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Infosys Q2FY22 Conference Call Highlights

Infosys Q2FY22 Conference Call Highlights

Published on 14 October 2021 Views 46 Comments 0
  • Fastest year-on-year growth in 11 years, accompanied by resilient operating margins at 23.6%.
  • Digital business grew by 42%, which constitutes 56% of the overall revenues.
  • Revised hiring to 45,000 for this year from 35,000 in the previous quarter.
  • Increasing the annual revenue growth guidance which was at 14% to 16% previously, to 16.5% with 17.5% growth in constant currency. Operating margin guidance remains the same, 22% to 24%.
  •  Pravin COO of the company, last full quarter before he retires after an incredible journey of 35 years with Infosys.
  • Utilization improved to new all-time high of 89.2%.
  • Onsite effort mix reduced further to a new low of 23.6%. Localization in the U.S. has reached 70%. They announced more than 10,000 additional hires over two years. But despite that, due to the volume growth and the mix within that, it will continue to secularly move toward more offshore.
  • Q2 margin remained resilient at 23.6% despite headwinds from salary increases for most of the employees, higher subcon costs and supply side challenges which were largely offset by improvements in operational parameters and scale benefits resulting from growth. The major components of the sequential margin movement are as follows: 1.1% impact to the compensation hikes given, effective July, to most of the employee base; a 0.5% increase in subcon costs, which were offset by 80 basis point benefit due to cost optimization and improvement in operating parameters; a 50 basis points due to SG&A scale benefits; and a 30 basis points benefit due to rupee and cross currency movement, overall, leading to a 10 basis points drop in sequential operating margins.
  • LTM basis, attrition has increased to 20.1%. Most of the attrition has been for people in lower levels between three to six years of experience. And this has been the trend in this industry, because in these experience levels, people are still not emotionally connected with the company and sometimes it's easier for to move around. Also, due to lack of talent mobility, that has also restricted fuelled attrition in some of the countries. In a couple of quarters, it should ease out.
  • There is always seasonality in Q3 and Q4. Especially in Q3, typically see some level of furloughs, and in Q4, less historically. But there is a good overall demand outlook as well.
  • They are among the few companies who have global DCs now in the West, where they can rope in freshers. Currently, they are having more than 3,000-odd freshers a year in the onsite locations. Also, 75% of the people cost is onsite. So, unless they address onsite costs, they can't really make an impact on the overall cost structure.

Originally Published On: https://blog.investyadnya.in/infosys-q2fy22-conference-call-highlights/
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