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 joining 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 timing mentioned in the agenda, which will enable us to organize the event smoothly. We've also go through the important information sheet, which contains information on WiFi, lunch, high fees, logistics and other relevant help that you might need during the course of the event.
We have volunteers spread on this floor. We'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 the 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 and A. Since the Chairman will not be staying for the full event, we will have Q and A at the end of his session. For questions on other sessions, please wait for the open house Q and A or connect with the presenters separately. With that, let me request our Chairman, Mr.
Nandan Nilekani to kick
start the event.
Thank you, Sandeep, and it's wonderful to be here. So 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 our 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 6 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 5 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 3 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 the 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 start up. 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 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 complaints merits, I want to share the background on Infosys' approach overall approach to compliance are 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 process 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 facilitate 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 dissimilar 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 30.
Pursuant to our shareholder policy, the complaints were placed before our audit committee on October 10 and before the non NV Board members on October 11. The following week, the audit company consulted with Ernst and 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 3, 2019, purportedly written to the Office of Whittledow Protection Program in Washington, D. C. The October 3, 2019 letter received by the company, however, did not include any of the reference e mails or voice recordings.
On October 18, 2 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, Amrch and Mangalap and Company on October 21 just as the whistleblower complaints were leaked to the media. In the context of this media leak, the company felt it could serve the interest of all stakeholders by issuing a press release. The company's 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 the 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 become 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 would 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 growth corporate dominance and would be a mistake. As it always has, Infosys continues to hold itself to the highest standard of ethics and conduct, and we believe the actions the company took after the receipt of these complaints, compliant with our legal obligations, were responsible and 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 the Huber complaint 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 we'll take corrective action if warranted. For nearly 4 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 is continued 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 3 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. Now before I go to the Q and A, I also want to issue a company statement that we have just issued for 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 in Forces, 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 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. So this company's 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. And 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.
So with this, I have come to the end of my prepared remarks, which is my statement on the Infosys future and the residual issue. Has 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
ask the question. And I'd
be grateful if you could introduce yourself and from which group you're or which firm you're from.
Hi, this is Sandeep from Edelweiss. Thanks for the update. Just one question, Nandan, on this topic of whistleblower. Is there any indicative time line or you think there could be some tenure by when we can get some clarity or some statement from you officially on this investigation? [SPEAKER UNIDENTIFIED COMPANY
REPRESENTATIVE:] No, sorry. What do you want apart from what I've said there?
No, I just want to know if there is any tentative time line or some duration by when we can get some clarity on this issue also. 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 visible or complaint. We have a lead legal firm. We have 3 or 4 auditors. So 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 are giving 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 Please introduce yourself.
Hi, this is Divya 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?
No, 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, very confident that we will not miss a beat in doing that. And I'm very, 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.
Good morning, sir. This is Viju Josh from JPMorgan. So my question is, you termed it as a distraction. What can you do to sort of ensure that these distractions don't keep or don't come up in the future? Because many of mean, there are always certain things that happen in the pools and pressures of doing business, but yet that has come about.
So what can we do internally to sort of ensure tighten up that these things don't come up in the future?
Well, I think the whistle though 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. And therefore, I think the policy will absolutely continue as it is. Having said that, we will have to see how it pans out.
But I'm very confident that we will be able to go forward very well. But I can't make a statement that no company will ever get a whistleblower policy in its future. And how can I make a statement like that?
Hi, Shyam Prabhu from Bank Nintry Advisors. I just wanted to figure out for a company the size of, say, Infosys, so typical financial year, so you know, let's say, last year, 2018, 2019, how many whistleblower complaints would you have typically got?
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Okay. We received 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 and deal with them as part
of our job. And that's part
of our job is to deal with such things. This is Palak from Morgan Stanley. My question is that what we've seen in the media suggests that the supporting e mails and evidence have been provided to the office in Washington. And obviously, it's not been provided to
the board out here. So
we understand from media that some of the supporting evidence has been provided to the SEC. That's what the media has quoted. So I 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 3, which we received on October 16.
That purportedly has some attachments, which have been presumably submitted to SEC. However, 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. So we have and 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, Nanon. This is Vishal Pohraj from Prahlad Hari. While I respect Infosys' 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 like an issue. Panaia, the Board gave a complete kind of a judgment that all is well. But over the next few quarters, we saw write offs.
