Infosys raises revenue guidance on deal momentum

IT services firm Infosys reported net profit of $734 million in the quarter ended September 2021, growing 4 percent sequentially and 12 percent over the same period a year ago.

India’s second-largest IT company clocked consolidated revenue of nearly $4 billion in the second quarter of fiscal year (FY) 2022. It grew 5.7 percent sequentially, and was 20.7 percent higher than a year ago.

“With a strong start to the financial year, good deal momentum in Q2, and a good deal pipeline,” Infosys' CEO and Managing Director Salil Parekh told reporters on Wednesday that the company has raised its revenue-guidance range to 16.5 percent to 17.5 percent for FY 2022 from the previous range of 14 percent to 16 percent.

Infosys won large deals worth $2.15 billion in the quarter ended September 2021. Parekh said the company has a good pipeline in terms of large deals. Its partnerships with infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS) companies are giving it good impact, he added.

"Our sustained investments in expanding capabilities has positioned us to continue serving our clients effectively, gain market share, and emerge as the preferred cloud and digital transformation partner,” Parekh said in a press statement.

Areas such as cloud, cybersecurity, internet of things, and digital transformation are getting a lot of traction, he noted.

Parekh told EnterpriseStory that Infosys has not taken its eye off M&A prospects. “We are absolutely looking for acquisition opportunities on an ongoing basis,” he said.

Last year, Infosys invested in areas such as cloud services, digital experience, design and development, SaaS companies, and acquired companies like GuideVision, Blue Acorn, Kaleidoscope, and Carter Digital.

“All of those areas are growing extremely well in the market,” Parekh added, as they “operationally integrate well, and drive incremental impact to clients and to Infosys."

The manufacturing segment rebound in the second quarter of FY 2022, growing 44 percent over the previous year. It accounted for nearly 11 percent of Infosys' revenue in the quarter.

Financial services, which contributes to around 32 percent of its revenue, grew 21.8 percent over a year ago. Even sectors like life sciences, retail, communication, energy, utilities, resources and services, and hi-tech grew in double digits.

North America and Europe, which contribute 60 percent and 24 percent to Infosys’ revenue, grew 23.1 percent and 22.8 percent respectively during the quarter.

Infosys added 117 new clients during the period, out of which one client was to the over $100 million bracket.

The company said it will increase its hiring to 45,000 freshers this year from the previous target of 35,000 to  deal with the surging demand from enterprises adopting digital transformation.

However, Infosys’ attrition rate has shot up in the past year. In the quarter ended September 2021, its voluntary attrition rate was 20.1 percent, compared to 12.8 percent a year ago.

Infosys' management said the company has taken up a host of measures, such as skill-based compensation, and promotions, apart from investing in employee engagement and re-skilling.

“On an average in the past few quarters,  nearly 80 percent of the incremental demand on digital has been met by internal re-skilling,” said UB Pravin Rao, Chief Operating Officer.

Rao will retire on December 11, 2021, after working at Infosys for 35 years. The company is expected to announce a new leadership structure in the next few weeks.