Q4 2026 Infosys Ltd Earnings Call

April 23, 2026

Operator 1: Ladies and gentlemen, please note the management has to make an announcement. Sir, you may go ahead.

Speaker #1: Ladies and gentlemen, please note that management has to make an announcement. So you may go ahead.

Sandeep Mahindroo: Hi. Good morning, good evening, everyone. This is Sandeep Mahindroo. We'll be slightly late on the call as regards the start of the call is concerned. The board meeting took some time to conclude, so the press conference is still underway. We'll start the call at 6:00PM India time, which is roughly 30 minutes from now. That corresponds to 8:30PM Singapore/Hong Kong time and 8:30AM Eastern Time. Apologies for that, but we will start the call at 6:00PM India time, roughly 30 minutes from now. Thank you.

Speaker #2: Hi. Good morning. Good evening, everyone. This is Sandeep. we'll be slightly late on the call as regards the start of the call is concerned.

Speaker #2: the board meeting took some time to conclude, so the press conference is still underway. We'll start the call at 6:00 PM India time, which is roughly 30 minutes from now.

Speaker #2: That corresponds to 8:30 PM Singapore-Hong Kong time, and 8:30 AM Eastern time. Apologies for that, but we will start the call at 6:00 PM India time, roughly 30 minutes from now.

Speaker #2: Thank you.

Operator 1: Thank you. Ladies and gentlemen, thank you for your patience. There is a slight delay. The call will begin at 6:00 PM. Participants, please note there is a slight delay in beginning the call for Infosys. The call will begin at 6:00 PM. Ladies and gentlemen, welcome to the Infosys conference call. Please note there's a slight delay. The call will begin at 6:00 PM. Participants, this conference call has been rescheduled to 6:00 PM. Ladies and gentlemen, good day, and welcome to Infosys' conference call. Apologies for the delay. The call will begin at 6:00 PM. Participants, there is a slight delay. The call will begin at 6:00 PM. Ladies and gentlemen, good day, and welcome to Infosys call. Apologies for the delay. The call will begin at 6:00 PM. Participants, apologies for the delay. The call will begin at 6:00 PM. Ladies and gentlemen, apologies for the delay.

Speaker #1: Thank you. Ladies and gentlemen, thank you for your patience. There is a slight delay. The call will begin at 6:00 PM. Participants, please note there is a slight delay in beginning the call for Infosys.

Speaker #1: The call will begin at 6:00 p.m. Ladies and gentlemen, welcome to the Infosys conference call. Please note there is a slight delay. The call will begin at 6:00 p.m.

Speaker #1: Participants, this conference call has been rescheduled to 6:00 PM. Ladies and gentlemen, good and welcome to Infosys conference call. Apologies for the delay. The call will begin at 6:00 PM.

Speaker #1: Participants, there is a slight delay. The call will begin at 6:00 PM. Ladies and gentlemen, good and welcome to Infosys call. Apologies for the delay.

Speaker #1: There is a the call will begin at 6:00 PM. Participants, apologies for the delay. The call will begin at 6:00 PM. Ladies and gentlemen, apologies for the delay.

Operator 1: Please note the call will begin at 6:00 PM. Participants, please note the call is delayed. The call will begin at 6:00 PM. Ladies and gentlemen, apologies for the delay. Please note the call will begin at 6:00 PM. Participants, apologies for the delay. Please note the call will begin at 6:00 PM.

Speaker #1: Please note the call will begin at 6:00 PM. Participants, please note the call is delayed. The call will begin at 6:00 PM. Ladies and gentlemen, apologies for the delay.

Speaker #1: Please note the call will begin at 6:00 PM. Participants, apologies for the delay. Please note the call will begin at 6:00 PM. Ladies and gentlemen, please stay connected to the conference will begin at 6:00 PM.

Operator 2: Ladies and gentlemen, please stay connected. The conference will begin at 6:00 PM. Ladies and gentlemen, please stay connected. The conference will begin at 6:00 PM. Ladies and gentlemen, please stay connected. The conference will begin at 6:00 PM. Ladies and gentlemen, please stay connected. The conference will begin at 6:00 PM. Ladies and gentlemen, please stay connected. The conference will begin shortly. Ladies and gentlemen, please stay connected. The conference will begin shortly. Ladies and gentlemen, thank you for your patience and staying connected. Please note the call will begin shortly. Thank you.

Speaker #1: Ladies and gentlemen, please stay connected to the conference will begin at 6:00 PM. Ladies and gentlemen, please stay connected to the conference will begin at 6:00 PM.

Speaker #1: Ladies and gentlemen, please stay connected to the conference will begin at 6:00 PM. Ladies and gentlemen, please stay connected to the conference will begin shortly.

Speaker #1: Ladies and gentlemen, please stay connected to the conference will begin shortly. Ladies and gentlemen, thank you for your patience and staying connected; please note the call will begin shortly.

Speaker #1: Thank you. Ladies and gentlemen, greetings and welcome to Infosys Limited, Q4, FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be no opportunity for you to ask questions after the presentation concludes.

Operator 1: Ladies and gentlemen, greetings and welcome to Infosys Limited Q4 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. 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. I now hand the conference over to Mr. Sandeep Mahindroo. Thank you, and over to Mr. Mahindroo.

Operator: Ladies and gentlemen, greetings and welcome to Infosys Limited Q4 FY26 Earnings Conference Ccall. 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. 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. I now hand the conference over to Mr. Sandeep Mahindroo. Thank you, and over to Mr. Mahindroo.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Sandeep Mahindroo. Thank you, and over to Mr. Mahindroo. Thanks, everyone. Welcome to this earnings call to discuss Infosys Q4 FY26 financial results.

Sandeep Mahindroo: Thanks everyone. Welcome to this Earnings Call to discuss Infosys Q4 FY2026 financial results. Joining us on this call is CEO and MD, Mr. Salil Parekh, CFO, Mr. Jayesh Sanghrajka, along with 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. Please note that anything we say that refers to our future outlook is a forward-looking statement that must be read in conjunction with the risks that the company faces. A complete statement explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I'd now like to pass on the call to Salil.

Speaker #1: Joining us on this call is CEO and MD, Mr. Salil Parekh, CFO, Mr. Jayesh Sanghrajka, along with other members of the leadership team. We'll start the call with some remarks on the performance of the company.

Speaker #1: Subsequent to which, we'll open up the call for questions. Please note that anything we say that refers to our future outlook is a forward-looking statement, and must be read in conjunction with the risks that the company faces.

Speaker #1: A complete statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I'd now like to pass on the call to Salil.

Salil Parekh: Thanks, Sandeep. Good afternoon, good evening, good morning to everyone. Thank you for joining in. We delivered a strong performance in the financial year 2026. We had a growth of 3.1% for the full year in constant currency terms. Our Q4 revenue growth was 4.1% year-on-year in constant currency terms. We had strong growth in financial services, in the communications industry, in manufacturing industry, and for the Europe geography for the full year. Large deals were strong. For the full year, we had $14.9 billion of large deals. This is a growth of 24% over the prior year. For Q4, we were at $3.2 billion, a strong showing for the quarter. We shared our AI strategy during our AI Investor Day a few weeks ago.

Speaker #1: Thanks, Sandeep. Good afternoon, good evening, good morning to everyone. Thank you for joining in. We delivered a strong performance in the financial year 2026.

Speaker #1: We had a growth of 3.1% for the full year in constant currency terms. Our Q4 revenue growth was 4.1% year-on-year in constant currency terms.

Speaker #1: We had strong growth in financial services, in the communications industry, and in the manufacturing industry. And for the Europe geography, for the full year, large deals were strong for the full year.

Speaker #1: We had 14.9 billion of large deals. This is a growth of 24% over the prior year. And for Q4, we were at 3.2 billion, a strong showing for the quarter.

Speaker #1: We shared our AI strategy during our AI investor day a few weeks ago. We see a large addressable market for AI services across six areas.

Salil Parekh: We see a large addressable market for AI services across six areas: AI strategy and engineering, data, process, legacy modernization, physical AI, and trust. With our Topaz Fabric platform for AI, our COBOL platform for cloud, we have differentiated capabilities to serve our clients across the six areas of AI. Some examples of the work we are doing. For a consumer products retail company, Ralph Lauren, we helped build a conversational and personalized AI tool that led to converting customer interest into a shopping experience. This resulted in an increase in their revenue by 12% and customer engagement by 50%. For a large transport company, Hertz, we helped with a legacy migration to bring 3 million lines of COBOL code to a modern microservices environment using AI foundation models.

Speaker #1: AI strategy and engineering, data, process, legacy modernization, physical AI, and trust. With our topaz fabric platform for AI, our cobalt platform for cloud, we have differentiated capabilities to serve our clients across the six areas of AI.

Speaker #1: Some examples of the work we are doing for a consumer products, retail company, Ralph Lauren, we help build a conversational and personalized AI tool that led to converting customer interest into a shopping experience.

Speaker #1: This resulted in an increase in their revenue by 12% and customer engagement by 50%. For a large transport company, Hertz, we helped with a legacy migration to bring 3 million lines of cobalt code to a modern microservices environment using AI foundation models.

Salil Parekh: The cost was 60% lower, the timeline was 60% quicker than how they would have done it without AI. For a large energy company, BP, we deployed 50 AI agent initiatives across trading, supply chain, sustainability, and core operations to transform the software development, knowledge automation, legacy modernization, and digital decision support. This resulted in 95% payment accuracy, 50% faster contract validation, and 18% improvement in IT operations efficiency. We have strategic collaborations with emerging foundation model companies such as Anthropic and OpenAI, which help us support our clients' transformation for software development, legacy modernization, and agent building. We also have established strategic AI collaborations with Google Gemini, Nvidia, Microsoft, AWS, Google Cloud, and Intel, among others. We've deployed over 30,000 developers on GitHub Copilot. As we look ahead to financial year 2027, we see large opportunities in AI services, continued competitive intensity, and AI productivity impact.

Speaker #1: The cost was 60% lower, and the timeline was 60% quicker than how they would have done it with or without AI. For a large energy company, BP, we deployed 50 AI agent initiatives across trading, supply chain, sustainability, and core operations to transform software development, knowledge automation, legacy modernization, and digital decision support.

Speaker #1: This resulted in 95% payment accuracy, 50% faster contract validation, and 18% improvement in IT operations efficiency. We have strategic collaborations with emerging foundation model companies, such as Anthropic and OpenAI, which help us support our clients' transformation for software development, legacy modernization, and agent building.

Speaker #1: We also have established strategic AI collaborations with Google Gemini, NVIDIA, Microsoft, AWS, Google Cloud, and Intel, among others. We've deployed over 30,000 Deployer developers on GitHub Copilot.

Speaker #1: As we look ahead, to financial year 2027, we see large opportunities in AI services, continued competitive intensity, and AI productivity impact. With a clear AI strategic roadmap and real-world toolkit of topaz fabric, we have well-positioned to support our clients' transformation technology and operations objectives.

