Good morning, ladies and gentlemen. On behalf of Infosys, I would like to extend a very warm welcome to all of you at our 2019 Analyst Meet. We thank you all for taking your time out of the busy schedule and join us at this event. We would also like to extend a very warm welcome to all the people who are not in the room, but accessing this event via the live audio webcast. Please note that this event is being recorded. The audio file of this event, various presentations, and the transcripts will be put up on our investor relations website.
At your desk we put agenda, important information, and feedback form. The agenda contains the schedule for the day. We request you to adhere to the timings mentioned in the agenda, which will enable us to organize the event smoothly. Please also go through the important information sheet, which contains information on Wi-Fi, lunch, high tea, logistics, and other relevant help that you might need during the course of the event. We have volunteers spread on this floor, they'll be glad to help you in case you need something.
We have a packed agenda for you, starting with a session by our Chairman, Mr. Nandan Nilekani. As part of his session, the Chairman will also talk about the recent whistleblower allegations, our response, and take questions on those matters. Please note that any questions on the recent events will be taken only by him. After his session, management will not take questions on those aspects during the rest of the day, including in the open house Q&A. Since the Chairman will not be staying for the full event, we will have Q&A at the end of his session. For questions on other sessions, please wait for the open house Q&A or connect with the presenters separately. With that, let me request our Chairman, Mr. Nandan Nilekani, to kickstart the event.
Thank you, Sandeep, and it's wonderful to be here. Welcome to the Infosys Analyst Meet. It is my pleasure to host all of you here today, and on behalf of the Infosys Board of Directors, I thank you for making the time to join us. We have always known that we can count on you, both your deep insights and your unstinting support, as we take on the various challenges of running a business over the years, and as we continue to strive onward. I would like to use this opportunity to briefly update you on the progress we have made as a board and as an organization over the last 18 months since we announced our new strategic direction.
I would also like to address questions or concerns you may have about the recent whistleblower matter that has generated a fair amount of discussion over the past few weeks. Let me begin by giving you a brief perspective about how digital disruption is fundamentally reshaping the boundaries and configuration of every industry. Navigating this disruption is rapidly becoming the single most important priority for every large global business, especially incumbent enterprises across sectors. FMCG players must equip themselves to pivot in a direct-to-consumer world.
Auto manufacturers must rethink the future where electric cars, driverless vehicles, and mobility aggregators will change the business dynamics irrevocably. With EV and renewables getting set to end the oil regime, energy and utility players will have to power up in new ways. As the world moves away from cards and begins to count more on the smartphone, financial services companies must think of their own smart moves. Every business is looking to understand these shifts, adapt to thrive, and respond confidently with technology as their aid.
We also see six technology imperatives impacting enterprises. These include the rise of the cloud, the evolution of open source, the democratization of data and algorithms, the consumerization of user experience, the changing cybersecurity landscape, and the modernization and assurance of core systems. Enterprises that are able to successfully address these imperatives will emerge as leaders in the new digital economy. Over the last 38 years, we have managed the core operations of some of the largest global enterprises.
Our Navigate Your Next strategy and distinct approach to the five digital outcomes, this is what we call as the pentagon, that these corporations seek, uniquely positions us to support our clients as they strive to overcome these digital challenges and capitalize upon the opportunities of our times. Our revenue growth averages 11.4% constant currency over the last four quarters. With our CEO and MD, Salil Parekh, playing a lead role in reinvigorating the organization and driving momentum. I'd like to give a small applause to Mr. Salil Parekh.
Recognition for our brand across various global platforms, including being awarded the number three ranking on the Forbes list of the world's best-regarded companies for 2019, is validation of the progress we are making as an organization. As we help our clients navigate their transformation journey, we have also been diligently preparing ourselves for this new world. As a Board, we have been focused on a few important priorities, strengthening our corporate governance standards and processes in line with our heritage and our values, developing a robust capital allocation policy that delivers predictable returns for our shareholders, and most importantly, building a resilient and stable executive management team to chart the way forward.
We have periodically updated you on all these dimensions, and I'm delighted with the progress we have made as a team. Another important area where the Board and the management are working in unison has been towards the objective of rewiring Infosys' operations to work with the energy and enthusiasm of a startup. This means overhauling the ways of working that were slowing us down, melting down the silos that separate us, replacing old systems and processes with new and agile ones, reimagining experience and learning for our 230,000 employees, growing our internal tribes of advocates and brand ambassadors, and all this towards making Infosys a Live Enterprise that can sense and respond in real time.
We're getting it all done because we believe we are relying on intelligent automation to create bandwidth for our people to focus on solving tougher problems for our clients, building more effective teams, and learning more. We have been collaborating, networking seamlessly and globally in our quest to bring the best of this renewed Infosys to every employee and every client. Let me now take this opportunity to address the matter of the anonymous whistleblower complaints recently received by the company.
Infosys takes these complaints seriously, and as we have said publicly, the audit committee has engaged an independent law firm to fully investigate the allegations. The investigation is ongoing, and we will provide a summary of the investigation results after it is complete. While I cannot address the substance of the ongoing investigation or the complaint's merits, I want to share the background on Infosys' overall approach to compliance on our handling of this matter. As a company, Infosys is committed to defining, following, and practicing the highest level of corporate governance across all our business functions.
In the 38 years since our founding, we have built a robust track record for compliance with several stable processes that have stood us in good stead. This company has always been guided by a strong moral core and sense of larger purpose. We have reinforced these values by hiring people who are aligned to the company's values and have instituted structures and processes to ensure that these values remain at the heart of our identity. Integrity and transparency are at the foundation of our business and inform our culture, policies, and relationships with all our stakeholders.
Our Whistleblower policy, which is grounded in the values of our corporate governance practices, has been in place for over 15 years. This policy is intended to help ensure that the company maintains a workplace that adheres to the highest ethical standards and facilitates the reporting of potential violations of company policies and applicable laws. The Audit Committee, which has expertise in these matters, serves as a custodian of the Whistleblower process and it promptly and appropriately investigates complaints.
Information disclosed during the course of the investigation is kept confidential, except as necessary to conduct the investigation and take any remediable action in accordance with the law. The investigation process allows the company to determine the validity of complaints. Should an investigation substantiate the allegations of a complaint, the company promptly undertakes remedial steps and makes disclosures if required. Infosys' response to the recent whistleblower allegations adhered to the company policy and past practices and complied with all applicable laws and regulations.
Contrary to reports that assert otherwise, I can say with certainty that the company acted responsibly in response to the complaints. Let me repeat this paragraph for you. Infosys' response to the recent whistleblower allegations adhered to the company policy and past practices and complied with all applicable laws and regulations. Contrary to reports that assert otherwise, I can say with certainty that the company acted responsibly in response to the complaints. Here are the facts. We first became aware of the original complaints on September 30th. Pursuant to our whistleblower policy, the complaints were placed before our audit committee on October 10th and before the Non-executive Board members on October 11th.
The following week, the audit committee consulted with Ernst & Young, the independent internal auditor, and Deloitte, our statutory auditors, were updated as well. On October 16, the company learned of a letter dated October 3rd, 2019, purportedly written to the Office of Whistleblower Protection Program in Washington, D.C. The October 3rd, 2019 letter issued to the company, however, did not include any of the referenced emails or voice recordings. On October 18th, two days before the complaints were made public, the chair of our audit committee decided to retain outside counsel to conduct an independent investigation of the matter.
Accordingly, we retained Shardul Amarchand Mangaldas & Company on October 21st, just as the whistleblower complaints were leaked to the media. In the context of this media leak, the company felt it would serve the interest of all stakeholders by issuing a press release. The company response to the anonymous complaints were reasonable and consistent with U.S. and Indian law, both of which recognize the importance of investigating such claims before disclosing them. U.S. courts recognize that companies have a reasonable amount of time to evaluate potentially negative information and to consider appropriate responses before a duty to disclose arises.
Similarly, circulars issued by the Indian stock exchanges in 2018 also confirm this understanding and encourage companies to disseminate unpublished price-sensitive information as soon as it becomes credible and concrete. Please, credible and concrete. We recognize and value the right of aggrieved or concerned individuals to bring critical issues to the company's attention. However, if a company does not have the opportunity to thoroughly investigate any complaints, this right could inappropriately shift from a corporate safeguard to becoming a conduit for abuse, allowing an individual to manipulate a company's operations or reputation without due process.
Accordingly, prematurely disclosing complaints without proper due diligence to assess the veracity contradicts good corporate governance and would be a mistake. As it always has, Infosys continues to hold itself to the highest standards of ethics and conduct, and we believe the actions the company took after the receipt of these complaints complied with our legal obligations, were responsible, and were in the best interest of our company, employees, and shareholders. Again, while I will not comment on the merits of the issues which are under investigation, I want to reassure you that Infosys takes these whistleblower complaints seriously.
As part of the standard processes defined within our whistleblower policy, we are committed to ensuring that every aspect of the allegations is thoroughly investigated. After the investigation is complete, we will share a summary of the findings and will take corrective action if warranted. For nearly four decades, Infosys has served as a model of strong corporate governance. We will always strive to live up to those standards. All signs point towards us achieving that goal. Potential employees continue to flock to the company, our clients continue to engage with us on new and expanded programs, and our business continues to build momentum.
Our company is prepared and excited for what's to come. Today, our focus is to ensure that we build on the momentum that has been gained in the last 18 months. We are about midway on the three-year strategic journey that the leadership team outlined. The board is fully supportive of the integrated management team that is driving the execution of this strategy. Together, we are prepared for the opportunities and challenges of the future. Let me thank you once again for joining us today. If you have any additional questions, I would be happy to answer them.
Before I go to the Q&A, I also want to issue a company statement that we have just issued to the stock exchanges. Infosys strongly condemns the mischievous insinuations made by anonymous sources against the Co-founders and former colleagues, suggesting their involvement in recent whistleblower allegations. According to Nandan Nilekani, Chairman of Infosys, "These speculations are appalling and seem to be aimed at tarnishing the image of some of the most accomplished and respected individuals. I have deep regard for the lifelong contribution of all our Co-founders. They have built this institution and have served this company selflessly, and even today, remain committed to the long-term success of Infosys."
As we have previously stated, the audit committee has appointed an external law firm to conduct an independent investigation into the allegations made in the complaints. We will share the outcome of the investigation at the relevant time with all stakeholders. This company statement about these anonymous sources against the Co-founders has been put out. It's been sent to the stock exchange. It should be on our website, and we are sharing that with you now. Similarly, the statement that I just made on the Investor Day is also going to be released soon to the stock exchange and all the other parties.
With this, I have come to the end of my prepared remarks, which is my statement on the Infosys future and the whistleblower issue. I've also read out to you the statement that we issued on the article. Now, I'll be happy to take questions from anyone on any topic hopefully relevant to all this. Sandeep will drive this. Sandeep will decide who's going to ask the question. I'd be grateful if you could introduce yourself and from which group or which firm you're from.
Hi, this is Sandip from Edelweiss. Thanks for the update. Just one question, Nandan, on this topic of whistleblower. Is there any indicative timeline, or you think there could be some tenure by when we can get some clarity or some statement from you officially on this investigation?
No, sorry. What do you want apart from what I've said there?
No, I just want to know if there's any tentative timeline or some duration by when we can get some clarity on this issue as well.
No. I think, as you will understand, our goal is to bring this investigation to an appropriate close in the best possible time. Having said that, it involves a number of statements that are there in the whistleblower complaint. We have a lead legal firm. We have three or four auditors. Everybody has to work together and I really can't give you a timeline because I don't think it's fair to the investigating authorities, so let them do their job. We have given them full and complete access to the whole company, and they will do a good job, and as soon as we get the thing, we will report back to you. Okay, I don't choose. Sandeep chooses, so look at him.
Hi. My question is, you talked about-
Could you please introduce yourself?
Hi, this is Diviya Nagarajan from UBS. My question is, you talked about being supportive of the management team. This is indeed a trying time for the company. What steps are you and the management taking to ensure that everyday business and employee morale is unaffected? Could you kind of run us through the communication that you've had internally to ensure that execution doesn't suffer?
I think everything is being done to run the business as usual. In fact, every day, every minute, our people are meeting with customers, meeting with employees, closing big deals, and I'm very confident that we will not miss a beat in doing that. I'm very grateful to the management that in spite of this distraction, they completely focus on the business. Maybe you should ask questions about the future of technology.
Morning, sir. This is Viju George from JPMorgan.
Where are you?
Yeah.
Okay.
Yeah. My question is, you termed this as a distraction. What can you do to sort of ensure that these distractions don't come up in the future? There are always certain things that happen in the pulls and pressures of doing business. Yet, this has come about. What can we do internally, to sort of ensure or tighten up that these things don't come up in the future?
Well, I think, the Whistleblower policy has been in existence for 15 years, and we are bound, and we believe it's a good policy because it gives opportunity for people to raise issues that they would not otherwise raise, and we respect that. Therefore, I think, the policy will absolutely continue as it is. Having said that, we will have to see how it pans out. I'm very confident that we will be able to go forward very well. I can't make a statement that no company will ever get a Whistleblower policy in its future. How can I make a statement like that? Sandeep?
Hi. Shyam Prabhu from Banyan Tree Advisors. I just wanted to figure out for a company the size of, say, Infosys. In a typical financial year, let's say last year, 2018- 2019, how many whistleblower complaints would you have typically got?
Okay. We receive several whistleblower complaints. I don't have the exact data on me right now. They come in different categories also, and we have a due process, and we deal with them as part of our job, and that's part of our job is to deal with such things.
Hi, Nandan. This is Parag from Morgan Stanley. My question is that what we've seen in the media suggests that the supporting emails and evidence have been provided to the office in Washington, and obviously it's not been provided to the Board out here.
Also what?
We understand from media that some of the supporting evidence has been provided to the SEC. That's what the media has quoted. Just wanted to understand, has there been any interaction with the SEC on this front and any views on that?
First of all, we have a letter addressed to the SEC's official Whistleblower office Program, whatever, dated October 3rd, which we received on October 16th. Purportedly has some attachments which have been presumably submitted to SEC. We have not received any of those attachments. All we have received is the same letter which you have seen, which is just the text of the body of the thing. We said that in our statement we issued to the stock exchanges a couple of days back that we have no evidence beyond these three documents. Does that answer your question?
Hi, Nandan. This is Vishal Purohit from Prabhudas Lilladher. As I respect Infosys, the legacy and epitome of governance in India-The fear which comes to the mind of investors by and large, especially after this whistleblower policy, is it shouldn't become like a Panaya type issue. Panaya, the board gave a complete kind of a judgment that all is well, over the next few quarters, we saw write-offs.
The report was never made public or to the investors. Just because a whistleblower has happened now, the information is available in public domain. Can you assure all the investors that the report would be made public? As a suggestion, just to get the fear out of the investors' mind, why don't you also make the Panaya report public so at least the investor gets a clarity rather than having to see any write-offs ahead, even on this issue?
First of all, I think you're confusing two things. One is the investigation into whether the Panaya purchase was kosher or not, second, the write-offs. They're two different things. A lot of people take business decisions that subsequently may lead to write-offs, I can give you chapter and verse of the world's biggest companies and the write-offs they've done. Let's not go there. Don't confuse two things. Having said that, after I came back as the Chairman, I came back and then became the chairman.
