Infosys is ‘watchful’ of the macro environment as risks emanating from steep inflation and rising interest rates threaten to grip major markets such as the US and Europe in a recessionary phase. Industries like hi-tech and telecom are treading with caution having joined the league of retail, mortgages, and financial services sectors in which some amount of weakness had already crept in. “What we see with clients...(is) more caution at the way clients are looking at services. We also see some impact on discretionary spending. We are cautious and watching the macro developments,” CEO & MD Salil Parekh says in a post-earnings call.
The Bengaluru-based IT major, however, sees growth opportunities in the automation and cost-efficiency areas as more clients subscribe to these services in a bid to cut expenses and streamline operations. “Among clients, there’s more and more interest in automation and cost efficiency..we also see this in our large deals pipeline with a strong focus on cost reduction in addition to digital transformation programmes in the pipeline,” Parekh says.
Infosys bagged large deals worth $2.7 billion during Q2FY23, recording the highest large deals value in the last seven quarters. About 54% of this is net new, said Parekh, adding that a strong large deals pipeline is giving the company ‘some confidence.’ “We feel comfortable with where we are in the market,” says Parekh.
Infosys on Wednesday reported an 11% year-on-year rise in net profit during the July-September quarter at ₹6,021 crore. The company's consolidated revenue grew 23.4% YoY to ₹36,538 crore during Q2FY23. The growth momentum of the IT industry that was fuelled by a pandemic-led surge in demand for sectoral services stands the risk of getting derailed by the current macroeconomic instability. Earlier this week, Wipro CEO Thierry Delaporte said that there was a level of uncertainty among clients and that fast-growing technology companies had already started to slow down. “We are ready in this macro environment for all types of client work, whether it focuses on digital and growth, whether it focuses on cost and yet, we want to be careful that we are cognizant of what’s going on with the macro environment and make sure that we go into this watchfully...we have capabilities in digital and cloud..we have...capabilities in automation and seeing very good traction on the cost programmes. We want to make sure that both of these engines are made available to clients,” Parekh said.
Commenting on Infosys’s views on moonlighting, Parekh makes it clear that the company doesn’t support dual employment, hinting that the firm has fired employees who engaged in the process. “We will support them (employees) to work on certain gig projects after prior approval of the managers..we are also developing more comprehensive policies for that while ensuring contractual and confidentiality commitments are fully respected. However, to be clear, we do not support dual employment. If we have found in the past, employees who are doing blatant work in two specific companies where there are confidentiality issues, we have let go of them,” said Parekh.