Now the report was never made public or to the investors. And just because the whistleblower has happened now, the information is available in public domain. Can you assure all the investors that the report would be made public? And as a suggestion, just to get the fear out of the investors' mind, why don't you also make the Panay 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 2 things. 1 is the investigation into whether the Panias purchase was kosher or not. And second, the write offs, they're 2 different things. A lot of people take business decisions that subsequently may lead to write offs and I can give you chapter and verse of the world's biggest companies and the write offs have done. So let's not go there.
So don't confuse 2 things. Having said that, we had after I came back as the Chairman, I mean, came back and then became the Chairman. We did a thorough analysis of the Panaya thing, and I met with the auditors as well as the firm that we appointed a very respected investigative agency in the U. S, Gibson Dunn. And I was personally satisfied that there was nothing wrong with the Panayad deal as such.
I'm not talking about write offs. That's a different business thing. Don't confuse 2 things. Now 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.
So people have to do a good job on investigation. They should be willing to speak without fear or favor in the investigation. And 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.
This is Sandeep from CTS J and B. Just wanted to understand this event of whistleblower now almost 2 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 customer 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 fit 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. So 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 allegations 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.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And 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. Yes. Okay.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:]
We get whistleblower complaints all the time. We resolve them. And in some cases, there is some action to be done. We take action. In most cases, there is no action to be done.
We close it. It doesn't go
to the media. Yes. Hi, sir. Madhu from Centrum. So this particular instance has gone to the media.
So could we take any legal proceedings of the person who has done
this No, because you leaked
the letter to the media. Where are you?
Yes. Okay. Yes. So the visual global letter was leaked to the
media and they tried to create a mischief on the stock price and impact and all that. We had multiple visual law complaints earlier as well. So can we pursue legally on the guy who has done this? I mean because the investigation is under the process at the company level. So that future somebody doesn't do this kind of events again.
So please understand that
both in the 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. So this is the understanding that is there. So we are not right now in the
business of finding out who did it. That's not 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 lawyer, a law legal form as well as 2 auditors. And we will first our first order of business is to come to evaluating whether there's any credibility or credence to these allegations. So I think if you're not going in the business of investigating who's done it, that's not what whistle blower policy is about.
Hi, this is Ravi Menon from Othral Asset Management. So I had a question about the $50,000,000 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. So can we say that in all probability that this is
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 these companies, so I don't know what is expected, expecting mere mortals to do something. This company has very, very strong processes.
We have an outstanding finance team of people of the highest integrity and they are actually feeling insulted by these accusations. And I'm sure, but I don't want
to again bias the investigation, let the report come out.
Yes. This is Pankaj from JM Financial. So among the allegations which
you have made, one of
the things pertain 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? And in case if What makes you think the board is not doing that? Yes, I'm just coming to that. So my point is, does it mean that this may be to have any kind of a delays in terms of or our ability to participate in the market more
stringent
consideration of these deals? No, I don't speculate too much. Large deals is an integral part of this firm. The large deals are 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. So I can assure you that the board is and 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. And I think we must let management perform their job.
And this is not a matter of business growing. Large deals is entirely the priority of the company to decide what margin they should take it at. Sure. And I had
a follow-up question. There is also a class action suit being talked about, and I think a couple of have been already filed. So how are we responding to that?
Class action suits are filed. We will respond to it in due course.
Did
you get 2 questions?
I think we're just evening out the women's representation.
You're doing it to 10. If you're at 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 we when you came back a few years ago, Ashok, you talked about looking to set things in order and shipping back. What is the time frame you're looking at now?
I said as long as it takes to make myself indispensable.
Right. And does this issue kind of extend that time frame now?
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] As
I said, as long as it takes for me to become dispensable.
Hello, sir. This is Sudhir. And 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. And 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.
But 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. But had it happened with some other companies, it would not have made headlines to that extent. So 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 leak? No, no, no.
I would hesitate to you 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, you can maybe you can exhaust your question, so at least then you can talk business to my colleagues.
None. Then let's get into the bread and butter business. Let's get into the bread and butter business.
I don't want others want to do that. Maybe only you
want to do that. It's important that the
end of it, the distractions come and go. You are defined by how strong you are to manage these distractions to keep away from distraction and focus on your business. And you guys have built this business over 3, 4 decades. So you have your core strength. The challenge today is in the marketplace.
