60 Senior Infosys Executives Earn More Than A Crore In FY19

Almost sixty senior executives at Infosys earned more than ₹1 crore in the fiscal year 2019. This was double the number earning that figure in the previous year, with several senior executives attaining great jumps in compensation after they exercised stock options for FY19, said the company.

Infosys reported in financial year 2018 fewer than 30 employees who were based in India and who received salaries over Rs 1.02 crore. That number, however, has since jumped to 64 for fiscal 2019.

Gross compensation increased significantly even for those not listed as key managerial personnel at the company, data published by the Bengaluru-headquartered IT services firm showed.

For instance, gross remuneration for Deepak Padaki, who heads corporate strategy and risk for the company, rose nearly 75% to Rs 3.16 crore in FY19, up from Rs 1.81 crore in FY18.

Koushik RN, EVP and group head of global immigration, received a 41% bump in gross remuneration. Gross compensation for Binod Hampapur, the head of global talent and technology, rose over 30% to Rs 5.2 crore. “A significant part of the increase in remuneration of the above-mentioned employees…is on account of the increase in perquisite value of stock incentives previously granted and exercised during the year,” Infosys said in a note, explaining the increases. The remuneration includes fixed pay, variable pay and retirement benefits, in addition to the value of stock incentives.

Among the top executives, CEO Salil Parekh received Rs 24.6 crore in compensation, including Rs 7.6 crore in restricted stock options. Chief operating office UB Pravin Rao received Rs 9.1 crore. Infosys president Mohit Joshi got Rs 15 crore, while deputy chief operating officer Ravi Kumar S received Rs 13.2 crore.

At rival TCS, CEO Rajesh Gopinathan earned Rs 16 crore last year. Interestingly, two among the top 10 highest-paid employees at Infosys came to the firm as part of the company’s acquisition of Noah Consulting. Noah directors Stewart Nelson and Shannon Tassim each earned a little over Rs 6.8 crore in FY19.

Infosys, which has seen high attrition rates, has said its salary hikes are differentiated, with high-performers getting far bigger pay increases than average performers. The company also said it was looking at its compensation and incentives structure to stem attrition.

In a separate development, Infosys said it had now invested $59 million from its $500 million innovation fund. In FY19, the company also divested stake in two investments, resulting in a net gain of $8 million.

Infosys Shares Go Down On Q4, TCS Shares Go Up

IT giant Infosys has reported a mixed data in the fourth quarter with margins below expectations even as revenue came in- line. The company also reported wins over strong large deal during the quarter which came in more than $1.5 billion. 

Infosys’ guidance for this fiscal starting April 1, 2019, came in below the Street’s estimates. Infosys shares fell as much as 5% in early trade to ₹713. 

Infosys’ bigger rival TCS, which also reported Q4 earnings on Friday, jumped as much as 3.5% to ₹2,085.60.

Coming back to Infosys’ fourth quarter numbers, the company reported strong 2.1% sequential rise in constant- currency revenue, underscoring strong execution and strong order inflows. This is the second successive quarter where Infosys has achieved more than 10% growth year-on-year in constant currency. The Bengaluru-based company said it signed large deals of $1.57 billion during the quarter, taking the cumulative size of deals won to $6.28 billion for the full year. This is twice that of FY18.

In this context, many analysts say that the growth momentum, which picked up in FY19 will continue in FY20. So, they view Infosys’ guidance of 7.5-9.5% growth in constant currency terms as conservative.

“We believe the IT major is being conservative in terms of its revenue guidance for FY19, which is slightly below what we were expecting (8-10%),” Reliance Securities said in a note.

Ravi Menon, lead analyst for IT at Elara Capital, said that Infosys growth guidance for FY20 was “disappointing” given large deal wins in FY19.

In terms of profitability, Infosys operating margin in the March quarter dropped 3.2 percentage points from a year ago, to 21.5%, led by wage hike impact and possibly costs related to large deal integration. This was below the Street’s estimates. The company also expects margins to remain suppressed in FY20 as well, guiding for in a range of 21-23%.