Salil Parekh: With a clear AI strategic roadmap and real-world toolkit of Topaz Fabric, we are well positioned to support our clients' transformation technology and operations objectives. Our revenue growth guidance for financial year 2027 is 1.5% to 3.5% year-on-year in constant currency terms. We expect acceleration in growth in financial services and the energy utilities resources services vertical from financial year 2026 to 2027. We expect H1 to be stronger than H2, consistent with our normal seasonality. Our operating margin guidance for financial year 2027 is 20% to 22%. With that, let me hand it over to Jayesh for his update.

Speaker #1: Our revenue growth guidance for financial year 2027 is 1.5% to 3.5% year-on-year in constant currency terms. We expect acceleration in growth in financial services and the energy utilities resources services vertical from financial year 2026 to 2027.

Speaker #1: We expect H1 to be stronger than H2, consistent with our normal seasonality. Our operating margin guidance for financial year 2027 is 20% to 22%.

Speaker #1: With that, let me hand it over to Jayesh for his update. Thank you, Salil. Good morning, good evening, everyone. And thank you for joining the call today.

Jayesh Sanghrajka: Thank you, Sandeep. Good morning, good evening, everyone, and thank you for joining the call today. FY26 performance demonstrates our ability to maintain financial discipline and operational excellence in a challenging and evolving business environment. Client spending is guarded, with greater focus on cost optimization engagements as against growth-led transformation programs. We are seeing increasing momentum in AI-driven initiatives, particularly around productivity, automation, and platform-led modernization initiatives. Let me start with the key highlights for the year and the quarter. FY26 revenues crossed $20 billion and grew 3.1% in constant currency terms within the upgraded guidance band given in January. This was after lower third-party costs, which was down by 1% as percentage of revenue and 0.7% reduction in on-site mix. Acquisitions contributed about 70 bps on full-year growth.

Speaker #1: Financial year 2026 performance demonstrates our ability to maintain financial discipline and operational excellence in a challenging and evolving business environment. Client spending is guarded, with greater focus on cost optimization engagement as against growth-led transformation programs.

Speaker #1: We are seeing increasing momentum in AI-driven initiatives, particularly around productivity, automation, and platform-led modernization initiatives. Let me start with the key highlights for the year and the quarter.

Speaker #1: FY26 revenues crossed 20 billion and grew 3.1% in constant currency terms, within the upgraded guidance band given in January. This was after lower third-party costs, which was down by 1% as percentage of revenue and 0.7% reduction in onsite mix.

Speaker #1: Acquisitions contributed about 70 bps on full-year growth. For FY26, communication, manufacturing vertical, and Europe geography grew more than double the company average, led by ramp-up of the large deal wins.

Jayesh Sanghrajka: For FY26, Communications, Manufacturing vertical and Europe geography grew more than double the company average, led by ramp-up of the large deal wins. Additionally, FS and ERS grew above the company average in constant currency terms. Volumes for the year were flattish. Growth was led by increase in realization, thanks to Project Maximus. Adjusted operating margin was stable at 21%. Gains from currency and Maximus were reinvested in talent, AI investment, and sales and marketing. Q4 revenues grew by 4.1% year-on-year. Sequentially, revenues declined 1.3% in constant currency due to seasonality and slower decision-making in the month of March. Growth in Q4 was broad-based across major geographies. Communications, ERS, and LS verticals grew well above the company average on a year-on-year basis in constant currency terms. Q4 operating margin stood at 20.9%, down 0.3% sequentially, adjusted for the labor code impact in Q3.

Speaker #1: Additionally, FS and EURS grew above the company average in constant currency terms. Volumes for the year were flattish. Growth was led by increase in realization thanks to project maximums.

Speaker #1: Adjusted operating margin was stable at 21%. Gains from currency and maximums were reinvested in talent, AI investment, and sales and marketing. Q4 revenues grew by 4.1% year-on-year, sequentially revenues declined 1.3% in constant currency due to seasonality and slower decision-making in the month of March.

Speaker #1: Growth in Q4 was broad-based across major geographies. Communication, EURS, and LS verticals grew well above the company average on a year-on-year basis in constant currency terms.

Speaker #1: Q4 operating margins stood at 20.9%, down 0.3% sequentially, adjusted for the labor code impact in Q3. Onsite mix further reduced to 22.8% from 23.1% in Q3.

Jayesh Sanghrajka: On-site mix further reduced to 22.8% from 23.1% in Q3. Utilization, excluding trainees, was 83% in Q4 and 84.4% in FY26. Utilization, including trainees, was at 81.1% for FY26, reflecting the investment made towards creating future capacity. Strong focus on collections aided by technology interventions helped us reduce DSO, including unbilled, net of unearned, to 78, which is the lowest in seven years. Reported EPS in INR terms grew 23.8% YOY in Q4 and 11% in FY26. EPS adjusted for income tax orders and the labor code grew double digits for the year at 13.9% in Q4 and 12.1% for the full year in INR terms. Free cash flow adjusted for the labor code and income tax refunds stood at INR 33.5 billion for FY and INR 882 million for Q4.

Speaker #1: Utilization excluding trainees was 83% in Q4 and 84.4% in FY26. Utilization including trainees was at 81.1% for FY26, reflecting the investment made towards creating future capacity.

Speaker #1: Strong focus on collections aided by technology interventions helped us reduce DSO, including an unbuilt net of unearned to 78, which is the slowest in seven years.

Speaker #1: This is the lowest in seven years. Reported EPS in INR terms grew 23.8% year on year in Q4 and 11% in FY26. EPS, adjusted for income tax orders and the labor code, grew double digit for the year, at 13.9% in Q4 and 12.1% for the full year in INR terms.

Speaker #1: Free cash flow adjusted for the labor codes and income tax refunds stood at 3.5 billion for FY and 882 million for Q4. Adjusted free cash as a percentage of net profit continued to be well above 100% at 106 for FY26 and 111 for Q4.

Jayesh Sanghrajka: Adjusted free cash as a percentage of net profit continued to be well above 100% at 106% for FY26 and 111% for Q4. We had strong large-deal wins in financial year with a TCV of $15 billion with 55% net new. Large-deal pipeline continues to remain strong. Our $50 million-plus clients increased by three, and $100 million-plus clients also increased by three, $400 million-plus by two in financial year last year. Headcount at the end of the year was over 328,000. Voluntary attrition reduced by 1.5% to 12.6% for the year, reflecting continuous softness in our interventions towards talent retention. We onboarded more than 20,000 freshers in FY26 and expect to hire a similar number in FY27. We will continue to calibrate the overall requirement depending on growth expectations and attrition trends. Operating margins for Q4 declined by 0.3% to 20.9% sequentially.

Speaker #1: We had a strong large deal wins in financial year with a TCV of 15 billion dollars, with 55% net new, large deal pipeline continues to remain strong.

Speaker #1: Our 50 million plus dollar plus clients increased by 3, and 100 million plus clients also increased by 3. 400 million by 2 in financial year last year.

Speaker #1: Headcount at the end of the year was over 328,000. Voluntary attrition reduced by 1.5% to 12.6% for the year, reflecting continuous softness in our interventions toward talent retention.

Speaker #1: We onboarded more than 20,000 freshers in FY26 and expect to hire a similar number in FY27. We will continue to calibrate the overall requirement depending on growth expectations and attrition trends.

Speaker #1: Operating margins for Q4 declined by 0.3% to 20.9% sequentially. Major components of the changes are as below. Headwinds of 50 basis points impact from past acquisition on account of additional amortization of intangibles.

Jayesh Sanghrajka: Major components of the changes are as below. Headwinds of 50 basis points impact from past acquisition on account of additional amortization of intangibles. 30 basis points for normalization of last quarter's one-off gain. 20 basis points from compensation-related costs offset by lower variable pay. This is partially offset by tailwinds of 40 basis points for currency and 30 basis points for Maximus, comprising of value-based selling, lean, and automation in critical portfolios. Q4 yield on cash and investments balance was at 6.2% and 6.7% for the year. ROE stood at 31.6%. Consolidated cash and investments were at $4.5 billion after returning over $4 billion to shareholders in FY2026, reflecting our strong cash generation. We signed 19 large deals during the quarter with TCV of $3.2 billion. This includes five each in financial services and manufacturing, four in retail, two each in life science and communication, and one in ERS.

Speaker #1: 30 basis points for normalization of last quarter's one-off gain, 20 basis points from compensation-related costs offset by lower variable pay. This is partially offset by tailwinds of 40 basis points for currency, and 30 basis points for maximums comprising of value-based selling, lean, and automation in critical portfolios.

Speaker #1: Q4 yield on cash and investments balance was at 6.2% and 6.7% for the year. ROE stood at 31.6%. Consolidated cash and investments were at 4.5 billion after returning over 4 billion to shareholders in FY26, reflecting our strong cash generation.

Speaker #1: We signed 19 large deals during the quarter with TCV of 3.2 billion. This includes 5 Asian financial services and manufacturing, 4 in retail, 2 in 2H in life science and communication, and 1 in EURS.

Jayesh Sanghrajka: Region-wise, we signed 11 deals in Europe, 5 in America, and 3 in the rest of the world. In FY26, we signed 96 large deals with TCV of $15 billion, 55% net new. This includes 3 mega deals for the year. Tax rate for the quarter is lower due to reversal of prior year tax provisions as a result of favorable tax orders. We expect effective tax rates for FY27 to be in the range of 29% to 30%. In line with our capital allocation policy, board has proposed a final dividend of INR 25 per share, which will result in a total dividend of INR 48 per share, an increase of 11.6% over last year once the final dividend is approved by the shareholders. Coming to verticals.

Speaker #1: Region-wise, we signed 11 deals in Europe, 5 in America, and 3 in the rest of the world. In FY26, we signed 96 large deals with TCV of 15 billion, 55% net new.

Speaker #1: This includes 3 mega deals for the year. Tax rate for the quarter is lower due to reversal of prior year tax provisions, as a result of favorable tax orders.

Speaker #1: We expect effective tax rates for the financial year 27 to be in the range of 29 to 30%. In line with our capital allocation policy, board has proposed a final dividend of R25 per share, which will result in a total dividend of 48 per share and increase of 11.6% over last year.

Speaker #1: Once the final dividend is approved by the shareholders. Coming to verticals, financial services for FY26 grew above company average at 4.4%, led by ramp-ups of large deal wins and continued momentum in AI-led transformation.

Jayesh Sanghrajka: Financial Services for FY26 grew above company average at 4.4%, led by ramp-ups of large deal wins and continued momentum in AI-led transformation, legacy modernization, and vendor consolidation. Overall market sentiment remains positive, resulting in continued consumer spending across US banking, capital markets, and Europe. CY26 budgets are expected to grow in US. We signed a large GCC deal for a regional bank in the US, an industry first, and a large AI-first GCC deal. We are strategic AI partner for 18 out of the top 20 clients in this vertical. Significant large deal closures and a new account opening in FY26, along with a strong large deal pipeline, will drive growth acceleration in FY27. Clients in manufacturing remain cautious amidst softer demand, particularly in automotive and parts of Europe.

Speaker #1: Legacy modernization and vendor consolidation. Overall market sentiment remains positive, resulting in continued consumer spending across US banking, capital markets, and Europe. FY26 budgets are expected to grow in the US.