We did a thorough analysis of the Panaya thing, I met with the auditors as well as the firm that we appointed, a very respected investigative agency in the U.S., the Gibson Dunn, I was personally satisfied that there was nothing wrong with the Panaya deal as such. I'm not talking about write-offs. That's a different business thing. Don't confuse two things. That is what we said after I came.
I also believe that the company is under no obligation to put out every investigative report, because investigative report by nature involve confidential conversations. People have to do a good job on investigation. They should be willing to speak without fear or favor in the investigation. I don't think that is a legitimate request. I think you have to leave it to the Board and the people on the Board who are of the highest integrity and who care about this company to decide whether they should release the report or not.
Yeah. Hi, this is Sandeep from CGS- CIMB. Just wanted to understand this event of whistleblower now almost two weeks old. Is there any instance where the deals under negotiation clients are saying that let's wait for the investigation report and then finalize anything on the deal which is under negotiation?
On the contrary, our customers are extremely supportive. We have proactively reached out to our customers, talked about this whole thing, and the kind of emails that I have received, really, I feel good that our customers have faith in Infosys. Maybe not others, but certainly our customers have faith in Infosys, and in fact, the deal flow continues to be as good as ever. Just this morning, I saw an email of a large deal Salil had forwarded to me.
I think we are doing very well with customers, and they deeply appreciate this. The fact that we are acting proactively, that we're dealing with the allegation seriously, and their experience is based on years of interaction with us, where we have given them service of the highest quality with the highest integrity, and they judge based on that, not on anonymous whistleblower complaints.
Just a follow-up. Is there any past instance where such whistleblower allegations has happened but did not got leaked and company managed through investigation, finding it nothing material in those allegations and has been resolved?
Absolutely.
It has happened as well?
Yes.
Okay.
We get whistleblower complaints all the time. We resolve them, and in some cases, if there's some action to be done, we take action. In most cases, there's no action to be done, we close it. It doesn't go to the media.
Yeah. Hi, sir. Madhu from Centrum. This particular instance has gone to the media. Could we take any legal proceedings of the person who has done this? No.
Sorry?
Because he leaked the letter to the media.
Where are you?
Yeah, here.
Okay, yeah. Sorry.
The whistleblower letter was leaked to the media, and they tried to create a mischief on the stock price and impact and all that.
Yeah.
We had multiple whistleblower complaints earlier as well. Can we pursue legally on the guy who has done this? Because the investigation is under the process at the company level. That in future somebody doesn't do this kind of events again.
Please understand that both in India and particularly in the U.S., there is very strong protection of the rights of a whistleblower because they rightly believe that if a whistleblower has raised a genuine issue and he's dealing with a company, then he should be protected against the company. This is the understanding that is there. We are not right now in the business of finding out who did it. That would be inappropriate on our part to do that.
We are trying to basically do an investigation by an independent group led by a legal firm as well as two auditors. Our first order of business is to come to evaluating whether there's any credibility or credence to these allegations. I think you cannot go in the business of investigating who's done it. That's not what whistleblower policy is about.
Hi, this is Ravi Menon from Motilal Oswal Asset Management. I had a question about the $50 million reversal that's alleged. Given the stringent controls that you have in place, do you think that the amount being fairly large, it seems very difficult to believe that in a firm like this with such controls. Such a large sum would escape notice. Can we say that in all probability, at least this aspect of the whistleblower allegation really has no merit?
Well, I find it difficult to believe, too. Having said that, I will wait for the investigation report. I don't want to bias it in any way. I think Infosys has very strong processes. Even God can't change the numbers of this company, so I don't know what is expected. Expecting mere mortals to do something, this company has very strong processes. We have an outstanding finance team of people of the highest integrity, and they are actually feeling insulted by these accusations. I don't want to, again, bias the investigation. Let the report come out.
Yeah.
Nandan, this is Pankaj from JM Financial. Among the allegations which were made, one of the things pertained to the large deal signing process itself, with some of the deals which were signed at probably low profitability. Without getting into the merits of allegation, do you think that this is something which requires a more rigorous review of such deals and all by the Board?
What makes you think the Board is not doing that?
I'm just coming to that. My point is, does it mean that this may lead to any kind of delays in terms of, or our ability to participate in the market more, stringent consideration of these deals and all?
No, don't speculate too much. Large deals is an integral part of this firm. The large deals go through a process, and whatever are the margin or other things, go through a process. The large deal policy is reviewed by the Audit Committee. The Audit Committee meets twice a year, full day, on a special audit committee. In fact, they have reviewed this just recently.
I can assure you that the Board and the audit committee are extremely cognizant of the implications of large deals, and we believe the management is fully within its rights to select large deals and see it in the overall context of what needs to be achieved. I think we must let management perform their job. This is not a matter of whistleblowing. Large deals is entirely the prerogative of the company to decide what margin they should take it at.
Sure. I had a follow-up question. There is also a class action suit being talked about, and I think a couple have been already filed. How are we responding to that?
Class action suits are filed. We will respond to it in due course.
Diviya?
You get two questions?
Oh.
I think we're just evening out the women's representation here.
Oh, we're doing it to 10. Make it 10 then.
Thanks for taking my question again. Nandan, what does this really mean, including this and even otherwise, for your tenure and term at Infosys as Chairman?
Tenure? Return? What?
I think when you came back a few years ago, surely you talked about getting to set things in order and stepping back. What is the timeframe you're looking at now?
I said as long as it takes to make myself dispensable.
Right. Does this issue kind of extend that timeframe now?
As I said, as long as it takes for me to become dispensable.
Hello, sir. This is Sudheer. My question is about, if you look at beyond this isolated incident, Infosys is always the company that comes under intense media scrutiny over something or the other, always, and it has been the case for quite some time. None of our peers, large companies, come under such intense media scrutiny. Of course, I do understand and respect the fact that we don't have control what media decides to say about one company and not about the other. Is there any root cause analysis that we have done to understand why exactly this is happening only with Infosys?
Let's say, as you said, whistleblower complaint is a common phenomena, maybe in Infosys in the past and across other companies also. Had it happened with some other companies, it would not have made headlines to that extent. Is there some due diligence which we have done to understand what's going wrong internally in terms of communications with the media and all this media leaking?
No, I would hesitate to use the word, what is going wrong inside. I think for whatever reason, Infosys has had its share of whistleblower complaints. We will deal with them, and I don't want to get into a comparison with other companies. I think we have to do our job properly, we'll do that. Let's talk about business here. Come on. Of course, maybe you can exhaust your questions so at least then you can talk business to my colleagues.
Nandan, let's get into the bread and butter business.
Huh?
Let's get into the bread and butter business.
I don't know if others want to do that. Maybe only you want to do that.
It's important. At the end of it, the distractions come and go.
Yeah.
You are defined by how strong you are to manage these distractions. To keep away from distraction and focus on your business. You guys have built this business over three to four decades. You have your core strength. The challenge today is in the marketplace.
Huh?
The challenge is in the marketplace. How do you handle your delivery, your sales, your offerings?
Well- In that context, I want to ask you about the evolving pyramid structure, because e volving?
Pyramid.
Yeah.
Of the whole pyramid.
Yeah.
How do you create a better pyramid, the relevant pyramid? The correct pyramid.
These are best questions left to management. I think Salil and his team are more than adequately capable of answering that. I can only say at the Board level, strategic level, I have never been more confident of Infosys' ability to perform in this market. There is a major transformation happening in the market, and I talked about that. The whole world is changing. There's no sector of the economy which is not affected by technological transformation and disruption. Companies are now seeing the specter of challenge coming from these new disruptors, and they are really looking for trusted partners who can help them navigate the future.
All the actions that Infosys has been doing under the leadership of Salil and his colleagues is to position us better for that. They have done a remarkable job of that, you can see that in the growth rates, the fact that the company grew four quarters in double digits, every day there's news that reinforces that. I'm supremely confident of a number of things. One, the market opportunity is large because this transformation means everybody has to rejig their systems, become more Agile, improve the consumer experience, I think my colleagues are going to talk about three big trends on what's happening with the cloud, what's happening with data, and what's happening with consumer experience.
These are all big things, I've been in this business for 40 years, I've never seen this level of intensity in change in our clients. That's point number one. Point number two, this game is not a rising tide that lifts all boats. It will go to those companies that get their strategy correct, that will get their execution correct, that will rebuild the skills of their people, that build new services and transform the way they do things. It's about training our people to deal with these new things. It's about making sure that our sales guys can talk the new story.
There also, I can say with extreme confidence that in the last 18 months, there's been remarkable progress in this company. It's all below the hood. It's not Twitter time. It's happening below the hood. This, I believe, is also part of the reason why you're seeing the increase in growth and relevance. I think relevance is a key thing. I think Salil and his team have done a great job in making sure that Infosys is relevant to our customers by actually offering contemporary services and contemporary skills which they need for their transformation. Therefore, I am very bullish about the future of this company.
Yeah, hi. This is Rahul Jain from Dolat Capital. Sir, from a business perspective, do you see that the current level of profitability is a new normal for the kind of Infosys positioning, market condition, and competitive landscape? Or you think we are off the mark given that we've been top of the chart on this metric historically?
No, I didn't get you.
The profitability, you think this is a new normal given the market condition and competitive landscape? Historically, we've been the best on the profitability number. We've been top of the chart, and now we are a little off the mark. You think this is the new normal, or this need to go up?
I think as far as profitability is concerned, I think it's best that Salil and Nilanjan answer that question. As a board, we are extremely comfortable with the strategy that is being executed. I think the first phase of the strategy was becoming more relevant and increasing growth, which has been done. Now the focus is on optimizing that, which is also being done. Board entirely comfortable, unanimous on this.
Any other questions on Nandan?
I'll be here all day if you want. No problem. Please keep asking. Diviya, one more? Oh, she wants. Diviya wants one. On behalf of the ladies.
She says I can keep it. Thank you. I think you talked about contract flows and large deals. Have customers actually come up to you on this issue? I think one of the things that do impact large customers is corporate governance and other issues. Have you had specific conversations with customers around this?
Oh, yeah.
Second part of this question is, you spoke about large deals continuing. Given that large deals have been such a big part of the recovery process for the last 18 months, can we be assured that there's no slowing down or caution on the large deal pursuits as of now?
Well, as I said, as far as we are concerned, it's business as usual. We continue to be remarkably and totally focused on our customers and closing all kinds of business, including large deals. What will be the large deals of this quarter, you'll know on January 11th. I can't comment on that. As far as the customers are concerned, we have reached out to customers wherever required. They have been very supportive. Customers understand these things. Remember, these are allegations. Anybody can make allegations. There's nothing concrete or credible that we have on these allegations. They all understand that this is part and parcel of a business, and they have been very supportive.
Thank you.
Thanks. Hi, this is Vishal Purohit again from Prabhudas Lilladher . Sir, a question on the changing landscape. When you have companies talking of digitization, automation, AI, how do you see the landscape changing for the Indian companies in terms of the hiring profile? Even for that matter, from the Infosys, the legacy, would you be sacrificing some margins to look for the growth ahead?
Okay, you're asking two separate questions. Talk about talent reskilling and you talk about margins, right?
Yeah.
Okay, fine. As far as talent is concerned, we are making massive efforts in reskilling. I think perhaps Pravin will talk about that in his presentation. I think we have made a huge commitment, and this commitment is we're doing it the last one and a half, two years, and I think the results are there. At the end of the day, you have to get your own people ready for the new world. There's nobody out there. It's not as if this market is full of experts on full stack development or what. There's nobody out there. Therefore, we'll do what we always do, which is get the best learning infrastructure, which we have, and you're happy to see it if you have time.
Make sure that everybody goes through the learning, gets certified, and so on. That has been a great success because we have really made it very easy for people to learn. While we will bring in people from outside, I think the bulk of it will come from our own people because they're very talented, they have deep domain knowledge, they have deep customer experience, and they're willing to invest that extra effort to learn new skills. I think the skilling part is okay. On the margin thing, I think it's, again, better you talk to Salil and Nilanjan. Whatever strategy that the management is pursuing is the full support and endorsement of the entire board.
This is Girish Pai from Nirmal Bang. I had a question on leadership. You've had to step out in the last five years to look for a CEO from the outside. Why is it that Infosys has not built a leadership bench internally? What are you doing to rectify that?
I think Infosys has a very strong set of leaders. Of course, Salil is there, Nilanjan, there are many other great leaders here like Pravin, Ravi, Mohit, Karmesh. There are lots of leaders. In the course of the last two years, I've had occasion to interact with many of them. In fact, all of them. I'm very impressed with Inderpreet, who's our Legal Counsel. There's a lot of great people. Even the next level of leaders in our finance team, like Sunil and Deepak and all are great guys. I think we are definitely going to make sure that the leadership opportunities will be available to everybody within before we go out. Okay, have I exhausted you?
Thanks, Nandan.
Thanks, Sandeep. Thank you for the opportunity.
I now request Mr. Salil Parekh, our CEO and MD, to commence his session.
Thank you, Nandan. Good morning and welcome to our Analyst Day. Thank you all for taking the time to come and visit us at our campus. During the day, we will share with you our view of what large enterprises are looking for, confirm our strategic direction and execution focus, and share our plans for going ahead. Before I get into that, I would like to say a few things with respect to the anonymous whistleblower letters. First, as CEO, I have served with commitment and integrity to deliver a major business transformation in a large, complex organization over the past two years.
Those who have worked with me know that I operate with inclusiveness and have no tolerance for divisiveness of any form. I'm grateful and heartened for the personal messages I've received from my employees. I have recused myself from the ongoing process. I respect that the audit committee has started an independent investigation. As the process is ongoing, it will not be appropriate for me to comment on the matters in that area. With that having been said, let me share a few points about the business.
I'm meeting with clients, I'm driving deals, I'm working with our teams, and I'm running the company. I would like to thank the over 230,000 employees of Infosys for keeping their attention on the work we do for our clients. That work has always been the true hallmark of Infosys. I would like to say to our clients that Infosys and I remain fully committed to working with them. My focus is to continue to transform Infosys and prepare it for the next decade. We have a well-articulated strategy that has been approved by the Board.
I'm committed to executing that strategy successfully as we have done over the past two years. I'm happy, after this session in the evening, to discuss any of those points with you. Let me now move to the deck that I want to share with you in terms of where we are in the business. As you heard from Nandan, the real focus for us has been intense client relevance. That's, I think, the difference that we see in the market today. Just want to make sure everyone's acknowledged the safe harbor statement here. If you look at the journey we've had over two years, and a lot of this will be detailed in the sessions throughout the day today.
We actually have a really exciting lab session for you, where we want to showcase to you how some of our real-life projects are working. You have a lot of options. There's about 20 projects, and you can walk through about nine of them. If you look at the growth, and Nandan shared some of this with you, in fiscal 2018, we were at about 5.8%. Fiscal 2019, we jumped it up. Last four quarters, very strong. In good shape. Digital growth, also in good shape. You can see we're consistently driving it above 30%. If you recall at our last Analyst Meet, we'd shared that this is about $160 billion addressable market and growing at about 15%. We're really going well above that growth rate at this stage.