Analysts also remained concern over rising attrition, which was above 20% in March quarter. “Attrition remains a bug-bear. This is an area that Infosys needs to focus given major digital talent shortage and attendant margin pressure due to wage cost inflation,” Reliance Securities said in a note.

Tata Consultancy Services Ltd (TCS), India’s largest IT services company by revenue, ended fiscal 2019 with double-digit revenue growth as the company reported a 11.4% growth in constant currency terms in the fiscal ending 31 March, the company said in a statement. For the March quarter, TCS reported a revenue growth of 2.4% from the preceding three months in constant currency terms. Revenue grew 12.7% from the same period a year ago.

This is TCS’ fifth straight quarter of year-on-year double-digit revenue growth in constant currency terms.

In terms of deal wins, TCS also did well, bagging contracts of $6.2 billion last quarter, higher than the $5.9 billion of deals it secured in the December quarter.

The rising cost of business also hit TCS’ profitability. Its operating margin contracted for the second straight quarter. It softened 30 basis points from a year ago to 25.1% in the fourth quarter of FY19.

Ravi Menon of Elara Capital said that TCS growth in March quarter was broad-based and he expects to the Mumbai-based company to post higher growth than what it had posted in FY19. “TCS deserves higher multiple and the premium vis-a-vis Infosys is expected to widen in TCS’ favour,” he added.

At 9:51 am, Infosys shares had pared some losses, trading 2.5% lower at ₹728 while TCS shares were 2.2% higher at ₹2,059. In comparison, Sensex was trading 0.20% higher.

Infosys Looking To Buy 75% Stake In ABN AMRO Group NV’s Mortgage

India’s second biggest IT services company Infosys Ltd. said on Thursday that it would buy a 75 per cent stake in ABN AMRO Group NV’s mortgage administration services unit worth 127.5 million euros ($143.53 million).

Infosys will acquire the stake in Stater NV through unit Infosys Consulting Pvt Ltd and the transaction is expected to close in the first quarter of fiscal 2020. 

This is in line with Infosys’ strategy to strengthen its mortgage servicing capabilities in Continental Europe, the software services company said in a statement.

ABN AMRO will continue to hold the remaining 25 per cent stake in Stater, which operates in the Netherlands, Belgium and Germany. 

Infosys had gained 1.6 per cent by 12:58 pm, while the broader Mumbai market was up 0.58 per cent.

Infosys Hired 7,600 Members in Staff in US

Infosys has hired over 7,600 staff in the US – more than three-fourth of its target of recruiting 10,000 American workers – and said it is making recruitment from local schools a “sustained effort” in its largest market.

North America is the largest market for Infosys accounting for 60.4 percent of the topline, followed by Europe (24.2 percent), rest of the world (12.8 percent) and India (2.6 percent) at the end of December 2018 quarter. The Bengaluru-based company reported 20.3 percent increase in revenue from operations at Rs 21,400 crore in the said quarter.

Infosys CEO Salil Parekh, who took over the top job last year, has outlined ‘localisation’, along with strategic investments and enhancing company’s digital capabilities as key areas of this three-year strategic plan. The strategy outlined focussed on stabilising the company’s business in 2018-19, building momentum the next year, followed by acceleration in 2020-21.

“…we have pretty much done 7,600-plus. We have opened five hubs now, we have announced six of them and we have opened five of them and we have hired 2,000 plus school grads – campus hires,” Infosys President and Deputy Chief Operating Officer Ravi Kumar said in a recent investor call.

He added that the company is “on track on localisation”.

BJP ticks off MK Stalin for not echoing ‘Rahul for PM’ at TMC rallyIn May 2017, Infosys had announced that it will set up four technology and innovation hubs and hire about 10,000 locals in the US over a two-year period.

Kumar explained that Infosys has recruited from campuses, trained them, and then moved them into live projects.