The challenge is in the marketplace. How do you handle your delivery, your sales, your offerings?
So in that context, I want to
ask you about the evolving pyramid structure because Evolving? Pyramid of the whole pyramid. How do you create a better pyramid, the relevant pyramid,
the hiring pyramid? These are best questions left to management. I think Sulliland is seem 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.
The whole 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. And companies are now seeing the specter of challenge coming from 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. And you can see that in the growth rates, the fact that the company grew 4 quarters in double digit, the fact that it's and every day there's news that reinforces that. So I'm supremely confident of number of things. 1, the market opportunity is large because this transformation means everybody has to rejig their systems, become more agile, become more improve the consumer experience. And I think my colleagues are going to talk about 3 big trends on what's happening with the cloud, what's happening with data and what's happening with consumer experience.
So these are all big things. And I've been in this business for 40 years, and I haven't seen this level of intensity in change in our clients. So let us point number 1. Point number 2, this game is not a rising tide that lift 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. And there also I can say with extreme confidence that in the last 18 months, there has been remarkable progress in this company. It's all below the hood.
It's not Twitter time. It's happening below the hood. And this, I believe, is also part of the reason why you're seeing the increase in growth and relevance. I think relevance is the key thing. I think we have done a great job.
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. And therefore, I am very, very bullish about the future of this company. Yes, hi. This is Rahul Jain from Dalat 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.
Do you think we are off the mark given that we've been top of
the chart on this metric historically? No, I didn't hear you. The profitability, you think this is a new profitability number. We've been top of
the chart and now we are little off the mark.
So you think this is the new normal or this need to go up? Again, I think as far as the profitability is concerned, I think it's best that Salil and Nilanjan answer that question. But 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.
So I'm very, very board entirely comfortable in animals on this.
Any other questions from Amlan? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] You
can I'll be here all day if you want. No problem. Please keep asking.
She says I can keep it. Thank you. I think you talked about contract flows and large deals. So have customers actually come up to you on this issue? Because I think one of the things that do impact large customers is corporate covenants and other issues.
So have you had specific conversations with customers around this? And 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 in the last 18 months, Can we be assured that there's no slowing down or caution on the large deal pursuit, Sazitra?
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 Jan 11, so 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. And customers understand these things like and remember, these are allegations. Anybody can make allegations. There's nothing concrete or credible that we have on these allegations. So they all understand that this is part and parcel of
our business, and they have been very supportive.
This is Vishal Pravet again from Pravida Sreedharthal. 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? Or even for that matter, would you be from the Infosys, the legacy, would you be sacrificing some margins to look for
the growth ahead? Okay. You're asking 2 separate questions.
You talk about talent reskilling and
you talk about margins, right? Yes. Okay, fine. Now as far as talent is concerned, we are making massive efforts in reskilling. I think perhaps Praveen will talk about that in his presentation.
I think we've made a huge commitment, and this commitment is we're doing it for the last one and a half, two years. And I think the results are there. Because at the end of the day, you have to get your own people ready for the new world because there's nobody out there. It's not only the market is full of experts on full stack development awards. There's nobody out there.
And 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 and make sure that everybody goes through the learning, get certified and so on. And that has been a great success because we have really made it very easy for people to learn. So 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. So I think the skilling part is okay. On the margin thing, I think it's again better you to Salil and Nilanjan.
But whatever strategy that the management is pursuing is the full support and endorsement of the entire board.
This is Girish Pai from Dagoban. I had a question on leadership. We've had to step out in the last 5 years to look for a CEO from the outside. Why is it that Infosys has not built a leadership bench internally? And what are you doing to rectify that?
Well, I think Infosys has a very strong set of leaders. Of course, Salil is there, Millennium is there, many other great leaders here like Praveen, Ravi, Mohit, Kalmesh, there are lots of leaders. In the course of the last 2 years, I've had occasion to interact with many of them, in fact, all of them. And I'm very impressed with Interpre through the legal counsel. So there's a lot of great people.
Even the next level of leaders in our financing like Sunil and Deepak and all are great guys. So I think we have and 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, Sandeep.
Thank you for the opportunity.
