BENGALURU: Infosys reported modest Q4 growth and guided a cautious FY27 outlook, citing AI-driven productivity pressures, competitive intensity, and macro uncertainty, even as AI-led transformation opportunities remain strong.
The company guided a revenue growth of 1.5–3.5% in constant currency terms for FY27, while retaining its operating margin guidance at 20–22%.
Meanwhile, in Q4, revenue from operations rose 13.4% YoY to Rs 46,402 crore during the quarter. But the sequential growth was modest at 2%.
The company said that AI-led deals, large contract wins, and expansion in existing client accounts are key growth drivers, even as some traditional services face compression due to automation.
Infosys’ operating margin improved to 21.0%, compared with 18.4% in the previous quarter and flat versus the year-ago period.
“We have absorbed a lot of headwinds and invested in the business… and delivered a 21% margin,” management said in the Q4 earnings press conference.
Infosys posted a year-on-year jump of 21% in consolidated net profit to Rs 8,501 crore. Meanwhile, on a sequential basis, the bottomline rose nearly 28%.
Net profit for the quarter was supported by a one-time gain of Rs 774 crore gained by the reversal of tax provisions after favourable tax orders.
For the full year, Infosys reported revenue of Rs 178,650 crore, up 9.6% YoY, while net profit increased 10.2% to Rs 29,440 crore.
“We delivered a resilient performance in FY26 with growth of 3.1% with strong large deal wins of $14.9 billion, reflecting the robustness of our enterprise AI value proposition and market share gains in large transformation opportunities,” said CEO Salil Parekh.
Deal momentum remained strong during the year, with a large total contract value (TCV) of $14.9 billion, with a net new component of 55%. In the fourth quarter, the company reported large deal wins of $3.2 billion.
Vertical Play
On the vertical front, financial services, the company’s largest segment, grew 5% YoY in reported terms, while manufacturing increased 5.9%. Energy, utilities and resources posted a stronger growth of 8.3%, and communication led with 12.6% growth.
Executives said financial services and energy segments are expected to accelerate further, driven by the rapid adoption of AI in areas such as KYC, credit processing, and legacy modernisation. “Clients are moving very quickly to adopt AI… that is helping grow our revenue,” Parekh said.
Retail grew 2.9% during the quarter, while the hi-tech segment declined 1.5%, reflecting continued weakness in parts of the technology spending cycle.
Weakness in certain segments was linked to discretionary spending cuts and AI-driven efficiency gains, reducing demand in traditional service lines such as tech services and BPM.
Geographically, North America, which accounts for over half of revenues, grew 4.1% YoY, while Europe saw stronger growth of 11.4%.
Management added that while global conditions showed signs of stabilisation, geopolitical tensions and cautious enterprise spending continue to influence decision-making cycles.
Headcount
On hiring, Infosys ended the quarter with a total employee count of 3,28,594, a reduction of 8,440 employees compared to the previous quarter, while voluntary attrition stood at 12.6%, broadly stable.
The decline in headcount was attributed to lower volumes, utilisation changes, and productivity gains driven by AI, rather than any structural shift in hiring strategy, the management said.
The company maintained that it will continue hiring freshers, with plans to onboard at least 20,000 in FY27.