Infosys has lowered its full-year revenue growth guidance for FY27 to 1–2% from the earlier projection of 1.5–3%, citing continued uncertainty, softer volumes, pricing pressure and weakness in certain sectors. The Bengaluru-based IT services provider has maintained its EBIT margin guidance at 20–22%.
Speaking to CNBC-TV18 after the company’s second-quarter results, CEO Salil Parekh highlighted the growing contribution of artificial intelligence (AI) to revenue, a healthy large-deal pipeline and strong free cash flow. He also said Infosys remains a preferred AI partner for its top clients and is well positioned to navigate the ongoing industry shift.
AI revenue accounts for 10.5% of Infosys’ Q2 revenue
Parekh said AI revenue accounted for 10.5% of Infosys’ second-quarter revenue, growing 29% sequentially.
He said the company’s AI strategy focuses on six areas under its Hexagon framework, with strong growth across offerings such as agent development, legacy modernisation, process AI and data AI.
The company’s partner ecosystem is also gaining momentum, Parekh said, adding that Infosys is increasingly focused on deploying AI solutions for large enterprise clients.
He attributed the traction to investments in its Topaz fabric and capabilities, along with employee training and certifications that enable teams to work with different frontier AI companies and their partners.
Parekh said Infosys is focusing on large opportunities in AI services and continues to invest in training its employees and scaling capabilities. He added that growth in this area is looking good and the company continues to be a leader in investments.
Mega deals to contribute 1% to revenue growth next year
Parekh said mega deals are expected to contribute 1% to revenue growth next year, highlighting the importance of large deals to the company’s growth outlook.
He said Infosys is being extremely careful about the deals it takes on, ensuring they meet its economic thresholds and internal guidelines. The company is taking on contracts only from clients that meet its economic criteria, he added.
Financial services, energy and manufacturing remain strong
On industry demand, Parekh said Infosys continued to see strength in financial services, energy and utilities, and manufacturing.
However, the company is witnessing weakness in the retail and high-tech sectors, he said.
Parekh added that AI adoption is becoming increasingly relevant for the large enterprises Infosys works with. Investments in AI capabilities and partnerships are helping the company gain traction with these clients.
Infosys cites uncertainty, pricing pressure for lower guidance
Jayesh Sanghrajka, Group CFO of Infosys, said the company’s revised revenue growth guidance reflects a softer second quarter, continued weakness in volumes, pricing pressure amid competitive intensity and higher productivity expectations.
Infosys had previously guided for revenue growth of 1.5–3% and has now lowered the range to 1–2%.
Sanghrajka also pointed to softer discretionary spending in retail and high-tech, which has weighed on the outlook.
The company has maintained its EBIT margin guidance at 20–22%, with Sanghrajka describing the performance as a result of its efforts under Project Maximus.
Margin performance and H2 headwinds
Sanghrajka said Infosys has maintained margins over the years despite investments in sales and marketing, AI capabilities and talent.
Explaining the sequential margin movement, he cited a 70-basis-point impact from post-sale customer support and a 20-basis-point impact from acquisitions. These were offset by a 40-basis-point benefit from currency movements, a 20-basis-point contribution from a higher calendar and working-day impact, and a 20-basis-point contribution from Project Maximus.
Sanghrajka explained that the post-sale customer support impact reflected a reversal in the previous quarter, while the acquisition-related impact increased due to an additional month of amortisation.
Looking ahead, he said the second half of the financial year would face headwinds from compensation costs and continued pricing pressure. Infosys will continue working on Project Maximus to offset these pressures as much as possible.
Infosys on US PERM and local hiring
Addressing the company’s US workforce, Parekh said the majority of Infosys employees in the country are local hires.
He said the company has maintained a good balance between local hiring and cost efficiency, adding that the ratio of offshore to onshore employees has changed.