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.

Infosys Q2 results shows growth at a High Cost

Infosys Ltd’s revenue growth in the September quarter (Q2) was it’s highest in the past eight quarters. In constant currency terms, i.e. after eliminating the impact of exchange rate fluctuations, revenues grew 8.1% year-on-year in Q2, much better than the average growth of 5-6% in the preceding four quarters. The bad news is that the company’s operating profit margin is at a 20-quarter low. And although the rupee has depreciated by over 11% in the past six months, Infosys is continuing to guide for margins of between 22 %and 24% for the full year, the same levels it had forecasted back in April.

This is not how things were supposed to go. The sharp depreciation in the rupee was expected to boost profit margins at least in the near term. Last week, the company’s chief competitor, Tata Consultancy Services Ltd (TCS), reported a 150 basis points improvement in margins sequentially. Its margins reached a 14-quarter high, boosted by the decline in the rupee.

Infosys, on the other hand, has been forced to hand over the gains from the currency to employees and sub-contractors, to support growth and rein in employee attrition. In the second half of the year, the company plans to step up investments to capitalize on opportunities in digital services, which will put a lid on margins as well.

Since Infosys still lags TCS by a wide margin in terms of revenue growth, the strategy to sacrifice margins for growth may be a sensible one, unless it has struck large deals that entail low margins for some time to come. The company’s revenues were considerably ahead of the Street’s estimates. Besides, it announced deal wins worth over $2 billion, the highest ever for a single quarter, and nearly double the levels it reported in Q1. While this is nothing to sneeze at, the fact remains that expectations have been running high with IT stocks, including Infosys, which has outperformed the Nifty 500 index by about 40% this year.

In that backdrop, investors will be disappointed that the higher-than-expected increase in revenue growth is not translating into higher earnings growth. Infosys’s net profit grew by 10.3% year-on-year in Q2, less than half the rate at which TCS’s net profit rose.

Of course, one can argue that Infosys also trades at a lower price-earnings multiple of 19 times estimated FY19 earnings, compared to TCS’s valuation of 23 times earnings. But given the large differential in earnings growth rates between the two companies, investors now need to consider if the valuation discount is wide enough.

Lost Arbitration Case: Infosys To Pay Rs 12.17 Crore to Its Former CFO

Arbitral Tribunal decreed a 12.17 crore compensation with interest to Rajiv Bansal, Former Chief Financial Officer of Infosys Limited after the latter lost the arbitration case over severance package.

Infosys said it will take legal advice for further action on the issue.

The IT firm had agreed to pay Bansal a severance amount of Rs 17.38 crore or 24 months of salary, but the company suspended payments after he got Rs 5 crore as co-founder N R Narayana Murthy and others objected to the severance package as excessive.

Following this, Bansal had dragged his former employer to arbitration to claim the remaining Rs 12 crore of his severance pay.

Bansal’s severance payout has been one of the issues that Infosys founders had raised to allege governance lapses at the Bengaluru-based firm.

When Bansal left Infosys in 2015, Infosys had agreed to pay him Rs 17.38 crore in severance pay, equivalent to 24 months of pay.

Infosys & Temasek to Join Hands Together

India’s second-largest software services exporter Infosys Ltd said on Friday it formed a joint venture with Singapore state investor Temasek as it expands its presence in Southeast Asia.

Temasek looks to enhance its IT services through the venture in which Infosys will hold a 60 percent stake and Temasek 40 percent, Infosys said in a statement.

The joint venture will integrate teams from Infosys and the operations of Temasek’s unit in Singapore, Trusted Source Pvt.  Ltd, which currently delivers IT services to Temasek and a number of other clients.

Headquartered in Singapore, the joint venture will have more than 200 employees and contractors from Trusted Source, while Infosys staff will join over time.

The companies named Shveta Arora, Infosys vice president and regional head in South East Asia, as chief executive officer of the new venture.