“This is a sustained effort, and as a part of our operating model, we would like to continue hiring in the US from schools, building a training infrastructure around it and then actually building a natural pyramid onsite as well. So, this is a sustained effort. It is going to continue as we go forward,” he said.

Infosys had announced setting up of technology and innovation hubs in Indianapolis (Indiana), Raleigh (North Carolina), Hartford (Connecticut), and Phoenix (Arizona). It is also establishing a design and innovation hub in Providence, Rhode Island.

Infosys, 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.

Shares of Infosys Ltd Have Risen 27%

Growth is certainly back to decent levels. The constant currency revenue growth of 10.1% from a year ago is notably higher than Street estimates. Importantly, Infosys also revised FY19 growth upwards by about 100 basis points. This implies growth momentum should continue into the fourth quarter, and return to double-digit growth is certainly something that will excite investors.

Shares of Infosys Ltd have risen 27% in the past year, outperforming the Nifty IT index’s 18% gain. Apart from the fact that the shares came off a low base, there have been signs of improvement in growth rates under the new CEO, Salil Parekh. In that backdrop, Infosys Q3 results come as a big reinforcement of that belief.

While the Infosys Q3 results were declared after Indian markets closed on Friday, the company’s American depository receipts rose more than 5% on the New York Stock Exchange.

Traditionally, the second half of the fiscal year is relatively softer for software companies due to fewer working days on account of Christmas and New Year holidays. So for Infosys to raise its forecast based on its second-half performance is quite unusual. The firm raised its growth forecast to 8.5-9% from 6-8% earlier.

Deal wins have been strong, too. Infosys won 14 large deals amounting to about $1.5 billion last quarter. Cumulatively deal wins so far in FY19 stand at $4.7 billion, more than double the orders Infosys booked in the year-ago period.

But the optimism is yet to reflect in its profitability. Operating margin narrowed 1.1 percentage points sequentially and 1.7 percentage points from a year ago. While there were some one-offs, even after adjusting for them, margins were lower than Street estimates. But investors seem to be in the mood to ignore margin-related concerns, given the strong pickup in growth.

Infosys is investing in building sales and digital capabilities, besides giving related compensation hikes to tame attrition. In addition, transition costs in large deals are leading to softness in margins. The investments are expected to continue, implying the trend of soft margins should continue in the near term.

While growth is back, it has to be seen if momentum will sustain on a higher base. Growth in the last two quarters came off a relatively low base.

That said, Infosys trades at a sizeable valuation discount vis-à-vis bigger rival Tata Consultancy Services Ltd, and the large share buyback should also help support the former’s stock. The buyback price is at a 16% premium to the last closing price of the stock. Importantly, it will be implemented through the open market route, which means the company will be regularly buying shares from the market and this will support the Infosys stock.

Infosys Likely to Opt for Buyback of Shares

The Bengaluru-based company is also slated to announce its third quarter results on January 11.

The IT major last year repurchased 113,043,478 equity shares at a price of ₹1,150 per share for an aggregate amount of ₹13,000 crore. The company’s December 2017 share buyback programme saw participation from LIC, Singapore government, Sudha Gopalakrishnan (wife of co-founder S. Gopalakrishnan) and Rohan Murty (son of co-founder N.R. Narayana Murthy’s son) among others.

Infosys will consider proposals for share buyback and special dividend during its board meeting on January 11, the company said in a statement to the stock exchanges on Tuesday.

“In this regard, we would like to inform you, pursuant to Regulation 29(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“SEBI LODR Regulations”), that the Board of the company will consider proposal(s), including but not to limited to, buyback of fully paid-up equity shares of the company, payment of special dividend, for implementation of the Capital Allocation Policy at its meeting to be held on January 11, 2019.”

Infosys shares closed at ₹669.85, down 0.19%, or 1.30 points, on the BSE on Tuesday.

Rivals Tata Consultancy Services, HCL Technologies, Wipro and Mindtree had also announced buyback plans recently.