Speaker #1: We signed a large GCC deal for a regional bank in the US, an industry first, and a large AI-first GCC deal. We have a strategic AI partner for 18 out of the top 20 clients in this vertical, significant large deal closures, and a new account opening in FY26. Along with a strong large deal pipeline, this will drive growth acceleration in FY27.

Speaker #1: Clients in manufacturing remain cautious amidst softer demand, particularly in automotive and parts of Europe. This is continued there is continued uncertainty on account of tariffs and ongoing Middle East conflict, which is resulting in delayed decision-making in pockets.

Jayesh Sanghrajka: There is continued uncertainty on account of tariffs and ongoing Middle East conflict, which is resulting in delayed decision-making in pockets. Discretionary spending remains constrained while clients prioritize in cost optimization and operational resilience. Large deal pipeline comprises of infra outsourcing, AMS, S/4HANA rollouts, et cetera. Near term and FY2027 growth will be impacted due to low revenue from one large client. Across ERS segment, demand environment remains constructive, supported by a strong large deal pipeline. Clients continue to prioritize cost reduction and operational efficiency, which is driving vendor consolidation. In energy, we see increased outsourcing, leading to healthy deal momentum. Utilities demand is structurally higher, driven by grid constraints, renewable integrations, and accelerating electricity needs for data centers. 80% of the large deal TCV of FY2026 was net new, which will help growth and acceleration in FY2027.

Speaker #1: Discretionary spending remains constrained, with clients prioritizing cost optimization and operational resilience. The large deal pipeline comprises infra outsourcing, AMS, S/4HANA rollouts, etc. Near-term and FY27 growth will be impacted due to low revenue from one large client.

Speaker #1: Across EURS segment, demand environment remains constructive, supported by a strong large deal pipeline. Clients continue to prioritize cost reduction and operational efficiency, which is a driving vendor consolidation.

Speaker #1: In energy, we see increased outsourcing, leading to healthy deal momentum utilities demand is structurally higher, driven by grid constraints, renewable integrations, and acceleration electricity needs for data centers.

Speaker #1: 80% of the large deal TCV of FY26 was net new, which will help growth and acceleration in FY27. In retail segment, clients are operating in continued uncertainty from supply chain disruptions, geopolitical conflicts, and shifting trade policy.

Jayesh Sanghrajka: In retail segment, clients are operating in continued uncertainty from supply chain disruptions, geopolitical conflicts, and shifting trade policy. Consumer demand remains muted across the sector, and budgets are tightly controlled with discretionary spend under pressure. Clients expect saving from AI-led productivity to do more with the similar budgets. We will see higher demand for AI-assisted legacy modernization. Topaz Fabric and AI Next platforms are helping clients in ideation from concept to deployable stage with the right guardrails for privacy, ethics, and controls. In communication sectors, growth for FY2026 was led by large deal ramp-ups. Overall environment remains cautious amid macro uncertainty and margin pressures for clients. Budgets are flat to negative, which is impacting discretionary spend. Non-discretionary spends are selective and increasingly AI-led. There is a shift from generative to agentic AI with clients consolidating IT and BPM cuts.

Speaker #1: Consumer demand remains muted across the sector, and budgets are tightly controlled with discretionary spend under pressure. Clients expect savings from AI-led productivity to do more with a similar budget.

Speaker #1: We will see higher demand for AI-assisted legacy modernization. So past fabric and AI next platforms are helping clients in ideation from concept to deployable stage with the right guardrails for privacy, ethics, and control.

Speaker #1: In communication sectors, growth for FY26 was led by large deal ramp-ups. The overall environment remains cautious, amid macro uncertainty and margin pressures for clients. Budgets are flat to negative, which is impacting discretionary spend.

Speaker #1: Non-discretionary spends are selective and increasingly AI-led. There is a shift from generative to AI to agentic AI, with clients consolidating IT and BPM cuts via strong we see a strong uptick in AI deals in areas like IT operations, software replacement, and mainframe migration.

Jayesh Sanghrajka: We see a strong uptick in AI deals in areas like IT operations, software replacement, and mainframe migration. As we enter FY27, we continue to see a measured and selective approach to enterprise budgets amid macro and geopolitical uncertainties, higher interest rates, rapid technology shifts, and high competitive intensity. We expect FY27 growth to be 1.5% to 3.5% in constant currency terms. The FY27 guidance includes contribution from Stratus, which we closed earlier this week, but excludes Versent JV and Optimum Healthcare IT acquisitions that are yet to be closed. There is a reduction of 0.75% to 1% due to lower revenue from one of our large European manufacturing clients. This was due to reduced client spend on account of challenging macro environment, along with our conscious decision to not pursue a certain deal that was not aligned to our return expectations. There is a further reduction in onsite mix by 0.75% to 1%.

Speaker #1: As we enter FY27, we continue to see a measured and selective approach to enterprise budgets amid macro and geopolitical uncertainties, higher interest rates, rapid technology shifts, and high competitive intensity.

Speaker #1: We expect FY27 growth to be 1.5% to 3.5% in concentric currency terms. The FY27 guidance includes contributions from status, which we closed earlier this week but excludes worsened and worsened JV and optimum healthcare acquisitions that are yet to be closed.

Speaker #1: Reduction of 0.75% to 1% due to a lower revenue from one of our large European manufacturing clients. This was due to reduced client spend on account of a challenging macro environment, along with our conscious decision to not pursue a certain deal that was not aligned to our return expectations.

Speaker #1: Further reduction in onsite mix by 0.75 to 1%. We expect third-party costs for FY27 to remain at similar levels as FY26. Our operating margins guidance for the year is 20 to 22%.

Jayesh Sanghrajka: We expect third-party costs for FY27 to remain at similar levels as FY26. Our operating margins guidance for the year is 20% to 22%. This assumes headwinds from wage hikes, productivity pass-throughs, and AI investments offset by initiatives under Project Maximus. The impact of Optimum Healthcare, Stratus, and Versent on operating margin will be approximately 0.7 on a full year annualized basis post-closure. With that, we can open up for the questions.

Speaker #1: This assumes headwinds from wage hikes, productivity pass-throughs, and AI investments offset by initiative under project maximus. The impact of optimum healthcare strategy worsens on operating margin will be approximately 0.7 on a full year annualized basis post-closure.

Speaker #1: With that, we can open up for the questions. Thank you very much. We'll now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone.

Operator 1: Thank you very much. We'll now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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 question queue assembles. Participants, you may press star and one to ask a question. First question is from the line of Yogesh Aggarwal from HSBC Securities. Please go ahead.

Operator: Thank you very much. We'll now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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 question queue assembles. Participants, you may press star and one to ask a question. First question is from the line of Yogesh Aggarwal from HSBC Securities. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets. While asking your question, ladies and gentlemen, we will wait for a moment while the question queue assembles.

Speaker #1: Participants, you may press star and 1. To ask the question, first question is from the line of Yogesh Agarwal from HSBC Securities. Please go ahead.

Yogesh Aggarwal: Yeah. Hi. Just couple of questions. Firstly, Salil, can you talk about the push-pulls for the guidance, like at the lower end, at the upper end, what are you assuming? Secondly, you guys had a very successful Project Maximus. The quality of business, the revenues has also improved. But the entire INR depreciation, which is very significant, has not impacted the margin outlook. I was just curious, which are the areas where all the INR depreciation has been invested? If you can talk a little bit about that. Thank you.

Speaker #3: Yeah, hi. Just a couple of questions. Firstly, Salil, can you talk about the push-pulls for the guidance at the lower and at the upper end?

Speaker #3: What are you assuming? And secondly, you guys had a very successful project maximus, the quality of business, the revenues has also improved. But the entire INR depreciation, which is very significant, has not impacted the margin outlook.

Speaker #3: So I was just curious, which are the areas where all the INR depreciation has been invested and if you can talk a little bit about that?

Speaker #3: Thank you.

Jayesh Sanghrajka: Yogesh, this is Jayesh here. At the lower end of the guidance, we have assumed higher deterioration in the environment, and at the upper end, we have assumed improved environment, similar to what we've done in the last year as well. In terms of margin work, I did give you broad margin work, but largely, we have invested all the benefit that we got from Rupee as well as from Maximus back into the business, whether it is sales and marketing cost, which has gone up by 40 basis points on a full year basis, the AI talent, and the AI partnerships, et cetera, that we have. I think all of that has been absorbed in the margin in the financial year.

Speaker #4: So Yogesh, this is Jayesh here. At the lower end of the guidance, we have assumed higher deterioration in the environment, and at the upper end, we have assumed improved environment.

Speaker #4: Similar to what we've done in the last year as well. In terms of margin walk, I did give you a broad margin walk, but largely, we have invested all the benefit that we got from rupee as well as from Maximus back into the business, whether it is sales and marketing costs, which have gone up by 40 basis points on a full-year basis.

Speaker #4: The AI talent and the AI partnerships, etc., that we have—so I think all of that is being absorbed in the margin and in the financial year.

Yogesh Aggarwal: Just a quick follow-up. You mentioned productivity pass-through impacted margins. I was just wondering why should that be the case, if there was productivity improvement.

Speaker #3: And just a quick follow-up, you mentioned productivity pass-through impacted margins. I was just wondering, why should that be the case if there was productivity improvement?

Jayesh Sanghrajka: Yogesh, market is competitive, right? As I said, the competitive intensity in the market has gone up and the productivity will get passed back to the client largely.

Speaker #4: So Yogesh, market is competitive, right? As I said, the competitive intensity in the market has gone up, and the productivity will get patched back to the client largely.

Yogesh Aggarwal: Thank you.

Operator 1: Thank you. Next question is from the line of Ankur Rudra from JPMorgan. Please go ahead.

Operator: Thank you. Next question is from the line of Ankur Rudra from JPMorgan. Please go ahead.

Speaker #3: All right. Thank you.

Speaker #1: Thank you. Next question is from the line of Ankur Rudra from JP Morgan. Please go ahead.

Ankur Rudra: Thank you. I noticed you've chosen to guide in a 200 basis point band, versus a slightly wider band in the last couple of years. Is your visibility better this year versus the last few years? Furthermore, if you can dig a bit more into the guidance, as a follow-up to the previous question. You're guiding for a 2.25% organic at the midpoint approximately, which appears to be a bit of a slowdown versus the 2.5% or 2.4% organic in fiscal 2026. Can you maybe talk about what are the puts and takes of the outlook? If you can especially elaborate on if the slowdown is because of, A, demand environment, B, structural AI deflation, or C, the impact from that one large account which is ramping down this year. Thank you.

Speaker #5: Hi. Thank you. I noticed you've chosen to guide in a 200 basis point band versus a slightly wider band in the last couple of years.

Speaker #5: Is there a visibility better this year versus the last few years? And furthermore, if you can dig a bit more into the guidance, as a follow-up to the previous question, your guiding for a 2.25% organic at the midpoint approximately, which appears to be a bit of a slowdown versus the 2.5% or 2.4% organic in fiscal '26.

Speaker #5: Can you maybe talk about what are the puts and takes of the outlook, and if you can, especially elaborate on if the slowdown is because of: A, the demand environment; B, structural AI deflation; or C, the impact from that one large account which is ramping down this year?

