Infosys Chief Executive Officer (CEO) Salil Parekh (left) with the company’s Chief Financial Officer (CFO) Jayesh Sanghrajka during a press conference regarding the company’s Q1 results, in Bengaluru
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PTI
Despite macroeconomic headwinds and geopolitical uncertainties, Infosys reported a 3.8 per cent year-on-year (y-o-y) and 2.6 per cent quarter-on-quarter (q-o-q) revenue growth in constant currency (cc) terms.
However, its profit after tax (PAT) declined 1.6 per cent sequentially, but rose 8.6 per cent on a y-o-y basis. The company has also lowered the bottom end of its full-year revenue growth guidance, in line with estimates, to 1–3 per cent constant currency (cc), better than the 0-3 per cent it had guided earlier.
While macroeconomic conditions have shown some signs of stabilising, they remain uncertain. As a result, the company has revised the lower end of its guidance upwards.
Infosys has maintained its operating margin guidance at 20-22 per cent for the full fiscal. During the quarter, its margin stood at 20.8 per cent, a decline of 0.3 per cent y-o-y and 0.2 per cent q-o-q.
Margin pressures
Jayesh Sanghrajka, CFO, stated, “The impact of wage hikes, rolled out in two phases, one in January and the other effective April 1, is baked into the quarter’s margins. Compensation-related factors, including the April hikes and higher variable pay, contributed to a 100-basis-point headwind. Currency fluctuations added a 30-basis-point impact, while other factors accounted for another 20 basis points. These were partially offset by a 70-basis-point pricing benefit, driven by seasonal trends, improved productivity, and initiatives under Project Maximus. Additionally, a 40-basis-point tailwind came from acquisition-related impairment in the last quarter.”
During the quarter, Infosys reported a large deal total contract value (TCV) of $3.8 billion, with net new deals making up 55 per cent. This marks an increase from $2.6 billion in Q4.
Efficiency focus
“We see the changes in the economic outlook with everything happening in the US and Europe. We have not seen any change in a specific client or project situation. There is more emphasis on cost and efficiency across, and some impact at an industry level, like in logistics, consumer products, or parts of manufacturing, like auto,” said Salil Parekh, CEO and MD, Infosys.
The company’s growth was broad-based, with its five large industry groups, including financial services and manufacturing, and large geographies like the US and Europe growing year-on-year.
Infosys witnessed strong momentum in its financial services segment, which recorded a 5.6 per cent y-o-y growth in cc terms. The manufacturing vertical performed even better, posting a 12.2 per cent y-o-y growth in constant currency.
Geographically, growth in the US remained largely flat at 0.4 per cent y-o-y in constant currency, while Europe saw a robust 12.3 per cent y-o-y growth.
“Infosys is operating in a highly competitive and dynamic industry, where margin pressures, pricing challenges, and talent retention remain persistent concerns,” DD Mishra, VP Analyst at Gartner, commented.
“It is exposed to global macroeconomic uncertainties, like fluctuations in client budgets, currency volatility, and regulatory changes in key markets like the US and Europe. Additionally, any missteps in execution, especially in large transformation deals or new technology adoption, could impact its growth momentum. While Infosys’ fundamentals remain strong, it is navigating through these challenges and performing as expected at the moment. However, it needs to leverage the tail winds of AI-enabled transformations to stay ahead of the curve and deal with geopolitical and economic headwinds,” he added.
Hiring
Infosys plans to continue hiring in line with its target of onboarding 15,000 to 20,000 freshers this year. Headcount remained largely flat during the quarter, increasing by just 200 employees, but showed a notable year-on-year rise of over 8,000. Voluntary attrition for Q1 stood at 14.4 per cent.
Published on July 23, 2025