The large deals, Mohit will share with you in a little while, really the engine that's been driven to build that large deals capability. Why is it happening? There are two big reasons. One is the investment in digital. We made a lot of that over the first 12, 15 months of the journey. We have a really very focused large deals engine. We have, I think, one of the best automation stories in the industry, and that helps us, among many other things, driving these things. On margin, as you recall, there was an investment phase. We closed the investment phase in Q4 of last year. It's done.
There's no more new investment. Now the focus is really on operational excellence. There we're starting to see the margin come back up. We have two big levers, and you'll hear from Pravin and Nilanjan on operational excellence and from Pravin on AI and automation as well. That was a story that we've driven over the past two years or so, and we've really delivered the results in how the business is going. Nandan shared with you that we're really more and more excited about three of these elements that I want to showcase to you today. On experience, you'll hear from Ben, who drives all of our business in that area, but really give you a couple of examples.
I'll talk about one. On data, you'll hear from Karmesh. On cloud, Ravi's really transformed that business because it's got a phenomenal growth rate today, and we see that continuing as we go forward. In experience, what has started to happen is we have this concept called human experience, and everything we do in the business today is driven from human experience insight, and that change is what is driving a lot of what we call downstream business. Experience being the first step, with really all of tech becoming then part of what is being driven from human experience.
On cloud, this is an example I really like. This is from one of our large healthcare companies. We've recently started to work with them in the cloud area. We're doing work with them in many other places. Here we've transformed how they can leverage the cloud and benefit from the Public Cloud environment. Working with our tools, our capabilities, and really us building the capability on the Public Cloud infrastructure, showing the value add that we can deliver.
Really a huge benefit. You'll hear from Ravi on the Polycloud thinking as well, which is very unique and new that we are driving in the market. On large deals, again, sort of a summary. We've made a lot of investments. We've really built capabilities. We've built capacity. We've really developed teams. You'll get a lot more sense of that and how that's working. While the large deals number is always volatile, so it's not a fixed number. Every quarter it expands. It's equally critical that the large deals pipeline remain healthy, and we see, and Mohit will share with you, it's a very healthy situation.
On automation and AI, again, as I said earlier, we have, I think, one of the best capabilities on automation. You'll hear more about it, but there's one example I like, which I want to share with you on an oil and gas major that has impacted 40% savings. Of course, some of the savings go back to the client and some stay with us, and this becomes a real supporting factor as we drive our business forward. On driving operational efficiency, there are several levers that are now fully in motion. A few of them are here, like on-site offshore mix, the pyramid, again, automation, and our subcontracting cost.
We think those are levers that we are starting to drive more and more of, and we have some runway for these levers, and that will give us a support for where we think the margin is going to end up in the coming years. On the people approach, a lot has been done over the past two quarters and even before. Here, the focus has been really to engage more and more with our employees, make sure that we understand how the digital reskilling and digital rollouts are working. We've also introduced some stock programs which are broader based, not just at the senior levels.
The outcome's starting to have some impact. We had a reduction in attrition in the last quarter, and we think that trend will continue, and we think that we will have some control over the outcome there in the coming quarters. We also built, as you recall, maybe from last year, I talked about localization. We started to build digital delivery centers in U.S., in Europe, in Asia. We're recruiting quite significantly in colleges and campuses in those markets. This is also in addition to the recruitment we do in campuses in India, which is about 15,000 people in the last 12 months.
We're also building digital studio capability that Ben will showcase to you and how that's working across the globe. In summary, at least from my perspective and how I see the business for growth, we have two big levers, our digital capability and the large deals engine, and we think that gives us some traction in the market. For margin, we have AI automation, we have our operational excellence and efficiency parameters. All of this under the goal of really intense client relevance that we want to keep pushing, making sure that we are meeting with them, making sure we understand where they're driving the business.
You'll see from many of the examples throughout the day, but also from the lab visit that we've organized, that showcases the intensity that we have with clients. With that, we hope to leave you, as we wrap up this evening and maybe before or after the Q&A, with a sense that we have the building blocks that can give us some traction on growth.
We have the building blocks that can give us some traction on margin. What we've achieved over the last two years is something that we think we can now execute on an ongoing basis as we go through the next several years and make Infosys more and more ready for the future with our clients. I'll stop there. The Q&A for all of these sessions is now condensed into the afternoon as we close the whole day. My colleagues will go through a number of different areas, starting first with Pravin. Thank you.
Good afternoon. Warm welcome from my side as well. I will spend most of my time in this session talking about some of the transformation initiatives we have taken in the last few quarters to drive operational efficiency. Please hear, [inaudible] . This is a brief snapshot of some of the key operational parameters. As you can see, most of these parameters are stable and vary in a very narrow band. We had concern around attrition for some time. In the last quarter, we have seen some progress, improvement in attrition on the back of some of the interventions that we have done.
Attrition has dropped by 200 basis points to 19.4% in quarter two, and voluntary attrition is much lower, under 18%. Similarly, on onsite ratios, it's 50% improvement. It's 28.2%, and it's perhaps one of the lowest we have seen in several quarters. Utilization also has improved by 180 basis points, 84.9%. Most of the operating parameters seem to be in a very stable and good range. As we are navigating our clients into becoming Live Enterprises, we have also started taking a deep look at our own internal transformation, our own ability to sense, our own ability to understand, our own ability to react to changing market dynamics.
We started this journey with the following key objectives. We said agility and speed is important. While we're a 200,000 people company, we need to have the agility and speed of a startup. We need to have the ability to respond to changing situations in real time with almost zero latency. We need to have better ability to tap into various ideas that are resident, ideas, thoughts within the organization in a much better way, so that there's always a constant flow of ideas. We want to make sure that we collaborate well so that we bring the best of Infosys to our clients.
We also want to focus on automation in everything we do, so that people can focus more on dealing with the clients, dealing with their own people, and also spending time on their own skill upgrades. In the last two quarters, we have looked at all aspects of our business. We are reimagining employee experience through digital mobile apps and computational design principles. We are reimagining business process using sentient principles. We're also reimagining the ecosystems by embedding artificial intelligence and automation into the enterprise cloud so that we evolve as a learning organization, and we are able to react to some of the insights and inputs that we get with changing market dynamics.
As part of reimagining the experience, we have optimized over 100+ applications into four mobile apps. Today, all key transactions and services are available on these four mobile apps on the go. We are seeing tremendous adoption of this. More than 45% of the critical transactions in the last few quarters have been enabled to these mobile apps. One of the things we have done is we have simplified employee onboarding. Over 30,000 people are benefited, the new employees have benefited from that, using our Launchpad application.
This makes onboarding very simple, paperless, We handle the new joinees even before they join all through their getting into joining and the joining formalities, We have seen significant adoption of this. Similarly, we have talked a lot about our next generation learning solution, Infosys Lex. We have over 200,000 people using Infosys Lex today. We have 850 courses available on Infosys Lex. On an average, we have found people spending about 40 minutes every day learning through Infosys Lex. InfyMe, the third application, InfyMe is a personal productivity app. All these transactions that an individual does on a day-to-day basis, it could be applying leave, it could be filling their work sheets, it could be uploading contract documents, it could be filing for travel requests and so on.
Today, they have the ability to do through InfyMe app. Likewise, one of the new things we have started developing is InfyWork. Some of the complex transactions which may involve teamwork, which involve project management, will be enabled through InfyWork, and that's still in the works. Net, we have seen, as I said, tremendous adoption of these mobile apps that we have created, and over 40% of transactions are today transacted through mobile apps. When I talked about these apps, we have architected these apps as platforms. We have developed these apps as platforms in a very modular way, and we have developed using open source technologies.
We have also architected them in such a way that they are able to scale using cloud-native technologies. One of the advantages of doing this is some of these apps today are relevant to our clients as well, and it's possible for us to sell these apps to the client. We have already seen the success of Lex. We launched the Infosys Wingspan about a year back on the basis of Lex, today we have more than a dozen implementations. Likewise, we are seeing a lot of interest in InfyMe and some of the other apps. The fact that we have developed that platform gives us a tremendous opportunity. In fact, in our client event, in September in U.S., we launched the enterprise suite of Live Enterprise Suite of applications, which are fundamentally driven by these apps.
One of the other things we have done is, as I said, these apps we have built through components, all these components are resident in our own service stores. The other thing that we have done is, we have also built telemetry into each of these apps. We have good level of observability. Essentially, whenever someone is using the app, we can look at not only the usage of app, but also the user behavior. This gives us powerful insights to figure out what features are working, what are not working, and what do we need to do enable greater adoption. The other thing that we have also started doing is we are creating what we call as Infosys Knowledge Graph.
We are mapping all the knowledge that is resident across the organization in various silos. We are linking them together and in real time. Now if you are able to bring in automation AI on top of it, then it is possible for you to orchestrate some of the insights. As and when some event happens, it's possible for you to orchestrate and give meaningful insights and for you to act on this. That's a journey we have undertaken in terms of enabling the platform. On the talent side, we looked at all aspects of work, workforce, and workplace. We have created digital tags. These are tags which indicate specialization in some next-generation technologies like blockchain, cybersecurity, and so on.
For people to get these tags, they have to complete a learning path. They have to get certified and work in these technologies for six months. Now we have already created about 38 such skill tags together, and we have seen very good adoption. We are also now redesigning job roles at middle management levels on the basis of skills. Basically, these are specializations either in domain or technology. We have also started creating bridge programs. This gives us an opportunity for people to pursue a career in newer areas.
Like if someone wants to be a technical architect or a power programmer, we have created all these bridge programs which enable people to do a transition into those career opportunities. At the middle manager level, we are looking at creating a skill tag. Sorry, not a skill tag, a skill index. This is basically a measure of a person's skill, experience, and knowledge, and it's a single composite index, and this gives you the ability to see who's good in what skills. We have started looking at it. We have also started focusing on a lot of employee mobility. We are opening up jobs in our internal marketplace. We are encouraging people to apply. We are removing restrictions for people rotating out from products and so on.
We are creating a very vibrant ecosystem where we are giving opportunities for people to skill themselves, take ownership of their own growth, exposing them to all the opportunities that are available, and enabling them rotation so that they are able to hone their skills and able to work in technologies of their choice. I briefly touched upon the Infosys Knowledge Graph. Just to repeat, all the transactions that happen between people, between employees, customers, partners, and even devices, we are now capturing all this in real time, and we are calling it Infosys Knowledge Graph. Sometimes we are also calling it as Digital Brain of the enterprise.
We have this rich knowledge, and using this knowledge, and as I said earlier, using AI and machine learning techniques, we are able to get very meaningful insights. We are able to use these insights to improve the business processes, making them more efficient, creating newer opportunities, and so on. These are some of the benefits that we have seen through our process optimization. We have digitized the recruitment process.
Now we have sped up the entire life cycle of recruitment, right from assessment, interview, as well as placement, has dramatically reduced. Our background check process, we are seeing 50% improvement. With the result, the time taken to fulfill is much faster and is translating into higher revenues. Similarly, the other thing that we have seen is the project set-up time. Infra setup time used to take a long time. Using this technique, we have been able to bring it down significantly by 90%.
There are many such examples, but these are some of the outcomes we have seen through some of the business process optimization that we have undertaken. We are also seeing massive embrace of the Agile and DevOps in the enterprise. In the last two quarters, we have significantly invested in developing and scaling our own Agile and DevOps capabilities. We have a massive enablement program. Today, about 88% of people, both across delivery and sales, are enabled on Agile. We have created our own DevOps platform, which we have open-sourced. In the recent DevOps Industry Forum, we won five awards, the largest award won by any DevOps platform in that thing.
We are also investing in a lot of third-party tools, open-source tools. We have also created some customized frameworks for different types of DevOps and Agile work. We have 15+ such frameworks available. We are also articulating our Distributed Agile methodology. It is getting good traction in the market. This is about bringing the best of Agile practices and best of global delivery model. The fact that we are also investing in this local innovation hub also is a very powerful thing in terms of positioning our Distributed Agile team.
We are seeing good traction. We are also transforming the workplaces. All new workplaces are Agile-ready, and we are also in a very phased manner converting our existing workplaces also into Agile-ready workplaces. We are also focusing on automation in a big way. Nandan talked about it. Salil talked about it. We are focusing on automation in everything we do. Our approach to automation. This is not only automating for stuff we do internally, but it's also automating for work we do for our clients.
It's one of the reasons where we have been able to counter the commoditization we are seeing in the run side of the business. We have seen tremendous success, and that allows us to be competitive when we go after large deals and so on. The mantra we use when we look at automation, anything we do is we have the standard mantra of eliminate, optimize, and automate. The first focus is to look at the task at hand and see whether we can eliminate it. There are many redundant steps in a particular process. Can we eliminate it? Can we look at the root cause and fix the root cause? That is the first approach. If you're not able to eliminate, then you start looking at optimizing.
That the process becomes much more efficient. We use lean techniques here to help us in the optimization. If you are not able to eliminate the optimized tasks, then finally chosen for automation. Today we have seen about 22% efficiency gains in the applicable projects where we have used this approach. We have also seen about 17% of FTE repurposed onshore, whom we have been able to release from current projects due to automation and lean, and we have been able to repurpose in other projects.
We are also creating a bot factory where we are able to deploy bots to do some of the mundane work, some of the respond to queries, do some health checks, and so on. A lot of focus on automation, and it's been one of the success in the last few quarters. As you can see, we are trying to reinvent ourselves so that as an organization, we are able to operate and innovate like digital natives. I'll just leave here with a small video to show some of the things I've been talking about, and you'll see more of it in the living lab later in the day. Video, please.
[Presentation]
Thank you. Over to Nilanjan now.
Yeah, morning and welcome to Analyst Day. Thank you for taking time to come from various parts of the country to Bangalore. Before I start, I would just like to make a short personal statement. As to the whistleblower allegation, I have recused myself and respect the process the company is following. I wish to state that in my professional career of 30 years, I have always held myself to the highest standards of integrity and values. Coming to the presentation, my theme of the day is increasing shareholder returns. As we started the year, and let me just go through the safe harbor, hope all of you have been through this.
As we started the year, our building blocks of shareholder value creation, we had laid this out in our equity deck. I think at the base of it is the market which we operate in, whether it's some $250 billion or $2 trillion, give or take, we are a very small size of this market. Therefore, as Infosys, we always need to think of ourselves as a challenger, as an entrepreneurial company to go and increase the market and increase market share.
Salil has already talked about this comprehensive and intense client strategy which we have in the last two years and how we are making progress on that. The four pillars of our digital strategy, which was scaling advanced digital, which was about reskilling, which was about energizing the core, and which was about localization. Pravin has also talked about that. The third layer, of course, is about do we have strong financial and operating metrics?
You have seen some of the figures coming out of Salil's presentation, and you'll see that later on the day as how we made progress on various financial and operating parameters, including relating to cash and shareholder value generation. You are aware, we announced our new capital allocation policy, a lot of feedback during the past few years about excess cash and returning cash back to the shareholders. We've upped our capital allocation, as you know, during the year in the new policy. Finally, the pinnacle of this is how is it all playing out in terms of shareholder returns over this period.