Speaker #5: Thank you.

Jayesh Sanghrajka: Yeah. Ankur, if you look at the guidance last year, we gave a three-point guidance because the whole environment changed pretty much very close to the time when we were giving guidance, right? We had very little clarity in terms of how that environment changed because of, on the back of, tariff changes is going to impact the client behavior, et cetera. Where we stand today, I think there is a better clarity in terms of what's happened. The environment has been like this for last few quarters, and we know how clients are behaving at this point, at least at this point in time. Of course, if things change, the client behavior will change. That's given always. At this point in time, from a competitive perspective, we have a better clarity and better handle versus the last year.

Speaker #4: Yeah. So Yogesh—sorry, Ankur—if you look at the guidance last year, we gave a three-point guidance because the whole environment changed pretty much very close to the time when we were giving guidance, right?

Speaker #4: And we had no we had very little clarity in terms of how that environment changed because of on the back of tariff changes is going to impact the client behavior, etc.

Speaker #4: Where we stand today, I think there is a better clarity in terms of what's happened the environment has been like this for the last few quarters.

Speaker #4: And we know how clients are behaving at this point, at least at this point in time. Of course, if things change, the client behavior will change.

Speaker #4: That's given always. But at this point in time, from a comparative perspective, we have a better clarity and better handle versus the last year.

Salil Parekh: Ankur, on the construction of the guidance, what we are seeing positive, where the changes are. Jayesh mentioned many of those points. I'll elaborate. We are seeing the growth on AI services. We are seeing very good traction on that. We've started a program where we are working with large companies with a smaller footprint that Infosys has. We're expanding that quite nicely. We saw the large deals, the net new was 55%, so that will contribute for this financial year in a significant way. On the other hand, there is the productivity benefits that are coming through which our clients are looking for with AI on the existing portfolios. Jayesh shared a couple of situations with manufacturing Europe with onsite mix, sort of some technical factors. Those, if I sort of add and subtract, is where we came on that guidance.

Speaker #5: Ankur, on the so the construction of the guidance, what we are seeing positive, where the changes are, the Jayesh mentioned many of those points.

Speaker #5: I'll elaborate. We are seeing the growth on AI services; we are seeing very good traction on that. We are seeing we've started a program where we are working with large companies with smaller footprint that Infosys has.

Speaker #5: We're expanding that quite nicely. Then, we saw the large deal with the net new was 55%. So that will contribute for this financial year in a significant way.

Speaker #5: And then on the other hand, there is the productivity benefits that are coming through, which are clients are looking for with AI. On the existing portfolios, then Jayesh shared a couple of situations with manufacturing, Europe, with on-site mix.

Speaker #5: So, some technical factors—so those, if I sort of add and subtract, is where we came on that guidance. The environment, I find, is good.

Salil Parekh: The environment I find is good. Our large deals pipeline is good. The way we had done it on that AI Investor Day, we had sort of said, look, there's a growth side with what will be the AI. We have a couple of other growth drivers. There's the compression side, and that's the balance that we are seeing. In the past year with 3.1%, and if you adjust for the one-timers, the one time from the prior year, growth rate, which was more than the compression we were seeing. This coming year, the guidance that we have started with also sees that. We'll see, as Jay said, on the environment, how it changes, improving or not improving, and then see how the year goes after that.

Speaker #5: Our large deals pipeline is good. The way we had done it on that AI-invested day, we had sort of said, 'Look, there's a growth side with what will be the AI.' We have a couple of other growth drivers.

Speaker #5: And then there's a compression side. And that's the balance that we are seeing. In the past year, with 3.1%, and if you adjust for the one-timers, the one-time from the prior year, we had a growth rate which was more than the compression we were seeing.

Speaker #5: And this coming year, the guidance that we have started with also sees that. And then we'll see, as Jayesh said, on the environment, how it changes.

Speaker #5: Improving or not improving, and then see how the year goes after that.

Ankur Rudra: Thank you for the elaboration, Salil Parekh. If I could, just a quick follow-up. What would need to happen for you to see an acceleration at the midpoint on an organic basis? Thank you.

Speaker #4: Thank you for the elaboration, Salil. If I could just a quick follow-up, what would need to happen for you to see an acceleration at the midpoint on an organic basis?

Speaker #4: Thank you. These are things which are always sort of more difficult to estimate as you know well. Ankur, on however, the view emerging is that the situation in the Middle East may find some sort of a good resolution when the underlying economic trends are pretty good in the markets where we are large.

Salil Parekh: These are things which are always more difficult to estimate, as you know well, Ankur. However, the view emerging is that the situation in the Middle East may find some sort of a good outcome resolution. The underlying economic trends are pretty good in the markets where we are large. That could give rise to a more stable macro environment. Our AI traction and partnerships are good. If those things, the first and the second accelerate, then we will see some good outcomes. It's more of going in. We see the environment today. We've not seen some big change to give us a view that we have to do a three-point range and so on at this stage. Overall, we see growth, which is more than compression.

Speaker #4: So that could give sort of rise to a more stable macro environment. Our AI traction and partnerships are good. So if those things the first and the second accelerate, then we will see some good outcomes.

Speaker #4: But it's more of going in. We see the environment today. It's not we've not seen some big change to give us a view that we have to do a three-point range and so on at this stage.

Speaker #4: And overall, we see growth, which is more than compression.

Ankur Rudra: Appreciate it. Thank you.

Speaker #5: Appreciate it. Thank you.

Operator 1: Thank you. Next question is from the line of Bryan Bergin from TD Cowen. Please go ahead.

Operator: Thank you. Next question is from the line of Bryan Bergin from TD Cowen. Please go ahead.

Speaker #1: Thank you. Next question is from the line of Brian Bergen from TD Corvin. Please go ahead.

Bryan Bergin: Hi. Thank you. I wanted to ask on the AI productivity that you're seeing here. So with the AI model advances happening as fast as they are, has the amount of productivity during compression that you're seeing changed in the current contracts relative to what you may have been seeing, say, one or two quarters ago? And can you dimension maybe the mix of the business that is directly exposed to the productivity pass-throughs versus maybe the mix of the business that is more insulated?

Speaker #6: Hi. Thank you. I wanted to ask on the AI productivity that you're seeing here. So with the AI model advances happening as fast as they are, as the amount of productivity during compression that you're seeing changed in the current contracts, relative to what you may have been seeing, say, one or two quarters ago, and can you dimension maybe the mix of the business that is directly exposed to the productivity pass-throughs versus maybe the mix of the business that is more insulated?

Salil Parekh: On the first one, the models are and the technology is moving with great innovation. We have not seen in one or two quarters the change that you referenced. What we are seeing is the competitive intensity is pretty high. Every now and then, we see a competitor doing something which looks outside the range of what we think the models can do today. That sort of thing we do see, but not that there's just a tech in the last two quarters. Meaning over the last two years, of course, there have been changes. In terms of exposure, I think we have not shared that data, but I think we've shared very clearly what our service line data is, and so you can make some estimates with that, I think.

Speaker #5: So on the first one, we have not with the models and the technologies moving with great innovation. We have not seen in one or two quarters the change that you referenced.

Speaker #5: So what we are seeing is a competitive intensity is pretty high. So every now and then, we see a competitor doing something which looks outside the range of what we think the models can do today.

Speaker #5: So that sort of thing we do see. But not just the tech in the last two quarters. I mean, over the last two years, of course, there have been changes.

Speaker #5: In the terms of exposed, I think we have not shared that data. But I think we've shared very clearly what our service line data is.

Speaker #5: And you can make some estimates with that, I think.

Bryan Bergin: Okay. My follow-up is on how you're thinking about the overall business and headcount. Like hiring intentions for fiscal 2027, I think I heard you say roughly targeting the fresher target of around 20,000 again. Do you envision a scenario where, I guess, the total headcount could ultimately be down in total when the year is over? Also, if you can help talk about the subcontractor intensity that you're anticipating in the year ahead.

Speaker #6: Okay. And then my follow-up on kind of how you're thinking about the overall business and headcount, hiring intentions for fiscal '27, I think I heard you say roughly targeting the fresher target of around 20,000.

Speaker #6: Again, but do you envision a scenario where, I guess, the total headcount could ultimately be down in total when the year is over? And also, can you help talk about the subcontractor intensity that you're anticipating in the year ahead?

Salil Parekh: On the overall headcount first, as you pointed out, we will recruit 20,000 college graduates. That's our plan today. We have a model which does some of it at one particular time and the rest of it throughout the year. We have a variability built in if we see some changes. What we see today, we think 20,000 looks like a good place to start. We still have, at least as I look out for this quarter, next quarter, very good demand for people which are coming at higher levels, lateral recruitment. I think that will continue. I don't see that our headcount is going to be. We don't have a plan that the headcount will be less at the end of the year. Now, we'll see how the demand environment plays out, but it's not the going in sort of a view that we have.

Speaker #5: So on the overall headcount first, as you pointed out, we will recruit 20,000 college graduates. That's our plan today. We have a model which does some of it at a one particular time and the rest of it throughout the year.

Speaker #5: So we have a variability built in. If we see some changes, but what we see today, we think 20,000 looks like a good place to start.

Speaker #5: We still have, at least now if I look out for this quarter, next quarter, very good demand for people who are coming at higher levels, lateral recruitment.

Speaker #5: So I think that will continue. I don't see that our headcount is going to be we don't have a plan that the headcount will be less at the end of the year.

Speaker #5: Now, we'll see how the demand environment plays out, but it's not the going in sort of a view that we have. Of course, we have we basically look at Q1, Q2, and the rest we build out on the models we have.

Salil Parekh: Of course, we basically look at Q1, Q2, and the rest we build out on the models we have. Subcons.

Jayesh Sanghrajka: Yeah. Then the subcon, Brian, if you look at last few years, our subcon as a percentage of revenue has come down. Obviously, it's also a factor of the growth. Typically, we use subcons to meet the demand which comes in immediately. We don't have the requirement skills, et cetera, and then we backfill that through the employees, and that's a cycle that goes on. We don't really expect subcons to significantly change from this number. Over a medium-term period, we expect it to maybe go towards the lower end. I mean, to slightly go down from the current level, but at this point in time, not significantly change.

Speaker #5: Capcom.

Speaker #4: Yeah. And then the Capco brand, if you look at the last few years, Capco as a percentage of revenue has come down. Obviously, it's also a factor of the growth.

Speaker #4: So typically, we use Capcoms to meet the demand which comes in immediately. We don't have the requirements, skills, etc. And then we backfill that through the employees and that's a cycle that goes on.

Speaker #4: So, we don't really expect Capcoms to significantly change from those numbers. Over a medium-term period, we expect it to maybe go towards the lower end.

Speaker #4: I mean, to slightly go down from the current level. But at this point in time, not significantly change.

Bryan Bergin: Okay, that's helpful. Thank you very much.

Operator 1: Thank you. Next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.

Operator: Thank you. Next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.

Speaker #6: Okay, that's helpful. Thank you very much.

Speaker #1: Thank you. Next question is from the line of Gaurav Ratheerya from Morgan Stanley. Please go ahead.