I'll now request Mr. Sawal Parekh, RCU and MD to commence his session.
So 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 2 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 2 years. And 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 And that's I think the difference that we see in the market today.
Just want to make sure everyone's acknowledge the Safe Harbor statement here. So if you look at the journey we've had over 2 years and a lot of this will be detailed in the sessions throughout the day to day. And 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. And you have a lot of options. There's about 20 projects and you can walk through about 9 of them.
So if you look at the growth and I'm going to share some of this with you in fiscal 2018, we were at about 5.8%, fiscal 2019 we jumped it up, last 4 quarters very strong, so in good shape. Digital growth also in good shape. You can see we are consistently driving it above 30. If you recall at our last analyst meet, we shared that this is about $160,000,000,000 addressable market, growing at about 15%. So we're really going well above that growth rate at this stage.
And 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. So why is it happening? There are 2 big reasons. 1 is the investment in digital and that we made a lot of that over the past the first 12, 15 months of the journey. And then 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. And on margin, as you recall, there was an investment phase. We closed the investment phase in Q4 of last year. It's done, so there's no more new investment. Now the focus is really on operation excellence.
And there, we're starting to see the margin come back up. We have 2 big levers. And you'll hear from Praveen and Nilandian on operational excellence and from Praveen on AI and automation as well. Now that was a story that we've driven over the past 2 years or so and we really delivered the results in how the business is going. And I'm going to share with you that we are really more and more excited about 3 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 1. On data, you'll hear from Karmesh. And on cloud, Zuggy has really transformed that business because it's got a phenomenal growth rate today and we see that continuing as we go forward. So in experience, what has started to happen is we have this concept called human experience.
And everything you do in the business today is driven from human experience inside. And that change is what is driving a lot of what we call downstream business. So 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. But 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. So really a huge benefit. You'll hear from Ravi on the Poly Cloud thinking as well, which is very unique and new that we're driving in the market.
On large deals, again, sort of a summary, we made a lot of investments. We really build capabilities. We build capacity. We've really developed teams and 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, but 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, where it's 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 costs. And 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 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 2 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 revolves are working. We've also introduced some stop programs, which are broader based, not just at the senior levels. And the outcome 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 delivery, 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. And we're also building digital studio capability that Ben will showcase to you and how that's working across the globe.
So in summary, at least from my perspective and how I see the business for growth, we have 2 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. And you'll see from many of the examples throughout the day, but also from the lab business that is organized. So 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 and 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. So what we've achieved over the last 2 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. So I'll stop there. The Q and A for all of these sessions is now condensed into the afternoon as we close the whole day.
And my colleagues will go through a number of different areas, starting first with Sabine. 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.
This is your safe harbor class. So this is a big snapshot of some
of the key operational parameters. As you can see, most of these parameters are stable and very in a very narrow band. We had done some around attrition for some time, But 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 percent in quarter 2 and voluntary attrition is much lower under 18%. Similarly, on on-site 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 point, 84.9. So most of the operating parameters seems to be in a very stable and good range. So as we are navigating our plans 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. So we started this journey with the following key objectives. We said agility and speed is important.
While we are 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 with 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 inputs 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.
So we have looked at in
the last two quarters, we have looked at all aspects of our business. We are reimagining employee experience using 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 have a lot of learning organization and we are able to react to some of the insights and inputs that we get with changing market dynamics. So as part of re imagining the experience, we have optimized over 100 plus applications into 4 mobile apps.
Today, all key transactions and services are available on these 4 mobile apps on the go. And we have seen tremendous adoption of this. About 45% more than 45% of the critical transactions in the last employee onboarding. Over 30,000 people are benefited by new employee onboarding. Over 30,000 people are benefited.
The new employees have benefited from that using our Launchpad applications. So this makes onboarding very simple, paperless. And we handle the new joinees even before they join all through their getting into joining and rejoining formalities. And we have seen significant adoption of this. Similarly, we have talked a lot about our next generation learning solution, Lex.
We have over 200,000 people using Lex today. We have 850,000 sorry, 850 courses available on Lex. And on an average, we have found people spending about 40 minutes every day learning through Lex. Infimi, the third application, Infimi is a personal the 3rd application, Infimi 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 will be filing for travel requests and so on.