I think underpinning all this is a very, very strong ESG framework around environmental, and you are aware of our carbon neutrality objective, a strong corporate social responsibility, and the brilliant work we do with Infosys Foundation. The epitome of it all is a strong corporate governance framework which all of us in Infosys pride ourselves in and which is a bedrock of this company. The revenue and margin trends over the last few quarters, like Nandan mentioned, this is the fourth consecutive quarter of double-digit growth. In terms of margin, we have seen the investment, and we talked about it last year, the investments we made around reskilling digital, around beefing up our sales force, around localization.
As we are moving into 2020, and our margin, as you see, at 20.5% in quarter one, at 21.7% in the second quarter. This is a good base for us to improve and look in our towards our margin guidance for the rest of the year. When we look at overall the margin headwinds in this business, I'll just go back a bit. We had two large headwinds which all of us in this industry faced, and it's something not new. It's over a period of time. One is, of course, pricing pressure from clients, whether it's part of new deals or it's part of renewals or discounts.
There's always some sort of headwind on pricing. The second, of course, is wage inflation, right? Largely on the offshore side because of interest rate differentials, the wage inflation in offshore. These are two headwinds largely the industry faces. How does the industry and how do we in Infosys look at this and chart our map in terms of how do we look at various cost optimization levers which we have? Many of these are familiar to you. Many of these we are looking at in a new lens, which I will share today.
The largest part of our cost structure, although the efforts, as you see and you know and saw from Pravin's deck, about 28% of our efforts sits overseas or what we call on-site. About 72% sits offshore, which is largely in India. The cost structure for all this is the inverse, right? Most of the cost of that 28% is actually on salary sitting overseas, whereas the offshore salaries are much smaller part. If you need to fix your margin, a biggest lever which you have is how do you continuously look at your on-site salary cost, right?
How do you continuously optimize that? The on-site offshore mix is something which we continuously work on. Projects come with a certain on-site offshore mix. What we do over a period of time is make sure that we continuously move work from on-site to offshore. We move work to nearshore. This could be different for new projects. It could be different for core projects. It could be different for digital projects. This is something which we continuously do, and there is a few years in terms of the on-site mix from nearly 30% in FY 2017. We're now at 28.2% in the last quarter.
The famous pyramid. Everybody asks about the pyramid. The way we look at it, there's an on-site pyramid where the most of the costs lie. It is a top-heavy pyramid, right? That's number one. Number two is the bottom end of the offshore pyramid is more like a battle shape, and that's something which we intend to correct. What are we doing in this regard? One is we are increasing the fresher intake at the offshore base. Much more flattening and broad-basing the pyramid at the bottom end.
This, we believe, will also help in attrition because we will get more growth opportunities for people from our JLC to move up, and therefore should also help in attrition. That's number one. Number two, as we announced the localization strategy last year, and which was centered around the hub, we believe now that with hiring freshers and college graduates in on-site and in the U.S. We can actually create a full stack pyramid in on-site as well, which we think is very unique in this industry. I think we are pioneers in this as well.
That will help us both in terms of getting our cost structures much more manageable and, like I said, on the offshore side, making it much more broad-based and, of course, hopefully will also reduce attrition. Another lever which we've already talked about was the key lever, the automation and lean. Pravin has already mentioned about it. I think the crux of this is actually first we need to fix our processes because there's no point automating a broken process. We do this so well for our clients. We save them millions and millions of dollars.
This is something we have to do with internally as well. Therefore, we have a lean and automation team which works cohesively together, both in looking at simplifying processes inside the company, and at the same time making sure we are continuously automating and taking out people from many of these projects and deploying them elsewhere. The subcon track, I think this is a favorite question of many analysts, is what is a subcon animal? Many projects, as you see, that they come with subcon. Why do we have subcons in this industry?
This is a phenomenon you see across most of the players. Three big reasons. One is, of course, that there is shorter recruitment times. Clients want resources faster, whereas you may not have the recruitment time to recruit as fast. It could be because certain skill sets which you want in a certain geography are not available immediately. Thirdly, it could be also because they're shorter duration projects. If you see, these are the reasons why we have subcons inside. What we are doing differently now, earlier we started looking at this at the wrong end.
We were trying to control the number of subcons we were trying to hire, and that really started telling on our revenues. Now we have really turned the tables and saying, we should actually look at continuously onboarding and replacing and converting subcons into the company so we don't have a loss on the top line, but yet we are continuously converting our subcons, either getting new employees in and replacing them or making them as employees. I think this is something you would have seen in our Q2 as well, that our subcon costs have moderated in the last quarter as well.
Operating leverage, I think for the size of our company, this is something which definitely should play to our advantage, is are we getting the benefits of scale with our size? We have made investments, like I mentioned last year, around SG&A costs, and that we believe is behind us. In FY 2019, we were about 12%, and in Q2 2020, we are at 11.7%. We are seeing some benefits of scale and synergy there. The other is utilization. I think this is something which is very important. While we talk about we have an 84%, 85% utilization, the reality is that's because we have a portfolio.
If you start now looking at utilizations and the way we have to measure it is across geographies, it's across service lines, across practice units. In a way, it's N=1 . We need to manage our utilization at that level. That's a very benefit which we have at large practices. In application development, we will have large headcounts, and probably in a fledgling business, we will have a low headcount. That's the whole idea of a large portfolio where we can balance both fledgling practices as well as have our large practices delivering higher utilizations.
This is a new track. We've called it under cost optimization. This is something which we've just started some work on. Of course, pricing has always been at the centerpiece of a lot of the work the industry does. I think first is how do we position ourselves with our clients? I think the discourse with our clients does not have to be the lowest price because we don't win because of the lowest price. We win because our solutions are delivering the maximum value to our clients. And I think that's the way the discourse should be with our clients, is how do we ensure that we maximize value for the client?
And that's at the heart of whatever RFPs or the pitches we do is, how are we transforming the client's landscape and delivering them the savings, the revenues which they are looking for? And that differentiates us. Coming after that is, of course, our pricing per se is number one, do we have digital rate cards? Are these nuanced enough to talk about experience, talk about proficiency, talking about skill sets? Are they dispersed across all the sales teams? Are they part of the sales pitch? Do we have a governance structure on the way we manage pricing? Do we have guardrails around discounts? Do we have pricing analysts?
These are whole list of work streams which we are looking at across the company, and this is something we're just looking at to start off with. The idea is not that we're going to get percentage increases across the board. We just don't want to leave money on the table on digital skills where there is a lack of talent and skill shortage, and that's what we are trying to look at. These are just some of the levers which we've talked about. We have a dedicated program manager now. We have a Senior Vice President who's leading the entire cost optimization track, works with Ravi and the delivery team very closely.
We have nearly 21 tracks across which we are looking at cost optimization. I'm just taking you illustratively around five, six of them. Our goal for this year, we're looking at between $ 100 million-$ 150 million of optimization as the year goes on. The second part of improving shareholder returns is how would we look at cash, because that at the end, as the older date goes, cash is king. The two things I want to really call out is about taxation and CapEx. One, of course, as we said in Q2, after the new tax regime was announced.
For the India rates, we are currently around 23%, and the new tax regime is closer to 25%. We have a transition plan over a period of time where we can migrate to the new tax regime, number one. Number two is, of course, our CapEx. As you know, the new SEZ policy is also getting sunset on March 31st, 2020. That will also reduce our CapEx intensity in terms of building infrastructure for our SEZ. And number two is also as we look at becoming more asset-light, we will look at make and buy decisions, rent or buy decisions as well in that light.
We have a lot of infrastructure capacities across over the years which we have built, which we are looking to threat more and more as we look at our go-ahead plans. We have some CapEx which are in flight, which we will get to over this year and next year. Broadly, we are looking at making sure that our overall cash drivers continue to be pressing the pedal on all of them. Our M&A strategy. I think our M&A philosophy, I wouldn't call it a strategy, is basically hinged on three broad buckets. Number one is complementary digital skills. Our entire strategy is dedicated on digital transformation for our clients, therefore, if you see our M&A strategy, the first plank is, of course, are we looking at acquisitions in our Digital Pentagon.
On the right side, you can see our biggest acquisitions across the last few years has been Fluido. We have Stater. We have Ben from WongDoody right here, and Brilliant Basics across the Digital Pentagon. Second is we will look at consolidating market share opportunities, which may be opportunistic, and that's something we will also look at in our strategy. Finally, if you see any synergistic client-specific assets, and a classic example of that is HIPUS in Japan, which we read about earlier in this year.
We have a very, very robust post-integration framework model of how do we integrate these companies running with us, and that's working pretty well. How do we have reverse synergies both ways, synergies not just flowing in from the target and acquisition company to Infosys, but even from Infosys back there. That's something which is well ingrained. Finally, as you know, we have kept some money in our capital allocation policy for tuck-in M&A, as required. We also have, of course, a very, very strong balance sheet in terms of cash today. Enhancing shareholder payouts.
This is something over the years, as you have seen, our progressive policy in terms of increasing dividend distribution. If you see from FY 2014 where we were giving up to 30% of net profits, we have upped that this year in July to up to 85% of free cash flows over five years. We have already given an interim dividend, which is about 14% year-on-year. I think this is something which we keep continuously hear back from shareholders is that if we don't need the cash, give it back. That's exactly what this reflects. Any excess ideal cash in the company was also returned in the last two years. We finished the INR 8,260 crore buyback as well this year.
That's a progressive improvement as you see and a more predictable as you see a cash payout. Finally, Total Shareholder Return. This is the pinnacle is all of you is how do we do with our industry peers. This is over the last two years since the strategy was launched. This is against the leading peers of an industry. Up to September, we were number one. Of course, we went after that. We are still number two over the last two years in delivering total shareholder return to our investors.
That's something which we have actually ingrained in our philosophy of management compensation. We think we are one of the first companies in India to use global best practices of aligning management compensation with shareholder value creation in terms of the new RSU 2019 plan, which we think is a benchmark in terms of how we look at this. This is pretty much what I had from my perspective. Of course, later in the afternoon, we will look at Q&A. Thank you.
Thank you, Nilanjan. I have 15 minutes to give you a broad sense of our sales transformation agenda, and then talk specifically about the large deals program. If you think of it in terms of time, given the fact that over the past 12 months, we have done about $9 billion in large deals. In approximate, roughly about $600 million for every minute of my talk and $10 million for every second that I will be on the stage. Just to talk broadly about the broad sales transformation agenda, and then we'll dig in specifically into large deals.
The overall sales transformation program that we have, where we made a sizable investment, as Salil mentioned, over the past 12- 18 months, was focused on three very specific things that we want to achieve from a results perspective. The first is obviously large deals, and we'll be talking about the metrics for large deals. There's also a significant focus on account expansion. This is a focus on our strategic accounts, our largest accounts. What is the most important over here for us is to get a level of strategic relevance for the largest companies in the world. The focus also is on making sure that we increase the number of large accounts that we have.
We want to focus on increasing our market share in these clients. We want to focus not just on performance as measured by account growth or account profitability or strategic deals. We also want to focus on health. We want to focus on making sure that for the large accounts, that we have the right account structures, we have the right delivery teams in place. This is a significant portion of our sales transformation agenda. The third focus from a market participation perspective is really on new account openings.
We want to make sure that we do a much better job in terms of hunting for new logos. We want to make sure that the proportion of revenue that we get, which is net new, both in year and over the long term, increases. We want to make sure that the accounts that we're opening are our priority accounts. We want to make sure that hunter compensation and compensation across the board for our sales teams is very clearly linked to outcomes that we want to drive towards, which is open priority accounts, increasing the net new and long-term revenue we get from these clients. These are the three market-facing strategies from a sales perspective.
Obviously, to achieve these, we've been very focused on changing the nature of the sales organization within Infosys, which is to focus on recruitment. What are the kinds of people, what are the kinds of skills that we want within the organization? Then making sure that the people that we have, we have an extensive program of training and reskilling to enable the organization. While I'll be talking here today specifically about large deals, I just wanted you to know that the overall sales transformation program has a much more ambitious agenda. We've spoken about large deals when we met in April of last year.
What we've said is that our thinking around large deals is that what we deliver to you on a quarterly basis in terms of a win total contract value is really a multiple of two things, right? It's a multiple of the pipeline. How are we able to drive a much larger funnel? How are we able to drive a much larger pipeline? Over here, the focus is on direct sale, but also making sure that we're reaching out to the channels, right. Making sure that we're working very closely with advisors, with influencers, with private equity firms, and with really almost everybody who can help us increase the size of our pipeline.
The second focus is on improving our win rates. If I look at the first six to nine months of the program, it's really much easier to influence the win rate first, right. Because the funnel takes a longer time to build up. For the first nine months, we were very focused on improving our win rates, improving our processes, making sure that we had a very clear and credible strategy for every single deal, making sure that the involvement of the senior leadership team was very high, making sure the quality of our proposals was uplifted.
Over the past six months or so, we have now pivoted to making sure that we're equally spending time on building out our pipeline and specifically creating a very large proactive deal pipeline for the entire organization. This is the strategy, and like I'd mentioned in the context of new account opening and in the context of account mining, we have very clear internal targets for each of the metrics that I speak to you today about. The first thing that we really did was to build a centralized team of experts.
This is important for us. We realized that if we build this team, then we can really get into almost a rinse and repeat model, right? Historically, we had significant expertise in closing accounts, in closing large deals within accounts, right? We have some of our largest client partners, and they have a significant amount of experience in closing these deals, but that knowledge was really lost to the rest of the organization. Creating a cadre of deal directors, people who have worked on $1 billion+ deals, making sure that within the organization, they are the face of Infosys to our clients, and that they're taking their expertise, one from a single deal into multiple deals.
The centralized group of deal directors was created. We made sure that the influencer team that we have, right? The one that works with the analyst firms, the team that works with private equity firms, the team that works with the likes of an [IC], for instance, that they are very focused on large deals. Historically, they've been focused on a number of things, right? They've been focused on getting our messaging out around geo expansion. They've been focused on our messaging around digital. We wanted to make sure that this team is also focused primarily on our large deals agenda.
We built up a large team to supplement our legal team of negotiators because we realized that in the context of a large deal, you can sometimes have fairly sharp discussions with customers, and we wanted to make sure that we shielded our client services team from these discussions, and that the legal expertise and the pricing expertise was available in a centralized team. We expanded our knowledge portal. We made sure that our presentations increasingly have a lot more show and a lot less tell. Building interactive artifacts, building specific materials and specific collateral for large deals, making sure that every single large deal, while it's templatized to a degree, that we're bringing something new, creative, and eye-catching for every single transaction was important.
This is the people investment that we've made. This is the global team of experts that we've built. Again, I feel that the cumulative benefits that we will get from this, now that we've got the wheel turning, I think the benefits that we will get in the future from this will be very significant. We've also started investing significantly in creating proactive large deal teams, and this is important. This is important because we're building out industry-specific virtual teams. What you see over here is a smattering of our agenda across multiple industry groups. In our business, a lot of teams are horizontal, right? Ravi will be talking about the cloud.