Gaurav Rateria: Hi. Thank you for taking my question. My first question is on the construct of growth. When I look at that, there are broadly three factors that comes to my mind. The first is the macro. Compared to last year, it appears that the headwinds related to tariff, et cetera, are not there. There is slight improvement, which is reflected in 40% of your portfolio that you talked about. The second factor is AI services, which probably has become larger than the last year and growing faster, which again, is a tailwind. The last factor could be the deflationary impact on existing business on account of productivity savings. The fundamental question is that the first two tailwinds look better than last year, and the growth rates in organic terms does not look better at the midpoint of guide.

Speaker #7: Hi. Thank you for taking my question. My first question is on the construct of growth. When I look at that, there are broadly three factors that come to my mind.

Speaker #7: The first is the macro compared to last year; it appears that the headwinds related to tariff, etc., are not there. So there is slight improvement which is reflected in 40% of your portfolio that you talked about.

Speaker #7: The second factor is AI services, which probably has become larger than the last year and growing faster. Which again is a tailwind. And the last factor could be the deflationary impact on existing business on account of productivity savings.

Speaker #7: So the fundamental question is that the first two tailwinds look better than last year, and the growth rates in organic terms do not look better at the midpoint of the guide.

Gaurav Rateria: Is it that the deflationary impact assumed in your guidance at the midpoint is slightly higher than what you have seen in the last year?

Speaker #7: Is it that the deflationary impact assumed in your guidance at the midpoint is slightly higher than what you have seen in the last year?

Salil Parekh: Hi, Gaurav. This is Salil. I think what you described is the way it starts off, which is we see very strong activity on AI services. On the macro, as the year progressed last year, the situation of the tariff got better and better understood, as you know. When the war started, that again had a little bit of a constraining effect on the macro. There's a general view that it's coming to a resolution, but it has not happened. While some of the economic indicators are forecasted in a better way, it's not yet into the system in that sense. We'll see when it actually comes in. If you looked at a couple of things that Jayesh shared on the specifics, on manufacturing in Europe, on the on-site mix.

Speaker #5: Hi, Gaurav. This is Salil. I think what you described is the way it starts off, which is, we see very strong activity on AI services.

Speaker #5: On the macro, as the year progressed last year, the situation of the tariff got better and better understood as you know. Then when the war started, that again had a little bit of a constraining effect on the macro.

Speaker #5: There's a general view that there's coming to a resolution. But it has not happened. So while some of the economic indicators are forecasted in a better way, it's not yet into the system in that sense.

Speaker #5: So we'll see when it actually comes in. Then if you look at the couple of things that Jayesh shared, on the specific on the manufacturing Europe, on the specific on the on-site mix, when you put all that together, we see actually something which looks stronger in that sense.

Salil Parekh: When you put all that together, we see actually something which looks stronger in that sense to what we saw last year. Now, the compression is definitely there, but I don't know if I have a sense that it's more than last year. We are definitely seeing the compression, but we are also seeing the growth, and that's how we are sort of dissecting it, if you will. Jayesh might add something there.

Speaker #5: To what we saw last year. Now, the compression is definitely there. But it's not I don't know if I have a sense that it's more than last year.

Speaker #5: We have definitely seen the compression. But we're also seeing the growth. And that's how we are sort of dissecting it, if you will. And Jayesh might have something to add.

Jayesh Sanghrajka: Gaurav, maybe a couple of points in addition to what Salil said. If you look at last year, we started with 0% to 3%, and as the visibility improved, every quarter we either tightened the band or improved the guide from where we are. The idea of guidance is to reduce the asymmetry and provide a view as to what we see today. This is what we see today. We do have a client in manufacturing in Europe, where we have stayed away from a deal where it did not meet our return estimations. There's some ramp downs on the clients happening because the client is going through a challenging macro environment. That is baked in. We have also baked in the on-site mix that will impact in the guidance.

Speaker #4: Yeah. So Gaurav, maybe a couple of points in addition to what Salil said. If you look at last year, we started with 0 to 3%.

Speaker #4: And as the visibility improved, every quarter, we either tightened the band or improved. The guide from where we are, right? The idea of guidance is to reduce our symmetry and provide a view as to where we see what we see today.

Speaker #4: And this is what we see today. We do have a planned in manufacturing in Europe, where we have stayed away from a deal where it did not make us make meet our return estimations.

Speaker #4: There's some ramp-downs on the clients happening because the client is going through a challenging macro environment. So that is baked in. We have also baked in the on-site mix that will impact in the guidance.

Jayesh Sanghrajka: The exit trajectory of on-site mix is already pretty much 40 to 50 basis points from the future year perspective. That is baked in the guidance already. The resultant is 1.5% to 3.5% guidance that we have announced. Of course, if the visibility improves as we go through the year, we will redo the guidance.

Speaker #4: The exit trajectory of on-site mix is already pretty much 40 to 50 basis points from the future year perspective. So that is baked in in the guidance already.

Speaker #4: And the resultant is 1.5 to 3.5 percent guidance that we have announced. Of course, if the visibility improves as we go through the year, we will really look at the guidance.

Gaurav Rateria: Thank you for the detailed answer. The second question is on the new AI services. Would it be fair to say they come at a relatively higher revenue productivity than the core business and also better gross margins or not? Lastly, Jayesh, any color on when would the wage hike cycle kick in during the current financial year? Thank you.

Speaker #5: Thank you for the detailed answer. The second question is on the new AI services. Would it be fair to say they come at a relatively higher revenue productivity than the core business, and also better gross margins, or not?

Speaker #5: Lastly, Jayesh, any color on when the wage hike cycle would kick in during the current financial year? Thank you.

Jayesh Sanghrajka: Gaurav, we have seen generally the AI projects come at a better pricing and therefore it reflects in a better margin. Of course, it also has a higher cost compared to the regular projects because the talent is a premium talent at this point in time. It's always a factor of how much ahead of the curve you are in terms of benchmark, and that's what will define the premium that you'll get in the market, right? If you are at the benchmark level, you wouldn't get a premium. If you are ahead of the curve, you do get a premium. At this point in time, if you look at the numbers in terms of deals that we are winning, we have won $15 billion deals. That kind of talks about our positioning in the market.

Speaker #4: So Gaurav, yes, generally, the AI projects come at a better pricing. And therefore, it reflects in a better margin. Of course, it also has a higher cost compared to the regular projects because the talent is a premium talent at this point in time, right?

Speaker #4: So, it's always a factor of how much ahead of the curve you are in terms of benchmark, and that's what will define the premium that you'll get in the market, right?

Speaker #4: If you are at the benchmark level, you wouldn't get a premium. If you are ahead of the curve, you do get a premium. And at this point in time, if you look at the numbers in terms of deals that we are winning, we have won $15 billion in deals.

Speaker #4: That kind of talks about our positioning in the market. You did see on the AI Day everything that we presented in terms of our capabilities and what clients are saying in terms of our AI capabilities.

Jayesh Sanghrajka: You did see on the AI Day everything that we presented in terms of our capabilities and what clients are saying in terms of our AI capabilities. I think that kind of gives us the comfort and confidence that we are in the right direction, and it's also reflected in the pricing and the margins on the AI deals. In terms of wage increases, we haven't really decided the timing at this point in time. We do take multiple factors when we decide that, in terms of the level of attrition that we have, when did we do the last wage increases, what the market scenario, what's the inflation, et cetera. We will take all of those decisions into consideration and decide.

Speaker #4: So I think that kind of gives us the comfort and confidence that we are in the right direction. And it's also reflected in the pricing and the margins.

Speaker #4: On the AI deals. In terms of wage increases, we haven't really decided the timing at this point in time. We do take multiple factors when we decide that in terms of the level of attrition that we have, when did we do the last wage increases, what the market scenario, what's the inflation, etc.

Speaker #4: We will take all of those decisions into consideration and decide.

Gaurav Rateria: Thank you, and all the very best.

Speaker #5: Thank you. And all the very best.

Sandeep Mahindroo: Thank you. Next question is from the line of Sumit Jain from CLSA India. Please go ahead.

Speaker #4: Thank you.

Speaker #6: Thank you. Next question is from the line of Sumit Jain from CLSA India. Please go ahead.

Sumit Jain: Yeah. Thanks for the opportunity. Salil, firstly, wanted to check in the last two months with the latest launch of Anthropic models. Have you seen increased productivity demand from the clients? You mentioned in the press conference that nothing material has changed in the last three months. Can you just specify what kind of client conversations are happening around productivity?

Sumeet Jain: Yeah. Thanks for the opportunity. Salil, firstly, wanted to check in the last two months with the latest launch of Anthropic models. Have you seen increased productivity demand from the clients? You mentioned in the press conference that nothing material has changed in the last three months. Can you just specify what kind of client conversations are happening around productivity?

Speaker #7: Yeah. Thanks for the opportunity. So Salil, firstly, wanted to check in the last two months with the latest launch of Anthropic models. Have you seen increased productivity demand from the clients?

Speaker #7: I mean, you mentioned in the press conference that nothing material has changed in the last three months. Can you just specify what kind of client conversations are you happening around productivity?

Salil Parekh: There, the sense I have is the need for productivity is similar. There is some level of competitive intensity, which is higher, which then leads to more sort of demand. There are some cases where it's way outside the bound where there is not a lot of engagement, then that meaning that is something which we don't see a way of getting to. We are not going down those paths. Those are very infrequent. If you look at the vast majority, we see not just something is complete, big changes has come literally in the last two months or so at this stage. Now things are moving fast, productivity over time, which is over multiple quarters, year, that has changed. It's not that something suddenly is like a step change in the last two months that we've seen there.

Speaker #5: So there, the sense I have is the need for productivity is similar. There is some level of competitive intensity, which is higher, which then leads to more sort of demands.

Speaker #5: There are some cases where it's way outside the bound where there is not a lot of engagement. Then that meaning it's something which we don't see a way of getting to.

Speaker #5: So we are not going down those paths. But those are very infrequent. If you look at the vast majority, we see not this like something is complete big changes has come literally in the last two months or so at this stage.

Speaker #5: Now, things are moving fast. Productivity over time which is over multiple quarters, year, that has changed. But it's not that something suddenly is like a step change in the last two months that we've seen.

Sumit Jain: Can you also help throw some light in the new deals, what you have signed? Are the productivity levels with usage of AI tools similar to what you are, in a way, passing on in the existing business? Can you give some. Because order book looks pretty strong on a YOY basis for the full year. That is not translating into your improved organic growth in FY27. Is it like the base business is seeing a much higher deflation than what each one of us were expecting and with the improvement in AI models, can it actually further accelerate in the coming quarters? Can you throw some light as to how you are seeing the market?

Sumeet Jain: Can you also help throw some light in the new deals, what you have signed? Are the productivity levels with usage of AI tools similar to what you are, in a way, passing on in the existing business? Can you give some. Because order book looks pretty strong on a YOY basis for the full year. That is not translating into your improved organic growth in FY27. Is it like the base business is seeing a much higher deflation than what each one of us were expecting and with the improvement in AI models, can it actually further accelerate in the coming quarters? Can you throw some light as to how you are seeing the market?

