Infosys says staff are leaving it again – a sign COVID crunch is receding

Infosys has landed massive new deals that it says will require a return to pre-COVID hiring practices, even as workers start to leave for other employers.

The Bangalore-headquartered IT company experienced 9.6 percent year-on-year growth for Q4 of its 2021 financial year. Speaking on the company's earnings call, CEO Salil Parekh credited the increase to customer demand for all things digital, cloudy and data-driven. COO Pravin Rao added that financial services, high-tech and life science business segments reported double-digit growth.

After inking the company’s largest deal ever in Q3, Infosys won 23 more significant deals in Q4, mostly in the Americas and Europe. Infosys also added 130 new clients in Q4, four of which will be US$100M clients.

“We had US$2.1B of large deals in Q4, which is a very strong healthy mix, over 50 percent net new,” said Parekh, adding “The US$7B of Q3 was incredible, but that’s not sort of a sustainable rate in the way we look at our business.”

The company experienced an annualized 15.2 percent voluntary attrition rate within its IT services team and onboarded 10,300 new hires in Q4. Infosys said it already hiked pay in January 2021 and will do so again in July. The January pay raise will make up for a skipped summer 2020 salary hike. Promotion cycles and recruitment were also delayed in FY 21 and will now resume.

“As COVID hit, we were very clear looking at the volatility and uncertainty in the economic environment that we had to do certain cost postponements,” said chief financial officer Nilanjan Roy.

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Infosys now expects high staff attrition across its industry for the next few quarters now that COVID effects are more under control. Infosys says its recruitment will be aggressive in what may shape up to be an employee’s market.

“The current utilization of 87.7 percent is very high and not what we are comfortable with. But over the quarters, it will trend down,” said Rao.

Roy commented that the full year impact of the compensation hike of Q4 will be felt into FY 22. He expects the operating margin for FY22, predicted at 22 to 24 percent, to experience margin pressure as the wage hike goes into effect and increased travel brings in costs.

Attempts to neutralize costs through automation are on the agenda.

"We have an underlying cost optimization program around that strategic levers of offsite - onsite-offshore mix around the pyramid, around automation, we continue to press on every year as well," he said.

Q4 revenue was $3.6bn the result for the full year was $13.56bn. Last year's numbers were $3.2bn and $12.9bn respectively.

Profit for the quarter was $1.25bn, and $4.73bn for the full year, jumps of $200m and $500m respectively. ®