We've previously Pravin has spoken about the fact that we've invested heavily in AI and automation from an application maintenance perspective. We want to make sure that for each industry, like if I take financial services, for instance, there's a very clear focus on risk management. There's a clear focus on lending. There's a focus on core transformation. Within our telecom business, there is a focus on 5G. Within utilities, there is a focus on grid modernization and indeed grid decentralization. Karmesh and his team in the consumer business have been focused on the opportunity that we have for digital transformation around the S/4 conversion that we're seeing in many of our clients.
We're building out specific themes that we can take to our clients around key business issues. These themes take the form, most simplistically, of a point of view that we've built. Building on that, we have built accelerators that are industry-specific. In some cases, we're even looking to see if we want to build platforms around key industry opportunities that may be there for us. This is, again, a significant proactive investment from us and will help us increase the size of our funnel and, as Salil mentioned, make us much more strategically relevant to each of our large clients. We've been trying to make sure that we build a culture of a team that is winning consistently in the marketplace.
This word cloud that you see over here, this actually comes from a specific feedback that we have taken from our clients and specific feedback we took from deal advisors for all the deals. The deals that we won, the deals that we lost, on what it was within the Infosys proposition that made them select us. You will see a number of things. You see responsiveness, you see localization, you see a strong delivery organization. The key thing is trust. The key thing that came to the forefront was trust. Over time, we have built the identity as an organization that has execution excellence. I think over the past 18 months, we have also built an identity around an organization that can help our clients deal with digital disruption.
The example that we speak about, that I'll be talking about, a very client-specific example should hopefully give you a better flavor of this word cloud. When we look at our large deals and we try to analyze about the key things that we have done within the last 18 months to drive a much larger TCV. I think senior leadership commitment is a critical thing. Everybody in the organization, with Salil, with Pravin, now Nilanjan, me, Ravi, Karmesh, we've all been involved in large deals from the very inception, and I think this is a key differentiator. We see many of our peers where senior executives get involved at the level when it comes to providing organizational commitment.
We have been involved in large deals from the inception so that the client is very aware that we have worked through the life cycle of the deal. I can tell you that in many, many deals that we have won, this has made the difference between winning and coming second. I've spoken about the transformation solutions that we've built, the investments that we've made in building out a significant partner ecosystem so that now we have a flying formation that goes together for a large deal rather than Infosys individually.
We have been creative in the deals that we've structured. We've spoken about the joint venture model where we signed on three joint ventures with Temasek, HIPUS, and started with ABN AMRO. There is a comprehensive strategy, and there are some key elements that have resulted in our wins. I think the growth trajectory is very obvious. Like I mentioned, $600 million in TCV for every single minute I'm on the stage. A 77% increase in overall signings for the first half of this year.
This is on top of the fact that we more than doubled last year in our win TCV. The growth trajectory, I think the numbers speak for themselves. Other important point is the diversity of the deals. If you look at the kinds of deals we won on the extreme left-hand side, I just want to point out a couple of flavors for your attention. If you look at public sector wins, this is very new for us. Historically, we've not been a major player in the public sector space, and large deals in a public sector context is something that we haven't done.
We are now bidding for and winning public sector deals across the world, in the U.S., in the Asia-Pacific region, in Europe, and I think this is a key theme that you will see in the future. You look at IT as a service and large scope IT takeover, what this really means is we've always done this for the larger firms, for the large banks, for the large insurers, for the large telcos. Now we're also doing it for the medium-sized firms that are essentially giving us all of their operations and technology to run as a platform. Ravi will be talking about the cloud, the cloud has been a very significant component of our win agenda.
Every single infrastructure deal that we have bid for and won in the past 12 months has had a component of a virtual private cloud or a public cloud. You look at the distribution across sectors, it's a very healthy distribution that largely reflects our revenue profile. You look at the distribution across geographies, North America is clearly predominant. Look at Asia-Pacific. The Asia-Pacific share that we have of large deals is actually larger than our revenue share from that geography. This is a high-growth geography, and I expect that you will see this trend continuing. I just want to talk about a significant deal that we won.
This is over $300 million in TCV for a large American healthcare client. The deal really had three components. There's a component of application development, there's a complete apps takeover, and there is an infrastructure component of the deal. All three were three separate RFPs, and I'm happy to say that we won all three. The reason we won this, again, there are many factors. Clearly, we had a commercial proposition that was attractive. Clearly, we had a level of commitment from all of us in the organization. Clearly, there was a solution that was robust.
Importantly, I think we took the time to understand the client's agenda, and the client was very clear. The client was very clear that they were looking at this as a significant market enablement. They were concerned that technology was really holding them back from meaningful cost reduction. The fact that we had to achieve not just operational metrics, but clearly medical management metrics. If you look at any payer firm, if you look at any insurer, the benefits that they can get from doing medical management much more sustainably is much higher than any cost savings or operations savings that you can give for them.
To that extent, the work that we were doing to improve, for instance, their auto adjudication, to improve the pre-authorization process, to improve the revenue adjustments that they have to make, was much more meaningful for them than our automation or AI, for instance. Clearly, having this comprehensive story, which included an infrastructure transformation, a move to the cloud, a really reimagining of their entire medical management processes, helped us win all the three RFPs within this client and effectively become the dominant partner for them for their technology and operations. Finally, look, the future is changing.
The future is changing, and I believe that we have a very defined and successful approach to the large deal business. Clearly, we'll be tweaking it as we move to the future. Nandan and Pravin both spoke about the Live Enterprise piece. This is going to be a key technology differentiator, I believe, for us. The fact that we have specific recommendations about the tech stack of the future are going to be very attractive to all of our clients as they look to give out large deals to modernize their platforms. The fact that we have a very successful localization story with specific physical locations in the U.S., in Europe, in Asia- Pacific, that we can take them to is going to be a very key differentiator for us. Finally, I feel that the learning piece.
The learning piece is something that our peer group hasn't emphasized enough, and this is a very significant differentiator for us. I was in Asia- Pacific for a large deal pitch yesterday. Our pitch around the capability uplift that we have brought to our organization and the capability uplift that we can bring to their organization and their communities is resonating very strongly. Clearly, the work that we've done around people, the work that we've done around building a winning culture, the work that we've done around incentive alignment and senior management focus has worked. As we introduce new elements like localization, like Live Enterprise, like our learning capabilities, I'm confident that we'll be looking at a very successful future for this team and for the company. Thank you.
Hi, I'm Ben Wiener. I'm the CEO of WongDoody. We are an experience company that was acquired by Infosys about 18 months ago. For the next 15 minutes, I'm going to throw a lot of marketing jargon at you while you nap after lunch. First, some legal jargon. This is all safe harbor. As I mentioned, we're a human experience company. We develop next-generation customer experiences that are hopefully beautiful and intuitive and turn customers into loyalists and turn employees into employees for life.
Because in a world where technology is becoming increasingly commoditized and where consumer expectations are ever ratcheted upwards, experience is often the only differentiator companies have left. In the interest of making this a good experience, I'm going to eschew some PowerPoint in favor of a video that I hope wakes you all up a little. Let's play that.
[Presentation]
I would have played it a little louder, but they wouldn't let me. We're a part of the emerging experience ecosystem inside of Infosys. In North America, we take the lead with design and experience. We have our counterparts in the United Kingdom and Europe where we use Basics, and all of this experience sits on top of the massive digital delivery capability of Infosys. Sure, there are lots of other agencies out there are experiences practices out there, but nobody's sitting on top of the talent pool of 1,400 engineers who can deploy the Adobe Experience Cloud.
Nobody's sitting on top of thousands of data scientists. We bring a level of scale and technological credibility to the experience practice that's unrivaled. Just a little bit of marketing jargon. Now, experience is what matters to customers. It makes them seven times more likely to buy, 15 times more likely to share positive word of mouth. This really is a battleground in a sea of parody products and parody services where people are competing. The reality is eight out of 10 companies have a stagnant CX rating, and it's low and stagnant, not high and stagnant. CX has not really evolved. If you think about the first time you got a text message from the airline telling you your flight was delayed, it was really, really cool.
Now, you pretty much expect that to happen. You expect to be able to deposit a check from your phone. Every single expectation that you have is ratcheted up by the last good experience that you had. You can now, I don't know if this is good or not, you can now apply for a mortgage in the U.S. with the exact same number of clicks as it takes for you to order a pizza during a television commercial while watching a football game. Really complicated complex financial transaction, hundreds of thousands in debt, as easy as ordering a pizza. One of the reasons we have so much stagnation in CX is because everybody's walking around with the same user journeys.
They sit somebody down in front of a computer, they ask them how to solve a problem, and they design experiences based on a very narrow context. We take a much more expansive view of the world. People don't stop being people when they go to work and start being people when they leave again. They come to work in an Uber, they order their lunch from a Postmates, and yet many companies are making them sit in front of the same unusable, boring, cumbersome screen for eight hours a day, being unproductive. Consumers don't think about digital shopping and physical shopping anymore.
They walk into a Nordstrom, and they expect a level of personalization that's equal to what they get on nordstrom.com. When they go onto nordstrom.com, they don't expect the exact same bathrobes and pajamas and shoes in a box. They want some element of that Nordstrom experience to translate over. How we bridge those experiences seamlessly is how we create human experiences. Behaviors follow expectations, and expectations are constantly being raised. The winners, the people who build great experiences, get rewarded with data.
Karmesh's going to talk about this right after that, but data is the holy grail, and the way you get data is you build really good experiences. People use really good experiences more. That gives you more data. The insight you get from that data builds even better experiences, and you start a virtuous loop of continuous improvement. You see two elements to building great experiences. The first is insight. With Infosys, we have built a proprietary agile insight platform called the Motherboard. Big data is great, but qualitative data is the holy grail to understand why people actually do things. Nobody's really innovated the process of gathering qualitative data until now.
We have a proprietary platform populated by thousands of consumers who have opted in to provide us with market research in almost real-time, segmented by people who make financial decisions, segmented by people who have young children at home. We can put almost anything out to our community and get feedback back from consumers, whether it's helping a client evolve their D2C strategy by testing price elasticity around new business models, whether it's pushing the MVP of an application to test usability, whether it's asking on behalf of a chocolate manufacturer which of two flavors is more appealing.
We can get answers from consumers literally overnight. Because of Infosys, this platform is now AI-enabled. We can send consumers to the supermarket with their cell phones. They can upload video. It will be transcribed in real time. The next feature that we're adding, thanks to Infosys, is consumers will be able to take a picture of what's in their fridge or what's in their medicine cabinet, and AI will recognize the brands and products that are sitting there, what they're adjacent to, how much ketchup is actually left in the bottle, and give us real-time glimpses of what's going on in the home of the American consumer.
The other element to building great experiences, and this is kind of soft, is creativity. How do you judge creativity? It's kind of subjective. It's in the eye of the beholder. The reality is some experiences are better than others. Some things are more beautiful, more intuitive, more usable. We've been able to build an experience practice that has earned vast amounts of creative recognition globally. We've received 74 awards in the last two years for experiences that we have built. Yeah, okay, results are more important, but this creative recognition is what allows us to attract and to retain the best creative talent inside the Infosys [Fintech] ecosystem, that produces great work for our clients.
Creativity is what enhances our end-to-end differentiation. You guys know this. Clients or our customers, they're looking to do bigger, more impactful work with a fewer number of partners who can truly enable their transformation journeys. They're not just looking for IT service providers. They're looking for vision and execution that will help drive their ability to compete in this highly disrupted world. By bringing creativity and insight to the front end of the Infosys sales process, we've been able to differentiate and we've been able to win.
A client that hired us recently shared that they felt like the legacy consultancies walked in with the exact same user journeys and said, "We're going to do for you what we did for our other seven clients." We brought some unique insights and a unique creative approach that differentiates us. Lest you think that creativity is too soft and fluffy, what begins with strategic insight, evolves through a marketing workshop or a human experience workshop, turns into a prototype through design. Before you know it led to $50 million or $60 million in technology implementation revenue without an RFP. Creativity and experience are business drivers, too. I'm going to share really briefly a couple stories.
One for a global apparel brand. They were kicking butt on every front, online sales, brand equity, every measure you could look for, except for their loyalty program. Their loyalty program was under-penetrated, and loyalty programs are really important because when you sell through wholesalers, the only direct view you get of your customer is your loyalty program. The thing with loyalty programs is most of them kind of suck. You sign up for something, and basically, you trade away an endless amount of spam in exchange for some meaningless loyalty points that you never redeem. It's hard to sign up for. We created a loyalty program that you could sign up for in the store from a piece of apparel using a QR code.
Instead of rewarding you with points, we rewarded our fashion-forward audience with exclusive merchandise and access to customization that wasn't available to anyone else. For a giant oil and gas company, the competition for petroleum engineers is fierce. They needed to build employee preference. They wanted to create a seamless, consistent, global employee experience that answered the important questions of our time, like how does onboarding work? How do I let my boss know about maternity leave?
What black hole did my expense report fall into? We moved a whole host of different HR applications onto one single platform that saved money from an HR implementation perspective and delivered increased employee satisfaction. Another area where we see massive demand is helping clients figure out what to do with their legacy real estate. Every bank has more branches that you don't need to go into because you can deposit a check from your phone and apply for a mortgage while sitting in front of TV.
That real estate isn't going anywhere, and so we need to find ways to create a new life for physical spaces in the digital realm. It's not just banks. It's one of our clients, which is a giant telecom provider, has thousands of stores. They're merging with another one that has even more thousands of stores. What are they going to do with that real estate when they're done? Drugstores and healthcare insurers coming together to create the front line of primary care in a place where we used to go buy beef jerky. These are the kinds of things that we're helping clients grapple with through our retail innovation practice.
Last but not least, for a giant European telecom, we integrated all their different lines of business into one application. They sell broadband, and that used to live over here. If you're a broadband customer, there's an app for that. If you wanted cable service from them, there was another app that you had to go onto. If you wanted to manage your phone bill with them, there wasn't even an app for that, yet you had to go to the web to do that. They had no singular view of their customer, and their customer had no singular way of interacting. From a data and marketing perspective, they couldn't serve up a next best action. They couldn't serve up a next best offer.
They couldn't cross-sell. In the world of telecom, cross-sell is everything. We moved all of those disparate applications and platforms into the palm of the consumer's hands and created a centralized marketing data repository on the back end that increased the efficiency and the uptake of offer management. What lies ahead is more growth and more scale. We've opened up a host of new DDCs this year, and we have built extensive offshore capability, well, onshore for you guys, in Bengaluru and Hyderabad, where we have talent pools of creative that live offshore at an offshore cost structure that you can deploy through an agency model.
We have a new pipeline for talent through years of liberal arts colleges producing junior designers, junior data scientists that we can deploy in a host of models. A traditional agency model, our expensive, slow, old way of working, but also creativity as a managed service, building hybrid offerings customized for each client where they get the services they need at the cost that they want. Lastly, experience requires different kinds of collaboration inside the enterprise. Marketing people can't build great experiences alone. They need technology.