Speaker #7: And can you also help throw some light in the new deals, what you have signed? I mean, are the productivity levels with usage of AI tools similar to what you are in a way passing on in the existing business?

Speaker #7: Can you give some because the order book looks pretty strong on a YOY basis for the full year. But that is not translating into your improved organic growth in FY27.

Speaker #7: So is it like the base business is seeing a much higher deflation than what each one of us were expecting? And with the improvement in AI models, can it actually further accelerate in the coming quarters?

Speaker #7: So can you show throw some light as to how you are seeing the market?

Salil Parekh: There we are not, let's say, sharing the specifics on what we are seeing in the portfolio in the growth compression side as opposed to what we've shared, which is our overall guidance with some of the points that Jayesh mentioned, the onsite mix, the manufacturing, et cetera. I think we see with that a solid growth outlook where we're keeping pace, making sure that what we are seeing in the AI services growth, some of the other areas of growth that we see, is growth which then manages the compression that we see on some of the other parts of our business. We don't have a way of sharing that this is the compression, this is the growth, and then this is the net sort of a growth, if you will.

Speaker #5: So there, I mean, we are not, let's say, sharing the specifics on what we are seeing in the portfolio in the growth compression side.

Speaker #5: As opposed to what we've shared, which is our overall guidance, and with some of the points that Jayesh mentioned—the on-site mix, the manufacturing, etc.

Speaker #5: So I think we see with that solid growth outlook where they're keeping pace making sure that what we're seeing in the AI services growth, some of the other areas of growth that we see is growth which then manages the compression that we see on some of the other parts of our business.

Speaker #5: So we don't have a way of sharing that this is the compression, this is the gross growth, and then this is the net sort of a growth, if you will.

Sumit Jain: No, got it. I think that's always a difficult thing to quantify. Also if you can just flag in terms of any quantification you can give the impact of the European manufacturing client sort of ramp down or maybe some competition kicking in there. I guess, Jayesh, you also mentioned that the shift to more offshore will have a 40 to 50 bps impact in FY27. I guess there were some articles around Vanguard insourcing. If you can quantify these three things, how much is the impact on your guidance in this year?

Sumeet Jain: No, got it. I think that's always a difficult thing to quantify. Also if you can just flag in terms of any quantification you can give the impact of the European manufacturing client sort of ramp down or maybe some competition kicking in there. I guess, Jayesh, you also mentioned that the shift to more offshore will have a 40 to 50 bps impact in FY27. I guess there were some articles around Vanguard insourcing. If you can quantify these three things, how much is the impact on your guidance in this year?

Speaker #7: No, got it. Got it. I think that's always a difficult thing to quantify. But also, if you can just flag in terms of any quantification you can give the impact of the European manufacturing client sort of ramp down or maybe some competition kicking in there.

Speaker #7: And I guess Jayesh, you also mentioned that the shift to more offshore will have a 40 to 50 bips impact in FY27. And I guess there were some articles around Vanguard in sourcing.

Speaker #7: So if you can quantify these three things, how much is the impact on your guidance in this year?

Jayesh Sanghrajka: Yeah, if you look at what I said earlier, 1% impact of 75 bps to 1% impact will come from the European client, which is combination of a deal which does not meet our returns expectation and the ramp downs in this client through the year as the macro environment is challenging in that sector. The 70 basis points is a reduction in on-site mix we are expecting. 40 to 50 basis points is already visible in the exit trajectory, and as we see forward, we still believe there'll be even further improvement on the on-site mix. That will also impact the revenue growth from that perspective.

Speaker #4: Yeah. So if you look at sorry. If you look at what I said earlier, 1% impact of so 75 bips to 1% impact will come from the European client, which is a combination of a deal which does not meet our returns expectation.

Speaker #4: And the ramp downs in this client through the year, as the macro environment is challenging in that sector. The 70 basis points is a reduction in on-site mix.

Speaker #4: We are expecting 40 to 50 basis points is already visible in the exit trajectory. And we do, as we see forward, we still believe there'll be even further improvement on the on-site mix.

Speaker #4: So that will also impact the revenue growth from that perspective.

Sumit Jain: I got it. That's very helpful and all the best. Thank you.

Sumeet Jain: I got it. That's very helpful and all the best. Thank you.

Speaker #7: No, got it. That's very helpful. And all the best. Thank you.

Jayesh Sanghrajka: Thank you.

Speaker #4: Thank you.

Operator 1: Thank you. Next question is from the line of Jonathan Lee from Guggenheim Securities. Please go ahead.

Operator: Thank you. Next question is from the line of Jonathan Lee from Guggenheim Securities. Please go ahead.

Speaker #7: Thank you. Next question is from the line of Jonathan Lee from Guggenheim Partners. Please go ahead.

Jonathan Lee: Great. Thanks for taking my questions. Percentage of net new deals came in at the lowest level we've seen in recent years. Can you help unpack whether that's a function of capability set, AI pressure potentially impacting demand environment or any other factor there? Can you walk us through your expectations for net new deals for the year, given what you're seeing today in the pipeline?

Speaker #8: Great, thanks for taking my questions. Percentage of net new deals came in at the lowest level we've seen in recent years. Can you help unpack whether that's a function of capability set, AI pressure potentially impacting the demand environment, or any other factor there?

Speaker #8: And can you walk us through your expectations for net new deals for the year, given what you're seeing today in the pipeline?

Jayesh Sanghrajka: Jonathan, sorry, can you repeat the question?

Speaker #4: Jonathan, sorry, can you repeat the question?

Jonathan Lee: We're seeing percentage of net new deals come in at the lowest level we've seen in recent years. Can you help us unpack whether that's a function of capability set or AI pressure impacting the demand environment or any other factor there? Can you walk us through what you expect for net new deals for the year, given what you're seeing in your pipeline today?

Speaker #8: We're seeing percentage of net new deals come in at the lowest level we've seen in recent years. So can you help us unpack whether that's a function of capability set or AI pressure impacting the demand environment or any other factor there?

Speaker #8: And can you walk us through what you expect for net new deals for the year, given what you're seeing in your pipeline today?

Jayesh Sanghrajka: Yeah, Jonathan, if you look at the combination of net new and the renewal, what percentage of deals are coming in for renewal and what percentage of deal are in the pipeline from net perspective. For the full year, if you look at

Speaker #4: Yeah. So Jonathan, if you look at the combination of net new and the renewal, what percentage of deals are coming into coming in for renewal and what percentage of deal are in the pipeline from net perspective?

Salil Parekh: We did sign $15 billion of deals, 96 of them, pretty much 55% net new on that. I think by any stretch of imagination, that's a strong performance. This is almost 25% growth on a year-on-year base.

Speaker #4: For the full year, if you look at it, we did sign $50 billion of deals—96 of them, pretty much, with 55% net new in that.

Speaker #4: So I think by any stretch of imagination, that's a strong performance. It's a 25% almost 25% growth on a year-on-year basis.

Jonathan Lee: Got it. As a follow-up, can you help us understand what transpired over the course of the quarter and how that may have tracked relative to your internal expectations? I'm hoping to get a better understanding of when you may have started to see some of the outside deflationary impact or some of the downtick in revenue realization or any other dynamics at play there.

Speaker #8: Got it. And as a follow-up, can you help us understand what transpired over the course of the quarter and how that may have tracked relative to your internal expectations?

Speaker #8: I'm hoping to get a better understanding of when you may have started to see some of the outside deflationary impact or some of the downtick in revenue realization or any other dynamics at play there.

Salil Parekh: We don't really give a visibility in terms of what were we setting as goals or looking at plans in terms of net large deals and performance against that. I think, in our view, $3.2 billion is a strong performance. Yeah, we do see in some pockets some slower decision making in March. I don't know if it has got a significant impact in the large deal sign-ups. I wouldn't call that at this point in time.

Speaker #4: I mean, we don't really give a visibility in terms of what were we setting as goals or looking at plants in terms of large deals and performance against that.

Speaker #4: I think in our view, 3.2 billion is a strong performance. Yeah, we do see in some pockets some slower decision-making in March. But I don't know if it has got a significant impact on in the large deal sign-ups.

Speaker #4: I wouldn't call that at this point.

Jonathan Lee: Appreciate the color there. Thank you.

Speaker #8: Appreciate the color there. Thank you.

Operator 1: Thank you. Next question is from the line of Vibhor Singhal from Nomura. Please go ahead.

Operator: Thank you. Next question is from the line of Vibhor Singhal from Nomura. Please go ahead.

Speaker #7: Thank you. Next question is from the line of Ybor Singel from Nuama. Please go ahead.

Vibhor Singhal: Yeah. Hi. Thanks for taking my question. Two questions from my side. The first question, Salil, is basically on the AI deflation or the compression part that we've been discussing a lot. Just wanted to get some color as to where do you think we are in that revenue deflation cycle. Let's say if I were to compare it to the last digital cycle, we had revenue compression which kept kind of increase and then we reached a trough, and from there, basically, that started coming down. Along with we had incremental revenue coming from the digital business. I would assume the cycle should pretty much follow the same order. While our GenAI revenue, and which is for the other companies also, is reporting very strong growth, the revenue compression continues to be quite substantial at this point of time.

Speaker #9: Yeah. Hi. Thanks for taking my question. Two questions from my side. The first question, Salil, is basically on the AI deflation or the compression part that we've been discussing a lot.

Speaker #9: So just wanted to get some color as to where do you think we are in that revenue deflation cycle? So let's say if I were to compare it to the last digital cycle, we had revenue compression which kept kind of increased, and then we reached a trough.

Speaker #9: And from there, basically, that started coming down. And along with, we had incremental revenue coming from the digital business. I would assume the cycle should pretty much follow the same order.

Speaker #9: So while our GenAI revenue and which is for the other companies also is reporting very strong growth, the revenue compression continues to be quite substantial at this point of time.

Vibhor Singhal: Do you think we are already at the trough of that revenue deflation cycle? If not, I know it's difficult to quantify the timeline. Basically, are we still a ways away? There is more deflation than you think might come in? Or do you think we are basically done with the worst is behind us and the deflation will still continue, but it might not be as much as, let's say, going forward as it was before? I have a follow-up for Jayesh.

Speaker #9: So do you think we are already at the trough of that revenue deflation cycle? If not, I mean, I know it's difficult to quantify the timeline.

Speaker #9: So basically, are we still away? There is more deflation that you think that that might come in, or do you think we are basically done with the versus behind?

Speaker #9: And the deflation will still continue, but it might be not as much as, let's say, going forward as it was before. And then I have a follow-up for Jayesh.

Salil Parekh: Hi, this is Salil. On that, what we are seeing is there are different sort of dimensions to the compression, meaning we are now working with clients where some of the productivity discussions were baked into the deals over the past year or so. Then you have a multiple year outlook. All of that has not happened on the first year. It goes through it. The actual compression will be dependent on the mix, first year deal, second deal, and so on. We've not got a sense of where we are on that path, but we have a sense of what the foundation models and other tools are able to sort of support and use that as a basis for what we are doing with forward deals, like 3-year, 5-year deals and so on.

