IT services major Infosys on Friday cut its revenue growth guidance for FY27 to 1–2 per cent in constant currency terms from the 1.5–3 per cent projected in the first quarter, citing pricing pressures, intense competition and subdued discretionary spending in sectors such as retail and hi-tech. The downgrade came despite strong deal wins during the September quarter, and rising AI revenue.
Infosys reported a 6 per cent year-on-year rise in consolidated net profit to ₹7,823 crore in the second quarter of FY27 compared with ₹7,364 crore in the corresponding period last year. Revenue from operations grew 11 per cent to ₹49,244 crore from ₹44,490 crore a year earlier. The company declared an interim dividend of ₹26 per share.
“We had strong large deals of $5.2 billion, including a mega deal of over $2 billion, reinforcing our position as a trusted partner in the marketplace when clients embark on large and complex transformation programmes. Our AI revenue was at 10.5 per cent and grew 29 per cent quarter-on-quarter,” said Salil Parekh, CEO and managing director of Infosys.
Explaining the guidance cut, chief financial officer Jayesh Sanghrajka said the company was facing pricing pressure amid heightened competitive intensity and increasing client demands for productivity gains.
“We have also seen pricing pressure on the back of competitive intensity and higher ask on productivity. So all that is baked in our revised guidance as we look forward. On top of that, some of the sectors like retail, hi-tech, where discretionary is lower than what we were expecting. So that is also reflected in our revenue guidance,” Sanghrajka said.
Despite the challenging environment, Infosys maintained its operating margin guidance for FY27 at 20–22 per cent. Operating margin stood at 21 per cent in the September quarter.
Headcount rises
Infosys added around 4,000 employees on a net basis during the quarter, taking its total workforce to 332,542. The headcount compares with 331,991 in the year-ago quarter and 328,062 in the first quarter of FY27.
The company hired 8,000 college graduates during the quarter and remains on track to recruit around 20,000 fresh graduates over the full financial year.
“We have 4,000 net increase in headcount which shows our continued confidence into the future. We have hired 8,000 college graduates during the quarter. For the full year, the target remains at approximately 20,000 and we have already done more than half of that in the first half of the year,” Parekh said.
On the company’s exposure to US work visas and its on-site workforce, Parekh said a majority of Infosys employees in the US were local hires. The company had taken steps several years ago to build this workforce and did not expect a change in its approach, although the ratio of on-site to offshore employees had shifted in recent quarters.
Market analysts, however, flagged the weaker-than-expected performance and the second reduction in the company’s FY27 revenue growth outlook.