Today, they have the ability to do through Infini app. And likewise, one of the new things we have started developing is Infiworks. So some of the complex transactions which involve teamwork, which involve product management will be enabled to improve work and that's still in the works. So net net we have seen tremendous as I said, tremendous adoption of this mobile app that we have created and over 40% of transactions are to be transacted through mobile app. We have when I talked about these apps, we have architected these apps as platforms.
I mean, we have developed these apps as platforms in a very modular way, and we have developed using open source technologies. They 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 send these apps to the client. We have already seen the success of Flex. We launched the Infosys Wingspan about a year back on the basis of Flex.
And today, we have more than a dozen implementation. Likewise, we are seeing lot of interest in Infini and some of the other apps. And so the fact that we have developed that platform gives us a tremendous opportunity. In fact, in our client events in September in U. S, we launched the enterprise suite of live enterprise suite of applications.
It was fundamentally driven by these apps. One of the other things we have done is, as I said, these apps, we have built 2 components, and 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. So we have good level of observability. So essentially, we can whenever someone is using the app, we can look at the usage, not only the usage of app, but also the user behavior.
And these are 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 capturing we are mapping all the knowledge that is resident across the organization in various silos. We are linking them together and in real time. And 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.
And when some event happens, it is possible for you to orchestrate and give meaningful insights and for you to act on this. So that's the journey we have undertaken in terms of enabling the platform. On the talent side, we have relooked 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 block chain, 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 this technology for 6 months. So now we have already created about 38 such skill sets together, and we have seen very good adoption. We are also now redefining 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 big programs.
This gives us an opportunity for people to pursue career in newer areas like someone wants to be a technical architect or a power programmer, they have created all these big programs, which enable people to do transition into those career opportunities. We are also now looking at at the middle manager level, we are looking at creating a skill tag sorry, not a skill tag, skill index. This is basically a measure of person's skill, experience and knowledge, and it's a single composite index. And this gives you the ability to see who is good in what skills. We have started looking at it.
We have also started focusing on 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 some products and so on. So we are creating a very vibrant ecosystem where we are giving opportunities for people to skill themselves, take ownership of their own growth, giving them opportunity, 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. I mean 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 in for its knowledge graph or in some sense, we are also calling it as digital brain of the enterprise. So I 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. And some of the benefits that we have seen and these are some
of the benefits that we
have seen through our process optimization. We have digitized the recruitment process. Now we have speeded up the entire lifecycle of recruitment right from assessment, interview as well as placement has dramatically reduced. Our background check process, we have seen 50% improvement. With the result, our the time taken to fulfill is much faster and this translating into higher revenues.
Similarly, the other thing that we have seen is the product setup time, infrastructure time used to take a long time. Using this technique, we have been able to bring this 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. So in the last two quarters, we have significantly invested in developing and scaling our own Agile and DevOps capabilities.
We have 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 with. And in the recent DevOps industry forum, we won 5 awards, the largest award won by any DevOps platform in that thing. We are also investing in lot of third party tools, open source tools. We have also created some customized framework for different types of DevOps and Agile work.
We have 15 plus 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. And the fact that we are also investing in this local innovation that's also is a very powerful thing in terms of positioning our distributor, the adult thing.
And we are seeing good traction. We are also transforming the workplaces. All new workplaces are agile ready. And we are also in a very safe manner converting our existing workplaces also into agile ready workplace. 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, I mean, this not only automating for stuff we do internally, but it's also automating for what we do for our clients. And this is 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 and go after large deals and so on. And 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 be eliminated. Can we look at the root cause and fixed the root cause?
So that is the first approach. If you are not able to eliminate, then you start looking at optimizing. If we use so that the process becomes much more efficient, we use lean techniques here to help us in the optimization. Finally, if you are not able to eliminate the optimized SaaS, then finally chosen for automation. And today, we have seen about 22% efficiency gains the applicable products where we have used this approach.
And we have also seen about 17% of FTE repurpose down here, whom we have been able to release some current projects due to automation and lean and we have been able to repurpose in other projects. We have also 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 bots, some of the left points of queries, do some health checks and so on. So a lot of focus on automation and it's been one of the success in the last few quarters. So as you can see, we are trying to reinvent ourselves so that we as an organization, we are able to operate and innovate like digital natives.
