Indian IT services company Infosys is all set to roll out annual hikes to its employees on November 1, the company’s Chief Human Resources Officer Shaji Mathew said in a town hall. The IT company had been deferring this hike since the past two quarters.
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The IT company usually rolls out the annual hikes to all its employees below the senior management in the month of April. Rest of the employees receive it in July. This year, the company had deferred the annual hike as it was optimising the business due to headwinds faced by the sector.
In an investor call post earnings, Chief Financial Officer Nilanjan Roy noted that the wage hike was deferred to counter the inefficiencies in the company. He explained that such steps have improved the company’s margins by 50 basis points.
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The CFO said, “Like I said, we had a good quarter two. And as I explained in my margin walk, we nearly had a 50 basis points improvement from our project Maximus on cost optimization.”
“And that gives us comfort for the rest of the year and of course a much longer program, which will take not only into this year into next year as well. We also realize that we have apparent inefficiencies. Our utilization is still low. So these will go and help us and, of course, offset the wage hikes, etc.,” he added.
For Q2 FY 2023-24, Infosys’ revenue stands at Rs 38,994 crore. In constant currency terms, the company reported revenue growth of 2.3 per cent sequentially. The company’s operating profit came in at Rs 8,274 crore and its EBIT margin was at 21.2 per cent for the September ended quarter.
The IT major also recorded a Total Contract Value (TCV) of $7.7 billion in Q2, marking its highest ever large and mega deal wins.
But despite that, the company has narrowed its guidance for the fiscal anticipating rampdowns and cutbacks on discretionary spends. The company trimmed its guidance by 100 basis points for FY24. Infosys expects revenue to grow between 1 per cent and 2.5 per cent, down from 1 per cent and 3.5 per cent earlier.
“We are seeing the discretionary programmes have reduced significantly, and we are seeing decision-making is slow. Keeping that in mind, we have cut back on the guidance,” Infosys CEO Salil Parekh said at a post-earnings press conference.
The company is also taking other steps to reduce inefficiencies. This includes improving utilisation, reducing bench size, and skipping the campus placement drive this year.
The CFO said at the earnings call, “As we see it, it is not likely that we will go to campuses for hiring this year. But will have to watch the situation every quarter.”