Speaker #4: So, hi, this is Salil. On that, what we are seeing is there are different sort of dimensions to the compression, meaning we are now working with clients where some of the productivity discussions were baked into the deals over the past year or so.

Speaker #4: And then you have a multiple-year Outlook. So all of that is not happened on the first year. It goes through it. So the actual compression will be dependent on the mix first-year deal, second deal, and so on.

Speaker #4: We have not got a sense of where we are on that path, but we have a sense of what the foundation models and other tools are able to sort of support.

Speaker #4: And use that as a basis for what we are doing with forward deals, like three-year, five-year deals, and so on. But on that sort of a scenario, we don't have a view we can share on where that path is.

Salil Parekh: On that sort of a scenario, we don't have a view we can share on where that path is. We are definitely very clear on where, when you're working with a foundation model and tools, what is possible, where is it effective, different models or different tools are more relevant for different parts of the AI work that we are doing with clients. That we are very, I would say, close to.

Speaker #4: But we are definitely very clear on where, when you're working with the foundation model and tools, what is possible, where is it effective. Different models or different tools are more relevant for different parts of the AI work that we are doing with clients.

Speaker #4: That we are very I would say close to.

Vibhor Singhal: Got it. If you may just extend a bit on that. Let's say the deals that we are signing at this point of time, you mentioned many of them have that productivity benefit already baked in or let's say built into the original deal. As the cycle evolves, are we also seeing, let's say, deals which we have signed, let's say maybe six months ago or 12 months ago, and there the client has come back and asked for incremental productivity benefits to be passed? I'm talking about the recent deals, not the earlier deals. I'm sure the earlier deals are seeing that kind of a response sometimes. In recent deals also, are we seeing that kind of a movement in our conversations?

Speaker #9: Got it. Got it. If you have any just extend a bit on that. So let's say the deals that we are signing at this point of time, you mentioned many of them have that productivity benefit already baked in.

Speaker #9: Or let's say built into the original deal. But as the cycle evolves, are we also seeing, let's say, deals which we have signed, let's say, maybe six months ago or 12 months ago, and there the client has come back and asked for incremental productivity benefits to be passed?

Speaker #9: I'm talking about the recent deals, not the early deals. I'm sure the early deals are seeing that kind of a response sometimes. But in recent deals also, are we seeing that kind of a movement in a kind of conversations?

Salil Parekh: No, Vibhor, I don't think we have seen scenarios where what we signed a few months back, a client has come back and asked us different productivity to be baked in again. What Salil was talking about when a deal comes up for bid or when you're bidding for a new deal.

Speaker #4: So Ybor, I don't think we have seen scenarios where what we signed a few months back where a client has come back and asked us different productivity to be baked in again.

Speaker #4: What Salil was talking about when a deal comes up for bid or when you're bidding for a new deal.

Vibhor Singhal: Right. Got it. Sure. Just one last question for you, Jayesh. In terms of the margins, I think this quarter had a very good tailwind from INR depreciation. Now, we know that for long the industry has matured to a state where the rupee depreciation doesn't lead to much of margin expansion over the medium to long term. We have generally seen a temporary quarterly bump up in margins because of INR depreciation. Has that benefit also kind of stopped trickling in because not just for us, but for most of the players in the industry, we're not seeing any kind of a margin expansion? Is it that in this quarter specifically? Is it that those benefits are being invested somewhere else? Or is it that those benefits have stopped accruing at all and those are being passed to the client immediately?

Speaker #9: Right. Got it. Got it. So, just one last question for you, Jayesh. In terms of the margins, I think this quarter had a very good tailwind from INR depreciation.

Speaker #9: Now, we know that for a long, the industry has matured to a state where the rupee depreciation doesn't lead to much of margin expansion.

Speaker #9: Over the medium to long term. But we have generally seen temporary quarterly bump-up in margins because of INR depreciation. Has that benefit also kind of stopped trickling in?

Speaker #9: Because not just for us, but for most of the players in the industry, we're not seeing any kind of a margin expansion. Is it that in this quarter specifically?

Speaker #9: Is it that those benefits are being invested somewhere accruing at all, and those are being passed to the client immediately?

Salil Parekh: Two points there, Vibhor. Generally, you do have rupee benefits that sometimes get offset, or most of the time get offset by cross-currency headwinds. Right? Because when US dollar appreciates, it appreciates against most currencies, and that kind of offsets each other. Your portfolio of non-US as it grows, that offset becomes larger and larger across us and across the industry also, you have seen that. There were times when the US dollar used to be 70+% , or US used to be 70, 75+% . That obviously has gone down significantly, and therefore the headwinds from the other currencies comes in. If you look at this quarter, specifically for us, as I called out in the margin walk, there was close to 50 basis points of headwind that we got because of amortization of one of the acquisition-related intangibles.

Jayesh Sanghrajka: Two points there, Vibhor. Generally, you do have rupee benefits that sometimes get offset, or most of the time get offset by cross-currency headwinds. Right? Because when US dollar appreciates, it appreciates against most currencies, and that kind of offsets each other. Your portfolio of non-US as it grows, that offset becomes larger and larger across us and across the industry also, you have seen that. There were times when the US dollar used to be 70+% , or US used to be 70, 75+% . That obviously has gone down significantly, and therefore the headwinds from the other currencies comes in. If you look at this quarter, specifically for us, as I called out in the margin walk, there was close to 50 basis points of headwind that we got because of amortization of one of the acquisition-related intangibles.

Speaker #4: So two points that Ybor generally I mean, you do have rupee benefit that sometimes gets offset, but most of the times gets offset by cross-currency headwinds, right?

Speaker #4: Because when US dollar appreciates, it appreciates against most currencies, and that kind of offsets each other. And your portfolio of non-US, as it grows, that offset becomes larger and larger across us and across the industry also.

Speaker #4: You have seen that. I mean, there were times when the US dollar used to be 70-plus percentage or US used to be 70, 75-plus percentage.

Speaker #4: That obviously has gone down significantly. And therefore, the headwinds from the other currencies come with it. If you look at this quarter specifically for us, as I called out in the margin box, there was a close to 50 basis points of headwind that we got because of amortization of one of the acquisitions related intangibles.

Salil Parekh: Last quarter, we had a 30 basis points gain. In a way, these two went into two different directions for us in terms of margin impact. Both became a headwind. Then 20 basis points on account of employee-related costs. All of those were headwinds that were offset by 40 basis points from currency and 30 basis points from Maximus.

Jayesh Sanghrajka: Last quarter, we had a 30 basis points gain. In a way, these two went into two different directions for us in terms of margin impact. Both became a headwind. Then 20 basis points on account of employee-related costs. All of those were headwinds that were offset by 40 basis points from currency and 30 basis points from Maximus.

Speaker #4: Last quarter, we had a 30 basis points gain. So in a way, these two went into two different directions. For us, in terms of margin impact, both became a headwind.

Speaker #4: And then 20 basis points on account of employee-related costs. So all of those were headwinds that were offset by 40 basis points from currency and 30 basis points from maximum.

Vibhor Singhal: Noted. Great. Thank you so much for taking my question, and I wish you all the best.

Speaker #9: Got it. Great. Thank you so much for taking my questions and I wish you all the best.

Salil Parekh: Thank you.

Operator 3: Thank you. Next question is from the line of Abhishek Pathak from Motilal Oswal. Please go ahead.

Operator: Thank you. Next question is from the line of Abhishek Pathak from Motilal Oswal. Please go ahead.

Speaker #4: Thank you.

Speaker #2: Thank you. Next question is from the line of Abhishek Patak from Motilal Oswal. Please go ahead.

Abhishek Pathak: Yeah. Hi, am I audible?

Operator 3: Yes, sir.

Operator: Yes, sir.

Speaker #8: Yeah. Hi. I'm audible? Yeah. Yeah. Hi. Hi, Salil. So I had a question around the deals that we left on the table. We saw similar comment from one of your sort of peers as well.

Abhishek Pathak: Yeah. Yeah. Hi, Salil Parekh. I had a question around the deals that we left on the table. We saw a similar comment from one of your peers as well. Just curious, what is happening over here? Are we being disrupted by, let's say, leaner, more AI native sort of companies who are pricing their deals very low by the delivery model changing? Or is this a race to the bottom from traditional vendors who are just essentially creating irrational pricing? Very curious as to what's happening here. Over the next 2 to 3-year period, do you think the industry needs to find newer linear models to price their deals and how much is possible to kind of change over here in the short term? Thank you.

Speaker #8: So just curious, sort of what is happening over here? Are we being disrupted by, let's say, leaner sort of more AI-native sort of companies who are pricing their deals very low by the delivery model changing?

Speaker #8: Or is this a race to the bottom from traditional vendors who are just essentially sort of creating a pricing creating irrational pricing? So very curious as to what's happening here.

Speaker #8: And over the next two to three-year period, do you think the industry needs to find newer leaner models to sort of price their deals and how much is sort of possible to kind of change over here in the short term?

Speaker #8: Thank you.

Salil Parekh: It's not that this is something widely prevalent. We do see sometimes a particular competitor doing pricing which seems unusual. This is something that's happened over the course of years for different reasons. Just now, it may be linked in a client's mind to AI productivity. In other times, it's got other things. I don't see that it's something which is sort of across everything. At the end, we had 96 deals with close to $15 billion in large deals for last year. It's a very sort of broad-based, robust outcome, plus the pipeline is pretty good. There are anecdotal things where some of the productivity thing looks out of the range that we see with what's possible with what we have understood with all the foundation models.

Speaker #4: So, there, it's not that this is something widely prevalent. We do see sometimes a particular sort of competitor doing pricing which seems sort of unusual, but this is something that's happened over the course of the years for different reasons.

Speaker #4: Just now, it may be linked with the client's mind to AI productivity, and other times it's got other things. So I don't see that it's something which is sort of across everything.

Speaker #4: At the end, we had 96 deals with close to 15 billion in large deals for last year. So it's a very sort of broad-based robust outcome.

Speaker #4: Plus, the pipeline is pretty good. But there are anecdotal things where some of the productivity thing looks out of the range that we see with what's possible with what we have understood with some of the foundation models.

Salil Parekh: It's more of that sort of a comment, not mainly, we don't see that as being a sort of trend of some sort.

Speaker #4: So it's more that sort of a comment, not mainly we don't see that as being a sort of trend of some sort.

Abhishek Pathak: Understood. Thank you so much. All the best.

Speaker #2: Understood. Thank you so much. Have a good rest. Thank you. Next question is from the line of Keith Backman. From BMO Capital, please go ahead.

Operator 3: Thank you. Next question is from the line of Keith Bachman from BMO Capital Markets. Please go ahead.

Operator: Thank you. Next question is from the line of Keith Bachman from BMO Capital Markets. Please go ahead.

Keith Bachman: Hi. Thank you very much. I have two questions. The first question is related to pricing, and I wanted to understand the context of how pricing competitiveness has changed, and you started the answer on the last question, and really, A, is it more competitive today than it has been over the last couple of years? B, the spirit of the question is, my understanding, when some of your competitors are getting more aggressive on pricing, they're introducing cost curves associated with the deployment of AI that may have more uncertainty surrounding those cost curves because this is new technology, and I think everybody's trying to figure out what it can and can't do at the current level. So does that introduce incremental risk in how you're philosophically thinking about pricing?