So I'll just leave here with a small video to talk about I mean to show some of the things I have been talking about. And you will see more of it in the living lab later in the day. Video, please.
How can an enterprise learn from nature? How can it sense, respond and act like a living organism? How can an enterprise become a live enterprise? These are the core questions we are creating solutions for, for ourselves and for our clients. At Infosys, we are transforming into a digital native organization using the Infosys Live Enterprise Suite, an enterprise that is connected.
Responsive. And continuously learning. We have reimagined our processes, our experience,
our ecosystem,
while also being sustainable. Now imagine what the Infosys Live Enterprise Suite can do for you.
Yes, morning and welcome to analyst days. Thank you for taking time to come from various parts of the country to Bangalore. So before I start, I would just like to make a short personal statement. As to the whistleblower allegations, 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.
So 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 from $250,000,000,000 or $2,000,000,000,000 give or take, we are a very small size of this market. And therefore, as Infosys, we always need to think of ourselves as a challenger, as a non spondial company to go and increase the market and increase market share.
Sanjay has already talked about the comprehensive and intense client strategy which we have in the last 2 years and how we are making progress on that. The 4 pillars of our digital strategy, which was scaling Adan Digital, which was about re skilling, which was about energizing the core and which was about localization. Praveen has also talked about that. The 3rd layer, of course, is about we have strong financial and operating metrics. And you have seen some of the figures coming out of Sanil'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. And we upped our capital allocation, as you know, during the year in the new policy. And finally, as 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 objectives, a strong corporate social responsibility and the brilliant work we do with Infosys Foundation. And the epitome, if at 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 4th quarter consecutive quarter of double digit growth. And in terms of margin, we have seen the investments and we talked about it last year, the investments we made around refilling digital, around beefing up our sales force, around localization. And as we are moving into 2020 and our margins as you see are 20.5% in quarter 1 at 21.7% in the 2nd quarter. And this is a good base for us to improve and look towards the 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 2 large headwinds that all of us in this industry face and it's something not new. It's over a period of time. 1 is of course pricing pressure from clients, whether it's part of new deals or it's part of renewals or discounts. So there's always some sort of headwind on pricing. The second, of course, is wage inflation, right, and largely on the offshore side because of interest rate differentials, the wage inflation in offshore.
These are 2 headwinds largely the industry faces. So 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 Praveen's deck, about 28% of our efforts sits overseas or what we call on-site, about 72% sits offshore, which is largely in India.
Then the cost structure for this is inverse, right? So most of the cost of that 28% is actually on salary sitting overseas, whereas the offshore salaries are much smaller part. So if you need to fix your margin, a biggest lever which you have is how do you continuously look at your on-site salary costs, right? And how do you continue to optimize that? The on-site offshore mix is something which we continuously work on.
Projects come with a certain on-site offshore mix. And what we do over a period of time is make sure that we continuously work move work from on-site to offshore. So 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. So this is something which we continuously do and there is a few years in terms of the on-site mix from nearly 30% in SI17, we're now at 28.2% in the last quarter. So famous pyramid, everybody asked about the pyramid and 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 1.
Number 2 is the bottom end of the offshore pyramid is more like a barrel chip and that's something which we intend to correct. So what are we doing in this regard? One is we are increasing the pressure intake at the offshore base. So 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 JLCs to move up and therefore should also help in attrition.
So that's number 1. Number 2, 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 the on-site as well, which we think is very, very unique in this industry. And I think we are pioneers in this as well. So 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 levers of automation and lean. Praveen has already mentioned about it. I think the crux of this is actually first we need to fix the processes because there's no point automating a broken process. We do this so well for our clients. We save them 1,000,000 and 1,000,000 of dollars.
And this is something we have to do with internally as well. And therefore, we have a lead 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? So many projects as you see that they come with subcon. So why do we have subcons in this industry?
And 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 them 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.
Or thirdly, it could be also because they're shorter duration projects. So if you see, these are the reasons why we have subproblems 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 higher and that really started selling on our revenues. So 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 in the top line, but yet we are continuously converting our sub comps either getting new employees in and replacing them or making them as employees. And I think this is something we would have seen in our quarter too as well that our sub comp 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 and A costs and that we believe is behind us. So in FY 'nineteen, we were about 12%.