CTOs can't build great experiences alone. They need marketing people. Those two organizations are on different floors, different buildings, different cities, have never talked to each other. They don't know how to come together to build the next generation of experiences. That's an opportunity for Infosys to own thought leadership in this area. We launched the C+C Awards, which is a platform for recognizing the best collaborations between CTOs and CMOs. We'll be handing out our first awards next fall at Confluence. In the meantime, though, we'll be sharing best practices and thought leadership around that collaboration through a series of events, through some proprietary research that's being launched at the World Economic Forum, and through extending the presence of Infosys in spaces where it hasn't been.
Getting in front of CMOs who are the buyers of the future at places like the Association of National Advertisers and the Cannes Lions Festival of Creativity. Lastly, we're doing our part to help tell the Infosys story more broadly. Having been around for 18 months, this is a company that's way too humble about what it's done. In working with the Infosys marketing team, we're telling our story a little more proudly and a little more loudly as we help our clients Navigate Your Next. Thank you.
Good afternoon, friends. To safe harbor, I'll just pause for a moment on this. What I'm going to cover is the whole arena of insights. World over, enterprise data is growing. If you look at the entire digital universe for enterprises, for governments, for economies, data is growing exponentially. The stats that you see here, growth projected from 40 ZB- 175 ZB. These are difficult units of measures, but just to put things in context, 1 ZB is 1 billion TB. The latest version of iPhone X, which comes with 256 GB of memory, is equivalent to you need four iPhones to have 1 TB .
That's the scale we are looking at. This growth is happening in all the leading industries, in all the leading economies. If you just look at the transaction volumes that are happening world over, all these transactions are leaving a data footprint. Not just transactional data, which is structured, but a lot of unstructured data as well, which comes from interactions, which comes from engagements. The other big indicator is really the way the cloud economy is growing. The volume of data that's migrating to cloud is growing at seven and a half times as compared to the volume that's moving to on-prem, obviously on a much lower base.
In a sense, every enterprise is becoming a big data enterprise. All this data is of little use if it cannot generate actionable insights. That's where the big opportunity lies for us at Infosys, because all the 1,300+ clients that we work with, where over the years we have cultivated deep, intricate knowledge of their applications, of their data, of their integration, of their infrastructure. As these clients are beginning to prepare themselves to combat the digital revolution that's happening, and they need such actionable insights to create value in the economy, we are helping them in shaping these insights at scale, at speed, with efficiency, and bringing the right level of governance.
We have a structured approach for this. This is not something which is a easily executed service. It requires complex engineering skills with good domain knowledge, with good people change skills, because most of the client enterprises are not geared up to imagine how they would operate with such insights. This is the framework that we are using to take our clients on the maturity journey of becoming a insight-driven enterprise. The foundation layer is really focusing on creating the speed, scale, efficiency, and governance, which I just talked about.
Once that's in play, where the entire data engineering has been created such that the diverse sources of metadata in the enterprise across legacy systems, mainframe systems, more contemporary technologies, are all being ingested, harmonized, standardized, and are available for consumption, it then creates opportunities to exploit new avenues of demand. Those could be looking at new micro markets, new customer segments, and it's creating opportunities in all the industries that we are working in, whether it's in banking, utilities, telecom, consumer goods, retail, healthcare, and so on. Once these sources of new demand are created, it then creates the opportunity to seek avenues of disruption in that industry.
The disruption comes in different formats. We are helping our clients to collaborate with their competitors. This is happening in utilities and telecom. We are helping our clients to start competing with their channel partners. This is happening in consumer goods, in retail. We are helping clients to enter adjacent industries and drive these disruptions. As we progress on this, with the power of insights and with the power of experience that Ben talked about, it then leads us to a stage where we are able to create new digital journeys. These could be new digital journeys for the consumers and customers, for the employees, or for the various functions in that value chain, be it marketing, be it supply chain, be it sales.
The biggest disruption comes in the last stage, which is the augmentation by new technology evolutions. Some of you would have seen in the living labs downstairs if you visited the 5G booth, that as 5G comes into play, we would have far greater opportunities for augmented reality. We would have far greater opportunities for consuming video data at scale and using that for decisions. This could be relevant in many industries, be it telecom for field services, be it retail in stores, be it consumer goods to monitor territory performances and so on. Underlying all this, there are a number of multipliers.
The time value, because as these new data technologies and cloud economies are maturing, and we as the end-to-end systems integrators are helping design these new paths, we are bringing the time component down. We are injecting more speed. The time to convert data to knowledge, new dictionary semantics that are beginning to come into play. Many of our clients are beginning to find new consumer segments which they had never imagined before, new market segments which they had never imagined before. Often it's leading to new products or new service ideas. This is broadly the framework with which we are trying to help elevate our clients' value chain in becoming more competitive, in helping them create better differentiation. I'll walk you through two case studies.
One is in the context of a retail bank, another is in the context of a fashion lifestyle retail chain. This is one of the top 10 banks in the world. Like most banks, 70%, 80% of their enterprise economy runs on legacy technologies, vast majority of which is mainframes. Mainframe systems are quite important to the functioning of these large banks because they provide good resilience, they provide good computing power. They are not that effective when you are competing with a data native, digital native bank, which is emerging through the fintech revolution. This client has 750 PB of enterprise data.
That you can put them in the top 5 percentile of the companies in the world in terms of enterprise data that they're managing. This comes from over 20,000 applications in the economy, with 200,000 users spread across the globe in multiple countries. They rely on 400+ commercial softwares, which are used to ingest data, mine data, process it, generate insights, generate reports. Reports could be for various purposes, for sales, marketing, regulatory risk compliance. They have over 1,000+ business processes that are relying on these reports, some running in real-time, some running in batch mode. Credit card check, credit card fraud checks, etc .
What we did over the last 18 months is conceptualized a platform which will be hosted on the cloud, which will be cloud agnostic, which will provide a meticulously engineered capability, which can ingest data from any source on any technology, which with minimal human effort, can help transform that data to be hosted on the cloud, taking care of all the requirements, both from a regulatory and compliance perspective. Data lineage is important, accessibility of data is important, all the aspects which are important for a bank to function smoothly.
We build this capability where nearly 50 PB of the 750 PB load has migrated with complete data lineage, with complete traceability into the origins of data. We have designed this to be cloud agnostic, so it could work on Google Cloud or AWS or Azure. That provides them with cloud contestability, so they're not locked into one cloud provider. They could be moving workloads from provider A to provider B. We've done this in a manner where many of their expensive commercial softwares are now being retired.
Those are being retired with absolutely no risk to business continuity. We established very strong data telemetry, so this really gives the power of observability to look at avenues where you want to improve compliance, where you want to mitigate risks, where you want to improve your new product innovation ideas. In many of these areas, we've achieved a 50x improvement in cost, time, and efficiency. Most importantly, what this has done, it has given a platform on which new business ideas, new innovations can now be conceptualized, designed, and executed with speed.
This bank recently launched for attractive customer segment where they were not operating. They were able to launch a offering within six months. Under normal circumstances with their legacy landscape, they would have taken two years. That's the power of this platform. The beauty of this platform is that it's been created in a manner where a lot of these assets, we have agreed with the client that we will broad-base it in the industry, not just in financial services industry, but other industries. That way, we will help improve the performance for this client as well.
These are some of the tangible savings that we have generated. Now, you can imagine for a global bank, the need to track liquidity and report that to improve the performance in various segments of the bank. That used to be a 16-hour window. It's come down to less than two hours. It significantly improves their performance of supply chain on capital. Earlier, if they were migrating workloads, and if they had to take 1 PB out of 750 PB, just the sheer design engineering effort involved would require them close to five to six weeks. That's come down to two days. There are commercial savings on the analytic capacity for processing 1 PB of data, as well as further commercial software tools.
This platform is something that we are seeing as our opportunity to help many other banks reduce the cost of modernization, many other companies in other industry also to benefit from these assets. We're already having conversations now with few consumer goods and telecom companies to come on board on this platform. I'll move to the second case , this is a case of a fashion lifestyle retail company, $25 billion in turnover. Three years back, we started the journey with them to harness the power of consumer insights. They were at a stage where approximately 5% of their sales was happening in direct-to-consumer form through their e-commerce channel.
They had about 50 million registered consumer users. All the insights about consumers were scattered across different applications, some sales applications, some marketing applications. There was some element of maturity in doing personalized marketing, but it was not good enough. Working collaboratively with their marketing teams and technology teams, we designed a construct which we internally call it as the Consumer Genome. That, in the last three years, has helped achieve the performance which you see on the right side, with online sales jumping to $3 billion.
They've grown at least 20% faster than the peer group companies in the industry in terms of online sales. In this industry, the faster growth you have in online sales, the greater value it creates on your market capitalization. It helps improve the average order value because there's a lot of intelligence built into driving personalized offers, personalized interventions, personalized marketing, all in real-time on any channel, and that helps improve the propensity of their target consumers to come on board.
This will give you an illustration of how every activity or every interaction with a consumer through the prospecting, engagement, conversion life cycle is being converted into a digital data footprint. That digital data footprint is a mix of structured, unstructured data, which is meticulously housed in a global consumer data lake, where we have now close to 120 million consumers with up to 5,000 attributes per consumer.
These are now being fed into a number of intelligent algorithms, through which all the marketing channels are activated to create better moments of truth, better moments of joy across the life cycle of a consumer. This will give you an illustration of how in this industry we measure performance on digital channels in terms of the conversion cycles. Every year, we have been improving the conversion ratio by about 30 basis points. The best in the industry is 2.2%. We hope to outclass that in the next 12-18 months.
A number of initiatives are underway. Just to give you a feel of the kind of interventions that are happening, there are consumers who are trend followers, who buy a merchandise looking at what others in their peer group are doing. When they are coming browsing on the mobile app or on the e-commerce site, they get to see statistics like the bottom left of number of people currently viewing the product, or number of times the product was purchased in the last 24 hours. The Consumer Genome that we've created, it helps mine the psychographics of that consumer, that what kind of experience should I render at the time a purchase decision is being evaluated.
There are consumers who are trendsetters, who want to do something unique. For them, if they bought a shoe, how do I give them a lookbook which shows them with other similar adjacent merchandise and give them a feel for it? These are some of the innovations we are doing. There are many others that we are doing on edge computing. We are quite confident of helping raise the performance on the digital channels for this client. Most importantly, a lot of this experience is something that we are extrapolating into a Consumer Genome framework, which we are extending to many other clients in similar industries. The patterns are reusable and repeatable.
In a nutshell, our data and insights practice today, we are servicing clients in over 20 industries. 500 out of our 1,500 clients are being serviced, so there's a significant headroom for growth in this space. This space gives us a significant premium because all these services require specialized skills. Clients are able to see the value it creates in their P&L and balance sheet, and they're willing to pay the premium. Today, we have 24,000 professionals in this economy and 1,000+ data scientists, and this is one of our fastest-growing practices. Thank you.
Good afternoon. I don't have a great reputation of staying on time, so they put me on the last session, so I don't have much choice but to finish it on time. We'll try to make it very quick. Let me just start with the safe harbor very quickly. If all of you are tracking the digitization of landscape across the world, the cloud is the single biggest opportunity underneath the digital transformation journeys for clients. Just to set a context, and I'm gonna give you a few numbers so that you can kind of understand the magnitude of what the cloud opportunity is.
If you see one of the analyst reports, a very popular analyst report, by 2023, 50% of the enterprises across the world or 50% of the GDP of the world would go through some level of digitization. Any products and services you consume would be 50% chance that they would be from an organization which has gone through a digital transformation. That is $50 trillion of total GDP, that would take roughly $5 trillion in the next five years to digitize those organizations. Of the $5 trillion, if you assume at three in a year, this opportunity is half of it, which is roughly $500 billion a year is the cloud opportunity underneath the digital transformation journeys of clients.
It kind of relates to what Infosys is going through as well, right? If you look at the digital services of Infosys, 50% of the digital services fall in the Accelerate bucket, which is actually where the digital journeys of cloud are. Why is it that the cloud is so critical in digital journeys? Let's step back and look at what enterprises look at when they want to digitize. They want to make their cost variable. They want to take their application landscape and rationalize. They want to monetize their data. They want to actually take all that ERP, which is on-prem in a large way, and move it to the cloud.
They want to actually build a layer of industry solutions, apply AI and automation on top of it, and customize the consumer experiences, which Ben spoke about. All of that, the underpinnings of that is actually with cloud as the focal point. That's the reason why the spend on the cloud is significantly higher if you take the value chain of digital. In fact, if you compare large enterprises with digitally native firms, one of the biggest differences is about the innovation network digitally native firms have.
A lot of the innovation framework is actually built on the cloud, and that's the mindset change which you want to incorporate to actually be digital. A couple of years ago when we looked at the cloud opportunity, it did look like the opportunity is actually for the hyperscalers, as we call it, like Azure, AWS, Google Cloud. They seem to have actually held that opportunity. If you go back to the enterprise software era, where for every $1 of software spent, there was $3 of system integration services, the preconceived notion was system integrators don't have a big role to play. It was roughly for $1 of spend, $0.30 for system integration services.
A lot of analysts asked me this question, saying, "Does the era of system integration go away because of the advent of cloud?" Contrary to that, the value proposition of Infosys is to actually take $1 of cloud spend and create $3 of system integration services. That is because we are pivoting not just on migrating the workload into the cloud, but also transform the workload, take on-prem enterprise applications, move them onto a SaaS model, convert them into platform as a service, apply AI and automation. Underneath of it is operations of the cloud and the data which is actually there. How do you actually enable it, scale it with the cloud?
That gives you the opportunity of almost every $100 million of subscription, around $300 million odd of services. With that context, the cloud opportunity for Infosys has actually ended up being a force multiplier. What we've also done, we've taken a cut on the private and the public cloud space. If you take the $500 billion of spend of the cloud, 2/3 of it is on the public cloud, and 1/3 of it is actually on the private cloud.
The private cloud space is growing at 50%, while the public cloud space is growing at 14%-15%. One of the things we believe, if you take a stack of applications and a stack of systems, the systems of record and the systems of parity, as I call it, there are five levels at which you can break a stack of systems. The systems of record and the systems of parity are forcefully aligned, are very favorably aligned towards the private cloud.
The systems of engagement, differentiation, and experience or innovation is actually aligned towards the public cloud. The Infosys strategy is to actually create a hybrid cloud environment for clients. I think 70% of the clients we interviewed actually believe that that is the way forward. In fact, 80% of customers actually say that they have a multi-cloud strategy, and the Infosys opportunity is both on private and public cloud. One of the exciting opportunities on the cloud is the large pools of enterprise workloads with ERP systems and package applications.
In fact, the SAP landscape, just as an example, only 8% of it is actually on the cloud, and 8% of it is actually moved to S/4HANA on a public cloud. Actually, around 92% of the balance is not moved into the cloud because there is not enough cash, enough money available for clients to actually repurpose it. The proposition from Infosys, and we want to replicate this across every ecosystem which is available on enterprise cloud applications, is to bundle cloud subscription, enterprise license, and Infosys services, and flatline the cost, take out the cost from the existing estates, and repurpose it for transition into the cloud and transition into S/4HANA.
