India’s second-biggest software services firm, Infosys Ltd is trying to push for higher margins as it is targeting to earn half its revenue from the company’s digital portfolio which is its fast-growing vertical, as stated by its chief executive Salil Parekh.
“Our stated objective is to have a high margin business. There is no question on that,” Parekh told the Economic Times in an interview. However, he refused to spill the beans on the timeline of achieving 50% revenue from Infosys’ digital technology solutions.
Bolstered by clinching strong deals in this financial year’s first quarter, the Bengaluru-based IT giant is headed towards a revival after a prolonged management tumult, technological transitions and regulatory disorder in North America which is its largest market (accounting for 61.2 per cent of its topline) had affected its business in recent times.
The Bengaluru-based company, like many of its peers, has been ramping local hiring in key markets like the US, the UK and Australia to tackle increasing scrutiny around work visas by various governments.
Infosys’ prediction of double-digit revenue growth for this year and the likelihood of clinching important deals over $6 billion which it had bagged in fiscal year 2019 has boosted the company’s confidence.
Speaking on the issue of attrition in the company, Parekh further said, “We have done with our investments. We will continue that and overtime scale that up. Because the more differentiated business we build the more we will be able to provide margins that are higher.”
After taking the helm of Infosys in January 2018, Parekh has trimmed the company’s operating margins two times, one in April 2018 followed by another one in March 2019.
The tech-giant in July this year posted better-than-expected 5.3% rise in its June quarter net profit at Rs 3,802 crore as it bagged more orders and increased FY20 revenue growth guidance to 8.5%-10% against 7.5-9.5% forecast earlier in constant currency and FY20 operating margin guidance retained at 21%-23%.
Infosys’ net profit for Q1FY20 stood at Rs 3,798 crore and reported Rs 21,803 crore as its revenues for the quarter. Consolidated total revenue of IT major rose by 14 per cent to Rs 21,803 crore during the June quarter of 2019-20, as compared to Rs 19,128 crore in the same period of 2018-19.
Infosys operating profit, however, decreased marginally by 1.5 per cent to Rs 4,471 crore in Q1FY20 versus Rs 4,537 in Q1FY19. The operating margin declined by 3.2 per cent to 20.5 per cent as compared to 23.7 per cent in the year ago period.