And in Q2 'twenty, we are at 11.7%. So 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 because we have a portfolio, right?
So if you start now looking at utilizations the way we have to measure it is across geographies, it's across service lines, it's across practice units. And in a way, n is equal to 1. We need to manage our utilization at that level. And that's a very benefit which we have at large practices. So in application development, we will have large headcounts.
And probably in a fledgling business, we will have a low headcount. But that's the whole idea of our 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 clients' landscape and delivering them the savings, the revenues which they are looking for and that differentiates us. Coming after that is, of course, pricing per se is number 1, do we have digital rate cards? Are these nuance 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? So 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. And we just 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 is leading the entire cost optimization track, works with Ravi and the delivery team very, very closely. Have nearly 21 tracks across which we are looking at cost optimization. I'll just give you illustratively around 5, 6 of them. Our goal for this year, we're looking at between 100,000,000 to 1000000 of optimization as the year goes on.
The second part of improving shareholder returns is how would we look at cash because that's at the end as the older days goes, cash is king. The two things I want to really call out is about taxation and CapEx. So one, of course, as we said in Q2 after the new regime, tax regime was announced, we are currently at for the India rate, we are currently around 23% and the new tax regime is closer to 25%. So we have a transition plan over the years time where we can migrate to the new tax regime, number 1. Number 2 is, of course, our CapEx.
As you know, the new SEZ policy is also getting sunset on 31st March 2020. So that will also reduce our CapEx intensity in terms of building infrastructure for SEZ. And number 2 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. Also, we have a lot of infrastructure capacities across over the years which we have built, which we are looking to spread more and more as we look at our go ahead plans. Of course, we have some CapEx which are in flight, which we will get through over this year and next year.
But broadly, we are looking at making sure that overall cash drivers continue to be pressing the pedal on all of them. Our M and A strategy, I think our M and A philosophy, I won't call it a strategy, is basically hinged on 3 broad buckets. Number 1 is complementary digital skills. I mean our entire strategy is dedicated on digital transformation for our clients. And therefore, if you see our M and A strategy, the first plank is, of course, are we looking at acquisitions and our digital pentagon.
And on the right side, you can see our last biggest acquisitions across the last few years has been FluidO. We have Stater. We have Ben from Wong Doody right here and building basics across the digital pentagon. 2nd 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. And finally, if you see any synergistic client specific assets and a classic example of that is Hypers in Japan, which you 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? Synergy is not just flowing in from the target, an acquisition company to Infosys, but even from Infosys back there. So that's something which
is very in demand. And finally,
as you know, we have kept some money in our capital allocation policy for tuck in M and 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 we have seen our progressive policy in terms of increasing dividend distributions. As you see over the from FY 'fourteen where we were giving up to 30% of net profit,
We
have upped that this year in July to up to 85% of free cash flows over 5 years. We have already given an interim dividend, which is about 14% year on year. And I think this is something which we keep continuously heard back from shareholders is that if you don't need the cash, give it back. And that's exactly what this reflects. Any excess ID cash in the company was also returned in the last 2 years.
We finished the 8,260 buyback as well this year. So that's a progressive improvement as you see and more predictable as you see a cash payout. I need 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 2 years since the strategy was launched and this is against the leading peers of an industry.
Up to September, we were number 1. Of course, we went after that. We are still number 2 over the last 2 years in delivering total shareholder return to our investors. And that's something which we have actually ingrained in our philosophy of a 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 RFP 2019 plan, which we think is benchmark in terms of how we look at this.
So this is pretty much what I had from my perspective. Of course, later in the afternoon, we will look at Q and A. Thank you. Thank you, Niranjan.
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 $9,000,000,000 in large deals. So an approximate to roughly about $600,000,000 for every minute of my talk and $10,000,000 for every second that I will be on the stage. Now just to talk broadly about the broad sales transformation agenda and then we'll dig in specifically into large deals. So the overall sales transformation program that
we have, where we made
a sizable investment, as Salil mentioned, over the past 12 to 18 months, We're focused on 3 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. But there's also a significant focus on account expansion. This is a focus on our strategic accounts, our largest accounts. And 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.
So this is a significant portion of our sales transformation agenda. The 3rd focus from a market PTC perspective is really on new account openings. We want to make sure that we do a much better job in terms of hunting, 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 opening priority accounts, increasing the net new and long term revenue we get from these clients.
