Infosys CEO Salil Parekh speaks during a press conference to announce the company’s Q1 results for the financial year 2023-24, at Infosys headquarters in Bengaluru, on July 20, 2023.
| Photo Credit: PTI
IT services major Infosys Ltd. on Thursday cut its full-year revenue growth guidance citing a distinct “stopping or slowing down” in some verticals, after reporting first-quarter net profit rose 10.9% year-on-year to ₹5,945 crore.
The technology services provider pared its FY24 revenue growth forecast by at least 300 basis points to 1-3.5%, from 4-7% projected earlier amid an increasingly challenging demand environment, which saw its first-quarter revenue in constant currency terms grow by just 1% on a sequential basis.
Infosys, however, retained its operating margin guidance for the full year at 20-22%.
Revenue in rupee terms increased 10% in the April-June quarter to ₹37,933 crore, from ₹34,470 crore in the year-earlier period. Revenue, in dollar terms, inched up to $4.61 billion.
The company said it had bagged large deals worth $2.3 billion (56% of them were net new) in Q1, as against a total contract value of $2.1 in the previous quarter. Infosys added it had also won two mega deals worth $2 billion just after the closure of the quarter.
“Even as we won two mega deals recently and also we have a strong pipeline, revenue from these is expected towards the later part of the fiscal,” CEO and MD Salil Parekh said at the post-earnings media briefing. “Keeping this in mind, we are changing our revenue growth guidance,’‘ he added.
Some business verticals were witnessing a loss in momentum, Mr. Parekh observed. “In the short term, we are seeing some stopping or slowing down of transformational programmes. Decision-making cycles are getting longer,” he said.
This was especially so in financial services, asset management, investment banking, payments, mortgages, high-tech, telecom and in parts of retail, according to the Infosys CEO. On the other hand, manufacturing and life sciences were the verticals that remained bullish and had helped deliver double-digit revenue growth for the company.
Mr. Parekh said the company’s generative AI capabilities were expanding well, with 80 active client projects now, as the comprehensive AI platform, Topaz, had resonated well with clients’ requirements.
“We are building well for the future. Generative AI covers large language models for software development, text, document, voice and video. We have already trained 40,000 of our people for these AI capabilities,” he elaborated.
During the quarter, Infosys’s total headcount shrank by 6,940 to 3,36,294, indicating a tepid hiring trend. It reported attrition at 17.3%, compared with 20.9% in the previous quarter. The IT major said it didn’t have a hiring target for FY24 and hiring would depend on how the rest of the year would play out in terms of the overall demand scene.
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