DQ Top 20 RANK 2 - Infosys Picking up Speed Despite Setbacks 

The era of optionality is upon us. Optionality can take various forms... it is all about having a digital-first and AI-first business architecture, which can be constantly configured,” says Infosys Chairman Nandan Nilekani. 

Infosys offers next-generation digital services and consulting, serving clients in over 56 countries to facilitate their digital transformation. As of fiscal 2023, the company has 3,43,234 employees with 39.4 percent of workers are women, and serves 1,872 active clients. 

Infosys generated total revenues of `1,46,767 crore. Net profit for FY23 was `24,108 crore, an increase of 8.9% compared to FY22’s `22,146 crore. Over the past five years, Infosys experienced a CAGR of 11.8% in net profits, with `19,423 crore in FY21 and `16,639 crore in FY20, respectively. 

Risk of economic ambiguity 

Indian IT companies are currently facing a decline, twice as severe as benchmark indices, echoing the tech meltdown in the US, besides the aftermath of Covid-19. The main driver is the fear of the US recession, a crucial market for Indian tech firms. Infosys’ performance in Q4-2022 reflects the wider impact of the US banking crisis, affecting various sectors beyond BFSI. The company acknowledged the challenges and considers new strategies to increase market share amidst issues such as sluggish growth, supply chain disruptions, soaring prices, rising interest rates, and recession concerns. 

Infosys Chairman Nandan Nilekani said in an official statement: “The era of optionality is upon us. Optionality can take various forms. In our IT infrastructure, it is the ability to dynamically reconfigure the way we work – remotely, in the office, or hybrid. In the area of talent, it is about building and deploying agile learning platforms so that our people can hone their skill sets to match new demands and new technologies. It is all about having a digital-first and AI-first business architecture, which can be constantly configured.” 

The financial services vertical saw a 3.7% sequential revenue decline, while other sectors like retail, communications, and hi-tech experienced mixed results. 

Deals and collaborations 

• Infosys and Rolls-Royce launched a joint Aerospace Engineering and Digital Innovation Centre in Bengaluru, India, aiming to leverage their combined strengths in engineering and digital innovation to accelerate growth in the civil aerospace market. 

• Introduced the Infosys Cobalt Financial Services Cloud, an industry cloud platform for enterprises in the financial services sector to accelerate business value in the cloud. 

• Infosys and Google Cloud joined forces to assist Backcountry in delivering seamless and secure digital experiences for outdoor enthusiasts. 

• Infosys collaborated with TK Elevator to enhance their digital workplace management, network security, and IT infrastructure, powered by Infosys Cobalt. 

• EisnerAmper, a major accounting, tax, and business advisory firm in the U.S., chose RISE with SAP, with Infosys implementing SAP S/4HANA Public Cloud to help EisnerAmper meet their growth ambitions in the coming years. 

• Introduced Infosys Equinox to enable enterprises to deliver hyper-segmented, personalized omnichannel commerce experiences for B2B and B2C buyers. 

• Established the Automotive Digital Technology and Innovation Center in Stuttgart, Germany, to drive innovation and IT infrastructure transformation in the automotive sector. 

• Collaborated with Goldman Sachs to digitally transform their Client Services Helpdesk using the ServiceNow Platform, resulting in improved agent productivity and enhanced user experience. 

• Frost Bank and Infosys jointly launched a new mortgage loan product offering to meet customer needs and enhance the customer service experience in Texas. 

• BankDhofar completed a successful three-phase modernization program using the Finacle Digital Banking Suite from Infosys, leading to improved technology leadership and functional coverage, enhancing the customer banking experience. 

• UCAS announced a major core technology collaboration with Infosys, focusing on automation, innovation, and efficiency to deliver on their strategy for the future. 

• Infosys Living Labs partners with global enterprises’ venture capital investment arms to enrich tech innovators’ portfolios and provide access to Infosys’ global client base, facilitating the adoption of startup solutions for Infosys clients. 

• Infosys Public Services launched a blockchain network to modernize public recordkeeping for the County of Riverside in California. 

The company revealed that project downsizing and decision delays had affected volumes, emphasizing the benefits of strong client relationships and growing client interest in efficiency, cost savings, and consolidation. 

While the financial services vertical contributes significantly to Infosys’ business, their exposure to US regional banks is less than 2% of the revenue. 

The Manufacturing segment reported the biggest year-over-year gain. Geographically, North America had a 10% year-over-year rise, Europe a 13.6% year-over-year growth, but India’s business showed an 11.5% year-over-year decline. 

Moody’s Investor Services published a research report that underlined the need for Infosys to enhance personnel affairs, such as hiring and attrition, to prepare for the uncertainties of the world. “Improving employee utilization from hiring in prior years, and steadily declining attrition amid global uncertainties will likely arrest any further margin pressure, with its EBITDA margin remaining around 24% over fiscal years 2024 and 2025,” said the research report. 

The average annual increase in employee salaries in India, after considering promotions and other event-based compensation revisions, was 9.9% 

Infosys operates through a range of go-to-market business units, encompassing Hi-Tech Manufacturing, Life Sciences and Healthcare, Financial Services and Insurance, Energy, Utilities, Resources, and Services, Communications, Telecom, OEM, and Media, Retail, Consumer Packaged Goods, and Logistics, as well as Public Services. This strategic structuring enables Infosys to effectively deliver specialized solutions and services to diverse industries while accommodating unique sector requirements and client needs. 

There were 40 clients with annual revenues of more than US$100 million dollars. There were 75 clients who generated more than US$50 million in revenue for the year. In the past year, Infosys completed 95 significant acquisitions worth US$9.8 billion. The ‘one Infosys approach’ is a way to support clients by utilizing all of their resources, and the strength of a complete workforce base. 

During Q2FY23 earnings, CEO & MD Salil Parekh stated that the company had started to pivot towards cost-focused programs within the vast transaction pipeline. 

Danske Bank, a Nordic bank, and Infosys also agreed to a strategic partnership to speed up and scale the latter’s digital transformation activities. Infosys will also purchase Danske Bank’s IT center in India.