In fact, SAP mentioned in their quarterly results two quarters ago that by 2022, they want the entire estate of SAP to be on S/4HANA, and they're going to stop enterprise support on their core platform. Infosys was actually quoted as one of the providers, actually the only provider, which is going to use this bundle of SAP and Azure and Infosys services to be actually delivered as one single bundle. The ability to make it cost neutral and flatlined is the proposition of Infosys.
Why do customers want to do this? That they can expose that entire SAP architecture to AI and automation to their Leonardo platform which is where they build their AI and automation, to their Fiori platform, which is where they build their experience layer, and their data platform through a bunch of acquisitions they did. They are unable to do so because of the lack of modernization of that landscape, and this is going to allow them to do so.
The big opportunity for system integrators, if you pivot on transformation, is to take cost out of their existing estates, create extremely attractive constructs by bundling with license of enterprise software, as well as subscription from the cloud, and then transform those workloads and build a proposition which is cost neutral but gives them significant value and gives them a roadmap to go to the digital world. What are we doing about it? The 3x potential I spoke about is the reason why the bet on the cloud is the biggest in the era we are in.
We're building a bunch of things around this ecosystem. We're building strategic partnerships, we're building API microservices, we're building a set of assets, we are converting enterprise on-prem applications into platform as a service and infrastructure as a service. We are actually propelling the value to come out of this transition to the cloud. As a part of this journey, and I did speak about how there's going to be a dichotomy between the private and the public cloud, we've created a Polycloud layer.
It's a cloud management layer, which kind of sits on top of multiple cloud, heterogeneous, disparate cloud ecosystems around it. This layer almost manages the cloud ecosystem underneath. It not only does make it interoperable, but it also takes the best of breed of different cloud ecosystems, and you could actually build a best-in-class hybrid environment. It gives you the telemetry, which Karmesh spoke about, the ability to sense what's happening around the cloud ecosystem and configure and calibrate it accordingly.
Thereafter, create a smart catalog so that you could actually almost like a glass pane, kind of configure the way you want to. The Polycloud now is a platform from Infosys where we've taken all our assets on the cloud, and we've kind of actually built it on top of existing cloud ecosystems. I'm not going to go through the assets, but we have a bunch of assets we've built, and we believe any large enterprise should be orchestrated through the Infosys ecosystem. The pivot of cloud transition and cloud transformation is no longer with the subscription players like Azure, AWS, and Google Cloud, but it's actually with Infosys and companies like Infosys.
We want to actually pivot and orchestrate that whole mechanism to transform those workloads into the cloud. Here is the analyst feedback. 38 out of the cloud ratings, 20 of them were in the leadership quadrant in the top one or two players. For the first time in the last 15 years, we actually became the Microsoft Global Alliance SI Partner of the Year because we had the largest influence of Azure consumption by any provider across the world. That has never happened. That's because we took a strategy of transforming workloads and making that a path to the digital journeys of clients. That has actually taken us to the consumption on every big public and private cloud player in the market.
We are in the top one or two players on influencing cloud consumption, and we are orchestrating it for large enterprises where we actually control their estates, and we have an opportunity to actually transform them. I'm going to speak about one case study. It's about a global auto major. They sell 3 million vehicles every year. This is a procurement platform which is on mainframe. They have 6 million auto parts from 1 million suppliers with 4,000 buyers which are actually using the procure-to-pay platform. With the transition to electric vehicles, the speed at which you have to onboard suppliers, the speed at which you have to actually take new orders, and the life cycle for auto parts has actually shrunk.
The speed at which you have to do straight-through processing has initiated a mechanism to create a cloud-enabled, mobile-first, procure-to-pay platform for taking $100 billion of spend. We just got $1 billion of spend on this platform and to scale it to $100 billion of spend. Because most clients today are building these systems which are scalable, and they can actually go down and go up based on market demand. The ability to reduce lead times, the operational efficiency and high buyer productivity, and 80% is touchless procure-to-pay system in this particular client. The ability to do this, enabled by the cloud, and this is enabled on S/4HANA on Azure. I'm actually going to run a video from a client to talk a little bit more about this case study. Can we run the video?
[Presentation]
In summary, the cloud is the single biggest digital opportunity for Infosys because we're not looking at this as a migration play. We're looking at this as an orchestration play. We're looking at this as a pivot to do transformation. We're looking at this as the ability to take customers through the journey to be digital fast enough.
We're looking at it as an ecosystem of partners where we orchestrate and we control the narrative for our clients. That's the reason why we're the number one Azure consumption company on the planet, and we would continue to be in the top league for cloud transformation services in the market. Thank you. Bye.
We're commencing the open house session now. If you wish to ask a question, please raise your hand and we'll provide you with the mic. Since the event is being recorded, kindly name yourself and your organization before asking the question. Once again, please restrict your questions only to the business part, since Nandan has already addressed questions on the visible aspects earlier in the day. Okay, go ahead, Sandip.
Hi. Sandip from Edelweiss. One question on the digital thing. First of all, thanks for the very good set of presentations throughout the day and very efficient demos. Just one question to you, Salil. The proportion of digital has been increasing continuously because it is the only business which is growing at a very fast pace across the industry, and we see the opportunities in digital is very significant.
Only question which is there that, at this proportion, at this growth, then why we are not seeing that 15%, 16% or 18% growth? Is it true that some portion of the legacy piece is shrinking quite fast? At what stage of that shrinking is that legacy piece, whether it will stabilize here or it will continue to be replaced by digital? What is your sense on that?
We shared last quarter, 38% of our business is now digital. It was also growing at just over 38% in that quarter. We've shared specifically numbers of where the core is and what the rates of growth or stability of core are right now. We don't share an outlook of what the core growth going forward is. Clearly, there is intense competitive environment and some level of commoditization in that business.
Our focus is mainly to make sure that the digital continues to grow at a rate which is above the market growth for that business, and that helps us to drive overall the growth of the business. We've not yet looked at least from an external perspective, where the core is and where we think the evolution of the core is going on in the three or five-year horizon. We've simply looked at it more in the annual horizon.
Hi, this is Kawaljeet Saluja from Kotak. I have actually three questions. The first question that I have is on large deals. I think Mohit made a fascinating presentation on large deals. The question that I have is that what percentage of the large deals that you have won are RFP based versus proactively shaped deals? How the margin profiles are different between RFP sourced deals versus proactively shaped deals, and what are the efforts that you're taking to increase the proactive nature of these large deals in the overall mix wins?
From an eventual outcome perspective, a significant percentage is still an RFP base. Your chances of winning in an RFP based deal, if you are able to feed in those large deal ideas in the client on a proactive basis. Many times, we approach the clients with a proactive basis in terms of talking to them about how we can take cost out and how to help in modernizing their estate. Eventually, based on their own context and other things, sometimes it lands into an RFP thing. If you are upfront, if you are proactive in terms of shaping some of the thoughts, then your chances of win rate is significantly higher. I would say still a significant percentage would still be an RFP thing.
The second question I had is on consulting. I think there was a restructuring or there was a reorientation plan for the consulting team. There was a new leader as well inducted in Infosys Consulting. Can you just walk us through the progress made in making consulting back to a robust growth limit again?
With consulting, a couple of things have happened. One, we started to focus essentially on scale markets and new services. Second, there's a lot of focus on how consulting works more jointly with the rest of the organization, where it starts off in consulting, much like we start off in digital or in experience, and then we see downstream impact. That has helped us, especially as Mohit shared in some of the large deals, we have a lot of consulting insights that come in, and that then start to help us shape how the large deal profile is.
Sometimes we do modernization exercises, sometimes large programs, whether it's on SAP, whether it's on S/4HANA, on some other areas, which starts with consulting. We've also taken the opportunity to now focus in more on markets where we have some scale and grow that and pivot the capabilities into more of the digital areas. The progress is quite good. In fact, if you see internally, we feel that consulting is starting to come back to a more stable business. We now want to ensure that margin expansion within consulting continues, and the growth starts to come back as well.
Hello. Yeah, hi. This is Devanshu from Emkay Global. My question is on margins. Nilanjan, you indicated about $100 million-$150 million of cost savings through operational changes you have brought in the organization. How much of that has already been realized in first half of FY 2020, and how much are we going to realize in the second half?
Yeah. As we are sitting, we are halfway through the year. We also mentioned in quarter two, we got about 110 bps improvement due to various levers on utilization, cost efficiency from Q2- Q1. We are roughly about halfway there already in terms of incremental year-on-year savings. Of course, we will look for the rest of the year, how do we push that up. Our current outlook, like I said, is between $100 million, $150 million.
Okay. One more question on margins. Pravin, you indicated about tracking the capability index of mid to senior level employees. Later, Nilanjan also talked about broadening of the pyramid. Are we indicating a change of roles for mid to senior level management or some involuntary attrition here? Thanks.
We are on a continuous journey to upskill and reskill workforce. As Nandan also talked about, and we have seen that common thread across all presentations. With all the changes happening, it's important for us to start reskilling, upskilling. Historically in our industry, in the past, there was a lot more value for people as they grow up. Managing more people was where we were placing more value. In today's world, I think people have to be much more hands-on. There is a lot of effort in terms of reskilling, a lot of programs to enabling middle management and so on.
That's what we were talking about. Some of the skill quotient is something we have started experimenting because that gives us a better ability to deploy the right people in different engagement based on the skills and so on. One of the effort is obviously if you have better skilled people, then your ability to deliver more value and ability to extract more value from the client for these people also improves. I don't think there is any relation to letting go people or anything. I think what we have seen in the press is really a speculation.
There is absolutely no planned layoff or anything. Every year as a high-performance organization, we do performance reviews, and as part of the performance review, we obviously focus on involuntary attrition as well, if particular people are not scaling up. There is tremendous amount, its idea is not to let go people. There is tremendous amount of investment we are doing in terms of reskilling people, and it would not make sense to just let go people because of it.
Hi. Good evening. This is Sudheer. My question is to Pravin. Firstly, thanks for that interesting presentation on the supply side aspects. There has been a lot of focus on in terms of reskilling and training, et c. Over the last four years, if you actually look at the average per capita training man months or training effort as reported in the sustainability report of Infosys on an annual basis, it has been showing a consistent decline.
How do we actually read this dichotomy? Is it because of the fact that the gravity of the employee pyramid is actually moving to the mid-level, which is why there are fewer pressures and hence the training effort is lower? Because some of the training effort, which is actually administered through digital and online channels, like the 40 minutes per employee which you mentioned, is not actually being captured in what you typically report in the annual sustainability report?
Most of the effort, when we talked about Lex, right, our next generation learning platform, is something which is probably one year in play. That is what has really given us the ability to broad-base our training capability. Today, our ability to train people irrespective where they are, is much more significant because of platform like Lex. As we have said, we have curated the best-in-class content. People can access it anytime.
We also talked about those statistics. This is a one-year effort. At this stage, I'm not sure whether we are counting what people have learned through Lex on their own versus what we have administered. I will have to probably go back and respond to that question. The fact is, all this transformation in terms of reskilling and other things is probably a one and a half year journey.
Yeah. Hi, sir. This is Madhu from Centrum. How has been the experience with WongDoody and Brilliant Basics? Sometimes when we see when services firms acquire these consulting firms, typically there is attrition at the high-end level. What are we doing to retain this top management of WongDoody and Brilliant Basics in terms of ESOPs and incentives?
As you heard, Ben was sharing earlier, the ecosystem around experience has been massively uplifted within the company with WongDoody and Brilliant Basics becoming part of Infosys. One interesting statistic, the attrition within WongDoody is actually reduced after the acquisition by Infosys, which is a positive signal. I think anecdotally, what we are seeing is the opportunity set that the individuals, whether it's within Brilliant Basics or WongDoody have, with the huge access to the large enterprise client base of Infosys with 1,500 clients, is massive.
That's where we're seeing the multiplier effect of scaling it up. In addition to that, as Ben was sharing with you, there's a downstream effect of building more scale digital businesses in terms of experience and not just digital marketing focus. That's giving us a lot of growth opportunities. At this stage, we see the growth trajectory positive with both of them. They have different capabilities and different geography focus. We are now working to make sure that we can scale that massively across all of the Infosys ecosystem.
Yeah. Sir, one more on the onsite offshore mix. We mentioned that as a significant margin lever. When digital is growing at 30% YoY, and digital typically tends to have, at least in some projects, tend to have higher onsite. How easy is to get this offshore mix at overall portfolio level?
The idea is, if you step back and look at how we're looking at the business, we want to make sure that we deploy our growth ability, which is through digital or large deals effectively. At the same time, make sure we optimize the overall business. We have to find ways, which is what Nilanjan was sharing on the onsite offshore mix, which are more in our core services as well.
Even what Ravi was sharing on cloud, for example, we want to make sure that those areas become much more operationally efficient. If you look at the data business, which is still a very digital business, we want to make sure that that's also operationally efficient. The real challenge is to build a scale business at this level of growth, yet keeping our economic model in good shape. That's where we are working very hard.
Yeah. Hi. This is Sandeep here from CGS-CI MB. I think Pravin's presentation has mentioned that 17% of the FT actually got repurposed. That looks like a big number. First, I want to understand over what period of time this has happened, but the same does not get reflected into the margins. By what time you believe that incremental saving on this base would actually flow into the margin? This looks like more a client push rather than a pure proactive automation kind of a push. The second question is in terms of the digital pricing. By what period of time we believe that this could be a definitive margin lever rather than a hopeful margin lever?
On the automation and the 17% FT release. See, the reality today is, every client across enterprise is looking at cost takeout on onsite of the business, which is still a significant part of most of us, ourselves as our competitors in this industry. There's tremendous pricing pressure, tremendous commoditization happening. Despite that, because of our efforts in automation, we have talked about what we're doing in automation. That has really helped us in terms of not only counter that impact, but also make sure that we run a profitable business and continue to have ability to invest in business.
You have to look at that 17% savings from that perspective. Because when we are winning the deals, we are winning in a very competitive situation. At the same time, through our efforts, despite winning in a competitive situation, we are able to improve our price points through automation. In the last one year, the 17% we are talking about is the efforts in the last one year where we have seen about 17% of FTEs we have been able to release in on-site, and we have repurposed them in other projects. That's what we have said there.
On the digital pricing, first couple of points, I think in the question before, just to clarify, on-site offshore mix is still coming down with digital growing, and that was the real approach we've put in place. As Pravin was sharing on the 17%, there is pricing pressure and also some of it is shared with our clients. On digital pricing, it's something that we are very keen to look at and start to get the value, as Nilanjan was sharing.
We are now starting that initiative internally. We've not yet formulated when the impact of that is going to come in. The idea was to make sure you see that we have some cost operational levers, and we also have some value operational levers, which we're going to deploy, and that will help us to give us some protection on how the margin evolves.
Yeah. Hi, this is Abhishek from Elara. Mohit had a great presentation about mining of customers as well. The data point I'm trying to understand is if you look at the last four or five quarters, the year-on-year growth for top customer and top 2- 10 customer has been moderating, and top is declining. What answers this dichotomy? Thanks.
Our approach in terms of mining the accounts is we have really looked at your top 100 accounts, and we have identified accounts where there are opportunities to improve. Our focus has been on those top 100 accounts, and some of them may be in your top 10 accounts, some of them may be outside your top 10 range. Second one also, some of these also vary quarter- on- quarter. Sometimes your top 10 accounts grow much faster than our average growth and sometimes slow.