Speaker #10: Hi. Thank you very much. I had two questions. The first question is related to pricing. And I wanted to understand the context of how pricing competitiveness has changed.

Speaker #10: And you started the answer on the last question, and really A, is it more competitive today than it has been over the last couple of years?

Speaker #10: But B, the spirit of the question is my understanding when some of your competitors are getting more aggressive, on-pricing, they're introducing cost curves associated with the deployment of AI that may have more uncertainty surrounding those cost curves because this is new technology and we're I think everybody's trying to figure out what it can and can't do at the current level.

Speaker #10: So, does that introduce incremental risk in how you're philosophically thinking about pricing? If you could just talk a little bit about pricing dynamics with the introduction of AI.

Keith Bachman: If you could just talk a little bit about pricing dynamics with the introduction of AI, and I do have a follow-up?

Speaker #10: And I do have a follow-up.

Salil Parekh: I'll start on that pricing sort of point. The way we are seeing it is the point you made about competitive intensity. We do see there is increased intensity. If you look at last financial year, we had a growth, some other players had negative revenue. One can sort of imagine some of that sort of a scenario. In pricing, actually, Jayesh will talk a little bit about it. I think overall realization is better in the year than we have seen before, so maybe the execution is better and the portfolio, at least we feel, is less risky in that sense. I don't think we have what if I understood well what you were describing.

Speaker #4: I'll start on that pricing sort of point. The way we are seeing it is the point you made about competitive intensity we do see there is increased intensity if you look at last financial year.

Speaker #4: We had a growth some other players had negative revenue so one can sort of imagine some of that sort of a scenario. In pricing, it's actually Jayesh will talk a little bit about it.

Speaker #4: I think overall a realization is better in the year than we have seen before. So maybe the execution is better and the portfolio at least we feel is less risky in that sense.

Speaker #4: So I don't think we have what if I understood well what you were describing. If I can just add to what Salil was saying, if you look at a little elevated level despite the softer volume through the year, most of our growth came from the realization.

Keith Bachman: Okay.

Jayesh Sanghrajka: If I can just add to what Salil Parekh was saying. If you look at an elevated level, despite the softer volume through the year, most of our growth came from the realization. That reflects in what we have been able to get on the back of AI. That reflects in the value that we are creating for our clients. To some extent, that also reflects the contribution from Project Maximus through the lean automation, value-based selling, and all of those tracks. That is given. If you look at, despite the competitiveness in the market, despite all of that, we've been able to maintain our margins for the year. We've invested back in the business 50 basis points or 40-odd basis points in sales and marketing, the AI talent that we are building, the AI capabilities that we are building, all other AI-related investments.

Speaker #4: That reflects in what we have been able to get. On the back of AI, that's reflected in the value that we are creating for our clients.

Speaker #4: And to some extent, that also reflects the contribution from project maximus. Through the lean automation value-based sellings and all of those tracks, right? So that is given.

Speaker #4: If you look at despite the competitiveness in the market, despite all of that, we've been able to maintain our margins for the year. We've invested in back in the business 50 basis points or 40 odd basis points and saved some marketing.

Speaker #4: The AI talent that we are building, the AI capabilities that we are building, all other AI-related investments. All of that has been absorbed in the margin while keeping margins constant.

Jayesh Sanghrajka: All of that has been absorbed in the margin, while keeping margin constant.

Keith Bachman: Okay. Let me ask my second follow-up question, and it also speaks to or questions the growth algorithm. I'm trying to understand how the growth algorithm may change from a volume perspective given the AI efficiency gains on the supply side. The way I think about it, and we've had this conversation with one of your competitors, if you're trying to grow at 3%, in the past years, you might have to grow volumes by 5% or 6% to get to 3% growth. One of your competitors suggested that volume variance may need to double because of the efficiency gains to get to the same revenue growth trajectory.

Speaker #10: Okay. Okay. Let me ask my second follow-up question. And it also speaks to or questions the growth algorithm. And I'm trying to understand how the growth algorithm may change from a volume perspective given the AI efficiency gains on the supply side.

Speaker #10: And the way I think about it and I've had this we've had this conversation with one of your competitors. If you're trying to grow at 3% in the past years, you might have to grow volumes by 5 or 6 percent to get to 3% growth.

Speaker #10: And one of your competitors suggested that that volume variance may need to double because the efficiency gains to get to the same revenue growth trajectory.

Keith Bachman: I just wanted to see if you could think about how is the growth algorithm on a volume basis different today because of those AI efficiency gains as you look out over the next 12 months versus what it's been over the last couple years?

Speaker #10: And I just wanted to see if you could think about over the how is the growth algorithm on a volume basis different today because of those AI efficiency gains as you look out over the next 12 months versus what it's been over the last couple of years?

Jayesh Sanghrajka: Keith, the reality is, we do see, as Sunil was saying earlier, we do see some deflation from our existing services. Largely, part of that is getting offset by the new services, the new AI-driven services. Overall, at this point in time, the volumes for the last year has remained flattish. As we go forward, we continue to see volumes to remain flatter or marginally positive as what we have baked in the guidance at this point in time, which is reflected in the lower end. In the upper end, as I said earlier, we have expected better macro environment, which should reflect in better volumes.

Speaker #4: So, the reality is we do see, as Salil was saying earlier, we do see some deflation from our existing services, right? And largely, part of that is getting offset by the new services—the new AI-driven services.

Speaker #4: Overall, at this point in time, the volumes for the last year has remained flattish. And as we go forward, we continue to see volumes to remain flatter or marginally positive as we what we've baked in in the guidance at this point in time, which is reflected in the lower end.

Speaker #4: In the upper end, as I said earlier, we have expected better macro environment, which would reflect in better volumes.

Keith Bachman: Okay. Thank you. All right, many thanks. Good luck.

Speaker #10: Okay. All right. Many thanks. Good luck.

Jayesh Sanghrajka: Thank you.

Sandeep Mahindroo: Thank you. Next question is from the line of Apoorva Prasad from Franklin Templeton. Please go ahead.

Speaker #4: Thank you.

Speaker #2: Thank you. Next question is from the line of Apurva Prasad from Franklin Templeton. Please go ahead.

Apoorva Prasad: Hey. Hi. Any comments on the direction of the onsite mix? I'm trying to understand if the AI compression or just AI embedded in services and contract structures, is that impacting the delivery mix?

Apurva Prasad: Hey. Hi. Any comments on the direction of the onsite mix? I'm trying to understand if the AI compression or just AI embedded in services and contract structures, is that impacting the delivery mix?

Speaker #11: Hey. Hi. Any comments on the direction of the onsite mix? I'm trying to understand if the AI compression or just AI embedded in services and contract structures, is that impacting the delivery mix?

Jayesh Sanghrajka: No, Apoorva. I think it's multiple factors. Little bit of the environment, little bit of the visa situations in some of the countries, little bit of our own initiative to deliver more from offshore. I think it's a combination of all of that.

Speaker #4: No, Apurva. I think it's a multiple factors, a little bit of the environment, a little bit of the Visa situations in some of the countries.

Speaker #4: A little bit of our own initiative to deliver more from offshore. So I think it's a combination of all of that.

Apoorva Prasad: There's a pushback, correct? At third party you expect that to be similar.

Apurva Prasad: There's a pushback, correct? At third party you expect that to be similar.

Speaker #11: So Jayesh, pick that correct? That third party you expect that to be similar?

Jayesh Sanghrajka: Sorry, just to add, the discretionary spend has also come down, which generally means higher onsite.

Speaker #4: Sorry. Just to add, the discretionary spend has also come down, which generally needs higher onsite.

Apoorva Prasad: Okay. For FY27, the onsite exit should be similar, and third party cost, I think you said, will be similar next year also this.

Apurva Prasad: Okay. For FY27, the onsite exit should be similar, and third party cost, I think you said, will be similar next year also this.

Speaker #11: Okay. And for FY27, the onsite exit should be similar. And third-party cost setting you said will be similar. Next year also this.

Jayesh Sanghrajka: The third party cost, as I said earlier, we expect it to be in the same similar range. FY27 exit is difficult to project at this point in time. As I said, the FY26 exit itself gives us approximately 40, 50 basis points of lower onsite mix. We think this trend will continue to some extent. It's very difficult to predict what will be FY27 exit.

Speaker #4: No, third-party cost, I did say that earlier. We expect it to be in the same similar range. FY27 exit, it's difficult to project. At this point in time, as I said, the FY26 exit itself gives us approximately 40, 50 basis points of lower onsite mix.

Speaker #4: And we think this trend will continue. To some extent. But it's very difficult to predict what will be FY27 exit.

Apoorva Prasad: Sure. Thank you. Thank you.

Apurva Prasad: Sure. Thank you. Thank you.

Speaker #11: Sure. Thank you.

Operator 3: Thank you very much. Ladies and gentlemen, we'll take that as the last question. I'll now hand the conference over to the management for closing comments.

Operator: Thank you very much. Ladies and gentlemen, we'll take that as the last question. I'll now hand the conference over to the management for closing comments.

Speaker #4: Thank you.

Speaker #2: Thank you very much. Ladies and gentlemen, we'll take that as a last question. I'll now hand the conference over to the management for closing comments.

Salil Parekh: Thank you. First, thanks everyone for joining. I just want to share a quick summary. We had a strong FY26 3.1% growth, 21% margin. Very good large deals, close to $15 billion. We have growth guidance for the coming year. We have a mix of growth drivers and compression, overall growth guidance, and, adjusting for some of the one-off technical factors, larger growth on a like-for-like basis. The AI services approach and strategy I think we've laid out is resonating with our clients very well. We see all of the six areas in our pipeline, very good partnerships with the AI foundation model companies and other tool companies. With all of that, we look ahead to a strong, successful year in this coming year and look forward to seeing all of you, catching up with all of you in the next quarterly call. Thank you. Take care.

Speaker #11: Thank you. First, thanks everyone for joining. Just want to share a quick summary we had a strong FY26 3.1% growth, 21% margin, very good large deals, close to 15 billion.

Speaker #11: We have a growth guidance for the coming year. We have a mix of growth drivers and compression. Overall growth guidance. And adjusting for some of the one-off technical factors, larger growth for like basis.

Speaker #11: The AI services approach and strategy, I think we've laid out, is resonating with our clients very well. We see all of the six areas in our pipeline.

Speaker #11: Very good partnerships with the AI foundation model companies and other tool companies. With all of that, we look ahead to a strong, successful year in this coming year, and look forward to seeing all of you, catching up with all of you in the next quarterly call.

Speaker #11: Thank you. Take care.

Operator 3: Thank you very much, members of management. Ladies and gentlemen, on behalf of Infosys Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.

Operator: Thank you very much, members of management. Ladies and gentlemen, on behalf of Infosys Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.

Speaker #2: Thank you very much, members of management. Ladies and gentlemen, on behalf of Infosys Limited, that concludes this conference call. Thank you for joining us.

Q4 2026 Infosys Ltd Earnings Call

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