headcount faster than effort, because A, it might help you, but it sounds like in the next couple quarters, inches, no.
Speaker Change: Okay, perfect. And then my second question is
The second question is related to your delivery model. How do you think about your delivery model changing over the next year or so in terms of having A, FTE-based versus B, more success-based or more fixed-price contracts? Do you think your delivery model may change, enabled by, or maybe caused by the advent of more AI capabilities? So Keith, if you look at the delivery model, I don't think delivery model will change in a in a short period of couple of quarters, over a longer period of time on the back of, you know, AI, etc, we may expect some part of newer pricing models emerging.
Speaker Change: Headcount, I just didn't know if you'd be able to break the cycle a little bit on growing headcount faster than effort uh because a AI might help you but it sounds like in the next couple quarters answers. No.
Speaker Change: Um, the second question is related to your delivery model.
Speaker Change: Um, how do you think about your delivery model changing over the next year or so, in terms of having uh a FTE base versus B, more success based or more fixed price contracts?
Speaker Change: Um, do you think your delivery model may change? Um, enabled by
Speaker Change: or maybe caused by uh the Advent of more, uh, AI capabilities.
Salil Parekh: It could be outcome based pricing model, it could be you know, pod based or studio based pricing model, etc. So there are various new pricing models that are emerging as we speak. I don't think, you know, over the next year or so the entire model is going to change. The change will happen gradually.
Okay, if you look at uh the delivery model, I don't think delivery model will change in a in a short period of couple of quarters over a longer period of time on the back of uh, you know, AI Etc. We may expect some part of newer pricing models emerging, uh, it could be outcome based pricing model. It could be, you know, part based or Studio based pricing model. Um I think rest of the latest new pricing models that are emerging as we speak. Uh, I don't think, uh, you know, over the next year or so the entire model is going to change, the change will happen gradually in my mind.
Okay, many thanks. That's a lot.
Speaker Change: Okay, many, thanks best of luck.
Sandeep Mahindroo: Thank you very much.
Ladies and Gentlemen, we will take that as the last question.
Speaker Change: Thank you very much.
Salil Parekh: I will now hand the conference over to the management for closing comments. Thank you. Thank you, everyone, for joining us. It's been a fantastic quarter for us, strong growth, large deals, a very good focus on enterprise AI consolidation, but also good on cloud and data work. We see this as a differentiated performance with what we have done, which is much more positioning Infosys in that leadership area. And we look forward to a good rest of financial year 26 and connecting with you through the quarter. And at the end of this quarter as well. Thanks, everyone.
Ladies and gentlemen, we will take that as our last question. I'll now hand the conference over to the management for closing comments.
Speaker Change: Thank you, thank you, everyone for joining us. Uh, it's been a fantastic quarter for us. Strong growth, large deals.
Take care.
Operator: Thank you very much members of the management, ladies and gentlemen, on behalf of Infosys that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.
Speaker Change: A very good focus on, Enterprise AI consolidation but also good on cloud and data work. We see this as a differentiated performance, uh, with, uh, what we have done, which is much more positioning Infosys, uh, in in that leadership area. Uh, and we look forward to a good rest of financial year, 26 and connecting with you through the quarter. And at the end of this quarter as well, thanks everyone. Take care. Bye.
Speaker Change: Thank you very much members of the management.
Speaker Change: Ladies and gentlemen that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.