We don't see any secular trend there. Our effort is to expand beyond your top 10, 25 accounts, and then look at our top 100 accounts and see how we can mine better, and some of this could potentially be your growth engine for the future as well. That's what when we talk about focus on mining account, it's not necessarily your top account or top 10 account, but it's across a much larger client base.
Okay. Just a second question. You mentioned just now that the on-site mix is reducing despite digital contribution rising. Is there a change in terms of project starts, versus two years ago where the on-site digital projects used to start very on-site centric versus today where you have seen offshore centric digital projects?
I think even in the past when we look at earlier days when we had ERP programs or something, in the initial phase, we used to have a lot more on-site, but later on when you execute the other parts of the life cycle, you could have a good on-site offshore mix. Digital, in the last two years, people have started embracing Agile in a big way. Earlier the thinking was Agile means only on-site. Through our Distributed Agile methodology, we have very clearly seen how Agile can be executed in an on-site offshore model.
I think in the last two years, data clearly shows while our digital has grown, but our on-site ratio has been in the same range or we have actually reduced our on-site range. Today, I think even most of the digital projects can be executed in an on-site offshore model. Most of the projects get executed in an iterative way. It's not necessary that you have to have a higher percentage of people on-site.
Yeah. Mukul here from Haitong. Another one for Pravin. I think quite a few interesting data points you mentioned today. Pravin, you mentioned that 30%-40% of the delivery effort in couple of projects have been automated. Can you help us with exactly what portion that contributes of overall business? Because if you look at revenue per employee or employee onboarding, this is not visible there. Second, from a whole company point of view, from a one to three year perspective, where do you think this will stabilize at?
Far, we have focused on large programs, large projects, which are typically fixed-price projects. Our automation efforts, when you look at the automation universe, that's where we have focused on in the last year and a half, and all the benefits I'm talking about is only in that particular universe. The opportunity going forward is to now start looking at other fixed-price projects which may not necessarily be large, and probably start looking at time and material projects as well, and then probably working closely with the customer, getting into some kind of gain share model and so on.
That is our effort now going forward. I think for most of the large programs, we have pretty much squeezed the maximum out of it. Any new large program comes now, we have enough automation levers to do it. The bigger opportunity is to expand the universe and Nilanjan also touched upon it. That's where we are focusing on going forward.
From a medium-term perspective, do you have any metric in mind which you are following for this automation of the work? Because should we see it from the employee point of view, from revenue per employee point of view, or from the margin perspective? Which number should we focus on for your automation effort for the company as a whole?
I think the way we look at it is a portfolio. There are always two parts of the business, right? From a client perspective, it is run the business, staying the business. As I keep on saying, there's tremendous pressure. IT budgets are not increasing, there is a need for all enterprises to invest in new technologies, transform themselves, compete against the digital natives. The only way they can do is to take cost out from business as usual and repurpose the spend in newer areas. You will always find in run the business, there is an opportunity for us in run the business in terms of helping our clients take cost out. That is where we are applying automation and some of the other tools in a much more aggressive way.
That is where the opportunity is. It's very difficult to predict. The way we look at it is there's a large part of business out there that's an opportunity for us to help clients and grow in that space. That's how we are trying to go in aggressively, winning those deals and using automation productivity. We are trying to make sure that we are not compromising on our profitable growth. At the same time, we also have an opportunity to work with the clients on their transformation journey as well.
That's the way we look at it. We are not really setting targets saying that in next three years, this should be your automation target and things like that. We are looking at it from a portfolio. We are looking at it from a client relevance. We want to play end-to-end in the client. We want to help them in their cost side. We also help them in driving growth and helping them in the transformation. The needs we meet, part of the business is different and that's how we really look at it.
Girish Pai from Nirmal Bang. Just a couple of questions. From a strategy perspective, is there a growth margin trade-off from a medium-term perspective? You've always aspired to be a growth and a margin leader. Would you say that you're going to go back to this 24% kind of a number? Are we going to be in the 21%, 22%, 23% kind of band for the medium term? That's question number one.
The way we've seen it is there's no growth margin trade-off. We put sort of investments in place over the previous 12 months or so, with the end being in Q4 of last year. We've not yet communicated anything in terms of a view beyond this fiscal year on the margin. However, what we wanted to show today was there are significant number of levers that we have internally, operational levers and some value levers, which will help us to make sure that we have margin where we want it to be.
At the same time, through some of the Q&A and through some of the other interactions, we shared that there are pressures in the market, which are headwinds. Pravin talked about some of the pricing pressure and so on. We want to make sure that we find there a balance between those and make sure that we have a way to work with our margin. We've not commented on where the medium-term margin is at this stage.
My second question is regarding an interesting point that Mohit made on large deals, which is to do with public sector deals. I've never heard Indian players talk about public sector deals in the past. Is it something new that's happening in the market? Why have we not addressed this in the past, and why we're addressing it now? Has something opened up? Has something changed in the market?
Apart from India, in the last two years, at least for this past 6-10 years, I would say we have Infosys Public Services, which have been focusing on public services in the U.S. market. In the recent past, probably in the last year or two, we have started looking at Australia and U.K. as well. I would say it is more about in the past we were not looking at, now we have identified that the right spaces, and we believe that there are opportunities. That's what Mohit said in his presentation.
Hey, Pankaj from JM. Just want to understand the large deal landscape a bit more. A lot of mid-tier companies are also trying to play that space, and they have been proactively engaging with some of these advisors, and we have seen the increased participation from them. Obviously for our Infosys scale, we probably will need some of these much larger, maybe mega, $500 million kind of deals to come in, probably much more.
Just curious to understand that when you are looking at such deal in the pipeline, do they have any different kind of a financial construct in terms of how the regular RFP-based deals are? Something very similar to maybe Stater or any such examples. We have seen quite a few for the other companies as well. If you can give some idea about the financial construct of such deals. How do you evaluate participation into such deals?
Most of the large deals are different, and they have different complexities involved. Majority of large deals still come through the traditional construct, but there are always large deals which comes with some unique financial constructs. Ravi, in his cloud presentation, he talked about large deal bundling in software and taking end-to-end ownership. More and more, when you are talking about an element of cloud in the large deal, then the constructs come in. People expect you to take end-to-end ownership. That means that you have to take ownership of the cloud.
You have to take ownership of the software apart from the services. The large deals are increasingly becoming complex. We find in some of the odd deals here and there, some unique commercial constructs. We don't shy away from them because end of the day, we have to also be innovative in the market. As long as we are able to execute well, and it meets whatever parameters we have internally, we are happy to do that. I would say that it's not a significant percentage at this stage. We find odd cases here and there where we find newer constructs.
Thanks for taking my question. Salil, I think we are now looking at almost end of year two. You had revealed a three-year strategy. Year three is going to be accelerate from what I remember. Could you talk about what that really entails for the organization and what it means for the continuation of the strategy in year three? Thank you.
One of the things that happened is we saw some of that acceleration come in a little bit earlier than we had originally anticipated when we laid out the three-year plan. I think through the day, many people talked about the large deal momentum and the growth over the last four quarters. The way we see the strategic direction now is we are very comfortable with the approach that's been put in place. We now want to make sure that that approach is executed with a lot more discipline, and we start to have levers to drive growth. Growth in the context of what we see in the overall environment, as the environment also develops.
With the two levers that we talked about with large deals and digital, we feel we have something quite powerful that allows us to have what we call competitive growth or growth relative to where the market is in good shape. On the margin, we have levers now which show us that we can also have discipline on how margin will evolve. In terms of the three-year journey, our thinking today is that we continue in this path. Some of the acceleration has come in, so we now want to really solidify that and make sure this competitive growth starts to show up within the environment. Then we start to look at where we go over the next three to five-year horizon, because we now need to craft something beyond that, which we are working on now, which we'll start to share in the coming quarters.
Hi, this is Surya from DSP. I think, Pravin, you just touched upon this in terms of the construct of these large deals, which include bundling of cloud as well. As you go ahead and like Ravi said, it's more about orchestration opportunity that you're seeing. Will there be pass-through revenues that will come through the Infosys revenues because of which the margin construct will also be different, or you would still structure it in such a way that the actual cloud license revenues will not be through the P&L of the company?
Right now, most of these are really pass-through deals because we are taking end-to-end ownership and it passes through our books. We can always look forward to different constructs in future. As I said earlier, this is only small percentage at this stage. As it becomes bigger, we have to look at are there any other mechanisms to still take ownership, but do things differently.
Doesn't that have a margin impact given that that part of the revenue will come at lower margins versus the services revenues?
As I said, we look at it as a portfolio. Large deal inherently probably comes at a lower margin than rest of the deals. We look at the overall thing as a portfolio, and that's why there's always a focus value. There's a push in terms of driving growth, getting new streams of business. There's an equal amount of emphasis and focus in terms of driving an efficient engine. All the initiatives which I talked about in cost optimization, Nilanjan also shared a lot of things, right? It's a balance we have to do, and we have to continuously figure out ways to take cost out, waste out from the system at the same time and do that because that is a market reality. We have to deal with it. We can't walk away from that.
Second, Nilanjan, when you said digital pricing is a lever for you from a margin perspective. Today it's 38%-40% of revenues are digital. What proportion of these revenues you think you could use this digital pricing as a margin lever?
Like I said, I think the whole idea is to get much more structure around our digital pricing on digital skill sets. For instance, do we have a total service offering backed up by a digital rate card around experience, around proficiency? How do we make sure that's used widely across the organization and not in certain pockets?
It's got different elements of how we price our services. Like I said, the discourse first has to start from value to the customer and then bring them onto the price lever. It's not that we are looking for, like I said, bundles of pricing going up. We just don't want to leave pennies on the table when you're getting $70, $80, $100 an hour. You're not looking at dramatic increases. We just want to make sure it's consistently applied across the landscape.
Hi. Shyam from Banyan Tree. You talked about employee utilization rates going up. They're around 85% now. In your opinion, what is the practical max that you can push it to?
I think we are comfortable where we are. We typically try to operate between 83%-85%. In the past, we have had couple of quarters more than 85% as well. From a planning perspective, we plan for low utilization, but if there is opportunities for us to improve utilization, we try to do that. A big part of the remaining 15%, at least about half of it is because people are not available. They are on leave, vacation, training, and other things. Real bent is really about maybe 4% or 5%.
You talked about the onshore-offshore mix, right? Onshore is dipping down. It's around 28% now. Can you talk a bit about the dispersion around this number? In the most aggressive, most offshore-centric kind of a deal, how much effort will be offshore?
Every project is unique, and I think it's less to do with project. It's more to do with the client and their comfort level. The same kind of projects we are executing at same similar project, similar technology. We have cases where we are executing only 5% on-site, 95% offshore. On the other extreme, probably for similar context, similar thing for a different client, we are probably executing 40% on-site. I think today from a technology perspective, it is possible to do a lot more offshore than what we are doing today. There is always a client context, their comfort and other things. We'll have to work through that.
Can I ask one? You talked about the subcontracting expenses as well, right? These are primarily spent on onshore talent, or these are primarily spent on offshore talent, or is there a mix to that in that?
I think it's a mix, both on-site and offshore. On-site we primarily use from a fulfillment perspective because many times we need to fulfill pretty aggressively and sometimes we don't have enough people on the bench because we operate on-site at a very high utilization, and it takes time to either recruit or deploy people from offshore.
In fact, the cost, recognizing that their own internal costs have gone up, is that happening?
We have seen two cases where we have seen COLA increases, but it's not as frequent as we have seen in the past. From our perspective, we will continue to push for COLA increases wherever possible. In some cases, we have been able to get many cases. We waive it, but many times, in lieu of waiving COLA, we also get opportunities for applying that account. That's the common.
Do you think, Pravin, that a very much more significant portion of the price increase at the overall level comes from the big change towards digital and trying to renegotiate this kind of COLA-based price increase?
Yes and no, I would say, because the COLA is typically where we have already committed to do large projects, three to five year thing. Where COLA is already built into your pricing, and if you don't get the COLA increase, sometimes you will have to take that impact. The digital pricing is a separate thing. We believe that for the kind of value we are delivering, there is much more headroom for growth in digital pricing, given the shortage of supply and things like that. That's where our focus is. I mean, it's not easy, but we believe that if we are able to demonstrate value, do things slightly differently, there is an opportunity for us to get higher pricing in the digital space.
Sure. The other question I had was on the on-site pyramid. I think we understand on-site, offshore, we understand utilization when it's an offshore pyramid. Does on-site pyramid work out well in practice? The reason I ask is that you can have freshers coming at $60,000-$65,000, but within three to four years, because the market is so tight, it is not uncommon to see them command $90,000-$95,000 in competitive firms. Does that work well in practice, or is that a model that we yet have to test out?
See, we are one year into this exercise where we have started recruiting in the last 12, 18 months. So far for us, it's working well. We have been able to recruit, and we continue to recruit aggressively and create that pyramid. Only time will tell whether I mean, over a period of time, whether the $60,000 , $70,000 will become $90,000 , $95,000 . Again, end of the day, when someone is commanding $90,000 or something, these are people probably with four, five-year experience. When people are moving up, then we are also recruiting at lower level. That's at the $60,000 , $65,000 kind of thing.
I think it's once you reach a mature thing, and as long as you continue to do that, continue to recruit, continue to scale those people up, where we are able to get. We have to pay them higher. We are also able to command higher pricing. That's the model we are really working on. So far it seems to be working. We are just 18 months in the journey. We will fine-tune it as things change.
Yeah, hi. This is Neerav from Maybank. I had a couple of questions. One is that in the renewal deals, are we seeing that digital services are filling the gap which comes with renewal of deals? This would mean that core services would continue to decline for the foreseeable future.
Today when we are talking about core services, there's an element of modernization in the core services. Some part of what we do, whenever we win a large deal, it is not just maintaining the current state of estate, right? As part of the large deal, three to five years thing, there's also a commitment to transform the landscape, there's some element of digital in every large deal. To that extent, I don't think we should really look at core as one distinct and digital as other distinct thing. Part of your core will eventually get transformed and become your modern thing, which would probably figure in your digital thing. Some of the digital we are talking today may perhaps maybe in three, five years may become core or legacy or whatever, right. That's a cycle anyway.
With the deals becoming more digital, are you seeing vendor consolidation happening and that is the reason the large deal pipeline will always remain strong, and so you will be able to maintain that large deal win TCV over a longer period of time?
I think Mohit talked about, Salil also mentioned that in the last couple of years, we have really looked at large deal space fundamentally different. There is a lot more focus on large deals. There are many things we have done in terms of bringing in digital strategies, bringing in deal consultants, improving our solution. There are multiple things we are doing. Mohit talked about it. I think that's probably one of the reasons why we are hearing a lot more share of difference of win from a large deal perspective.
Second one, from a pipeline perspective as well, as I said earlier, there is tremendous pressure on clients to invest in newer areas. Only way they can do is in terms of taking cost out. That's also translating into large deal, and one of the element of large deal is also about vendor consolidation and other things. We are seeing that element as well.
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