A Brief Look At HCL, Infosys, Wipro Sensex Report Card

The Indian rupee gained in early trade against the dollar. The rupee opened higher by 22 paise at 71.33 as compared to previous day close of 71.55. Shares of information technology (IT) companies are trading lower as a stronger rupee is dragging marquee names such as Infosys and Wipro, among others.

Rupee in the last few sessions consolidated in a wide range of 71.20 and 72.30 ahead of the important FOMC policy statement that will be released tomorrow. Expectation is that the Fed could consider raising rates by 2bps and a hawkish stance could extend gains for the greenback. On the domestic front, rupee extended its gains after India’s trade deficit narrowed in November, said Motilal Oswal.

At 09:30 hrs Infosys was quoting at Rs 681.00, down Rs 12.55, or 1.81 percent. Wipro was quoting at Rs 334.50, down Rs 5.30, or 1.56 percent.

CEO Salil Parekh- A Man Par Excellence; Brushed Aside Conflicts Inside Infosys

Infosys Ltd chief executive Salil Parekh is still two months away from completing one year in office, but the 54-year-old has already ironed out differences within the organization, restructured compensation for the benefit of employees, given the digital business the required urgency, appointed new leaders for key roles and bagged billion-dollar deals. Parekh comments on his journey of the past 10 months at Infosys.

“Last quarter, the company had a very large number of big deal wins, the largest the company have had in many quarters. The company the companyre the company within the guidance the company had given both on growth and on margin. The company are still putting in the building blocks. But the real test is over the next 3-5 years, as the company put all these things together and as it starts to hum in an efficient way” said Parikh.

With acquisitions, things are always available. It is a question of whether they are ready to sell, and does the price make sense. The point is about the cultural fit and then the strategic fit. So many things have to come in place together. It’s a little bit like getting married. There’s always people willing on every side, but a lot of things have to come together.

In terms of the strategic fit, the company will look at those five elements of digital, plus some of our core services, which are growing the company. For example, our engineering services, which is growing very the company today, and business process management, which is also growing the company. So the company are open to those, in addition to the digital ones. And among geographies, my preference is definitely the US, but the company’ll also look at some continental European ones, especially markets such as Germany and Switzerland.

Board decisions are really about what Nandan and the board will decide. I have a very good equation, from my perspective, with Mr Murthy. The company met socially a few times. I make it a point to try and reach out to him every few months, just to say hello. He has been kind enough to invite me to his home, have coffee or dinner. The company have not talked about Infosys. He is deeply involved in so many areas, in NGOs, in the social sector, I am happy to learn and listen. But that’s clearly been the nature of our equation.

The company essentially gave a margin guidance of 22-24% and, in the last quarter, the company the companyre at 23.7%. This quarter is pretty close to the high end of that guidance. The reason the company did that is twofold. One, there is a lot of new work in the digital area which needs investments, and for us to scale up. To make those investments, the company needed some room. And, this was one way for us to make some room. The second, on our employees, the company had not handled all employee changes in terms of compensation appropriately.

 

Infosys To Land in Texas with New Technology Hub

The global software major Infosys is geared up to mark its arrival in Texas with a bang by 2020 with its new technology hub which will house a capacity of 500 employees.

“The new hub will drive expansion and create jobs in Texas to reinforce our commitment to workforce development in the US,” said the city-based IT major which seeks to hire more almost 500 techies by 2020.

The new employees would include graduates from Texas universities and colleges. They would benefit from upskilling through its training curriculum.

“The new technology and innovation hub will focus on telecommunications, retail and banking sectors,” said the statement.

The investment in Texas reinforces the outsourcing firm’s commitment to driving digital transformation for American enterprises by leveraging talent from the area alongside the best global talent available.

The investment in Texas is part of the company’s strategy to drive digital transformation of American businesses.

“Digital is changing every industry, and our hubs will allow us to co-locate, co-innovate and co-create alongside our clients,” said Infosys Chief Operating Officer U.B. Pravin Rao on the occasion.