Infosys Q1 Results | Strong Pipeline, Robust Major Deal Demand Outlook: CEO Salil Parekh

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Infosys increased its revenue growth target for FY23 to 14–16 percent, up from 13–15 percent before.

In spite of the fact that macroeconomic conditions are unpredictable, Infosys stated on July 24 that the demand outlook remains positive.

After the company announced its results for the first quarter of the fiscal year 23 (Q1FY23), Chief Financial Officer Salil Parekh said that while there have been concerns about an impact on IT spending and a dent in demand due to an increase in interest rates and looming fears of a recession, the company is optimistic about its future.

In addition, according to Parekh, major agreements, defined as those with a value of more than $50 million, are notoriously unstable, and the total pipeline for large deals is currently higher than it has been in the preceding three to six months. He went on to say that within their pipeline, they have a solid demand forecast on significant agreements inside the markets of both the United States and Europe.

“There is talk of recession, there is an increase in interest rates. There are some pockets where we see this. For example, in the mortgage business in our financial services area. But, the view for us today given what we see in our pipeline is that the overall pipeline is strong at this stage. We are watching out for what can happen as the environment evolves and changes,” Salil Parekh said.

Parekh said that the firm felt confident enough to raise its revenue guidance because of the demand and strength in terms of both overall growth and volume growth. The company’s previous revenue growth target for FY23 was 13-15 percent, but Infosys has increased it to 14-16 percent.

He also said that the company is seeing two types of demand: those who want to change to digital and those who want to save money and work more efficiently.

“We have both of those within our mix and, as we looked at this, even in the previous month, we’ve made sure that our focus remains on both types of programs. We feel in terms of automation, we have a tremendous capability that we think will be of great use to clients in any environment as they look at making efficiency within the tech landscape,” Parekh said.

Infosys, on the other hand, has not changed its margin guidance for the year, which is between 21 and 23 percent. The company anticipates staying at the lower end of that range.

At the Annual General Meeting (AGM) of the firm that took place a month ago, Chief Executive Officer Salil Parekh put shareholders’ worries about the impact of the recession to rest. Parekh was quoted as saying that the firm has a healthy pipeline of work and that they are “well-positioned” to collaborate with customers.

The majority of Infosys’ competitors sounded a note of concern, while Infosys’ competitor Wipro sounded optimistic. Wipro stated that there was no slowdown in expenditure, that bookings were solid, and that the transaction pipeline remained healthy.

“Despite the uncertainties of the macroeconomic environment, if I look at our pipeline, our order booking, and the discussion we are having with our customers, there has been no slowdown or pullback of spends for us. The demand for IT services is robust,” CEO Thierry Delaporte said.

Rajesh Gopinathan, the CEO of TCS, has said that the company is being careful because of macro-level uncertainties, even though pipeline velocity and deal closures are still strong.

Mindtree CEO Debashis Chatterjee had said that some clients who had business with Ukraine and Russia had to put off opportunities because of it.

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