Bengaluru-based IT major Infosys has announced a revenue guidance of 0-2% year-on-year growth for the full financial year of FY21 in constant currency terms. The guidance for its operating margins, Infosys said, would be between 21-23% for the financial year.
Addressing the media on the financial results for the first quarter, Infosys CEO Salil Parekh said that the revenue guidance was reinstated based on their learnings from the quarter and a strong client connect.
For the April-June quarter of 2020, Infosys reported 1.5% growth in constant currency terms, while net profit grew 12% to Rs 4,233 crore for the quarter. Digital revenues came in at $1,389 million (44.5% of total revenues), registering a year-on-year growth of 25.5%. Operating margins came in at 22.7%, an increase of 220 basis points year-on-year.
The company executives also outlined the cost-cutting measures put in place by the company in the light of the COVID-19 pandemic. These included promotion freezes and reskilling of existing employees, among others.
Nilanjan Roy, CFO of Infosys said that due to the pandemic, work travel and visa costs came down, along with the company cutting down on discretionary spends like branding and marketing with aggressive rate negotiations.
The voluntary attrition for the quarter declined to 11.7% as opposed to 20% during the same period last year.
In terms of employees, the company said that it increased the variable pay for employees in the light of the pandemic.
Pravin Rao, COO of Infosys also added that 90% of all those hired last quarter have been onboarded, with the rest being completed this quarter. Infosys expects about 20,000 freshers to start work later this quarter. However, there is a general freeze on lateral hiring, he added.
“During the last few months, we took multiple steps aimed at employee safety and well-being while providing seamless services to our clients. Clients have recognised us for the speed, security and effectiveness of our remote enablement efforts”, said Pravin. “The strength and diversity of our portfolio was evident in good revenue performance, sizeable large deal wins, high focus on operating metrics and significant decline in attrition.”
On working from home, Infosys reiterated that efforts are in the direction of adopting a hybrid working model. Currently, less 1% of Infosys’s workforce is working in office
“Our effort and focus is mainly on an operating model that we can seamlessly swap between work from home and work from office,” Pravin said, noting that WFH will always be more productive than work from office.
The company also commented on the recent ban on non-immigrant work visas including H-1B in the US till the end of the year.
“It doesn’t really make any logical sense. Various independent studies show the value that indian IT service providers lend to the US economy and how they make American companies very competitive,” Pravin said.
However, the impact on Infosys would be minimal, Pravin noted. “In the short term, we do not see any impact because there’s anyway a ban on travel. But our focus on localisation has really helped us. More than 60% employees are visa independent,” he added.
“Even in the medium to long term, we do not see an impact although personally we do feel it does not make sense. Even unemployment is very low in the tech sector. From Infosys’ point of view, given our localisation, we are fairly comfortable,” he said.
Infosys said that it has recruited more than 13,000 US nationals as part of its localisation drive with the idea of building local talent in all the geographies it operates in.
It has also set up digital centers in the US and Europe and Australia.
“Our thinking really is to do college recruitment and build a full pyramid in those environments. By doing that we are building a business model that is more and more resilient in the future. It is not to say that we anticipated something like this that happened in the past quarter to happen, but because of the decisions we made and investments in building that model, we are more able to manage in this environment,” Salil added.
With inputs from Shilpa S Ranipeta