So these are the 3 market facing strategies from a sales perspective. And obviously, to achieve these, we've been very focused on changing the nature of the sales organization with an emphasis, which is to focus on recruitment, what are
the kinds of people, what
are the kinds of skills that we wanted in the organization and then making sure that the people that we have, we have an extensive program of training and reskilling enable the organization. So while I'll be talking here today specifically about Largely, I just wanted you to know that the overall sales transformation program has a much more ambitious agenda. Now we've spoken about large deals when we met in April of last year. And 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 2 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? And over here, the focus is on direct sales, 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. And the second focus is on improving our win rates. If I look at the 1st 6 to 9 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.
So for the 1st 9 months, we are 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. But over the past 6 months or so, we have now pivoted to making sure that we're equally, we're equally spending time on building out our pipeline and specifically creating a very large proactive deal pipeline for the entire organization. So this is the strategy. And like I had 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. So the first thing that we really did was to build a centralized team of experts.
And 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? So you have some of our largest client partners and they have a significant amount of experience in closing these deals. But that knowledge is really lost in the rest of the organization.
So creating a cadre of deal directors, people who have worked on $1,000,000,000 plus deals, making sure that within the organization, they are the face of emphasis to our clients and that they're taking their expertise, 1 from a single deal, into multiple deals. So this 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 one the team that works with private equity firms, the team that works with the likes of an ISG, for instance, that they are very focused on large deals because historically, they've been focused on a number of things, right? They've been focused on, I guess, getting our messaging out around geo expansion, that they're 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 want 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. So 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 is important.
And this is the people investment that we've made. This is the global team of experts that we've built. And 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 specific industry specific vertical teams. And what you see over here is a smattering of our agenda across multiple industry groups. In our business, a lot of themes are horizontal, right. So Ravi will be talking about the cloud. We've previously Praveen has spoken about the fact that we've invested heavily in AI and automation from an application maintenance perspective.
But we want to make sure that for each industry, like if I take financial services, for instance, there's a very clear focus on wealth management, there's a
clear focus on lending, there's
a focus on core transformation. Within our telecom business, there is a focus on 5 gs. 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 S4 conversion that we've seen in many of our clients. So we're building out specific themes that we can take to our clients around key business issues.
And these themes take the form more simplistically of a point of view, of a point of view that we've built. But building on that, we have built accelerators that are industry specific.
And in
some cases, we are 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 for 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. And 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 was actually this actually comes from specific feedback that we have taken from our clients and specific feedback we took from deal advisers for all the deals, right, the deals that we won, the deals that we lost on what it was within the Infosys proposition that made them select us. And you will see a number of things, right?
You see responsiveness, you see localization, you see a strong delivery organization. But 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.
And the example that we speak about that I'll be talking about, a very client specially 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 TCE. I think senior leadership commitment is a critical thing. Everybody in the organization, with Salil, with Praveen, 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. And 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've signed on 3 joint ventures with Temasek, Hypers and Starter with ABN. So there is a comprehensive strategy and there are some key elements that have resulted in our wins. And I think the growth trajectory is very obvious, right? Like I mentioned, dollars 600,000,000 ETCB for every single minute I'm on the stage, a 77% increase in overall signings for the first half of this year. And this is on top of the fact that we more than doubled last year in our win PCD.
So the growth trajectory, I think, is the numbers speak for themselves. Another important point is the diversity of the deals, right? Now if you look at the kinds of deals we've 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 have 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. I think this
is a key thing that you will see
in the future. If 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, right, for the large banks, for the large insurers, for the large telcos. But 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 and the cloud has been a very significant component of our win agenda. Every single infrastructure team that we have bid for and won in the past 12 months has had a component of virtual private cloud or a public cloud.
If you look at the distribution across sectors, it's a very healthy distribution that largely reflects our revenue profile. If you look at the distribution across geographies, North America is clearly predominant. But look at Asia Pacific, the Asia Pacific share that we have of large deals is actually larger than our revenue share from that geography, right? So 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 $300,000,000 in TCV for a large American healthcare client. And the deal really has 3 components, right? There's a component of application development, there's a complete apps takeover and there is an infrastructure component of the deal. Now all 3 were 3 separate RFPs. And I'm happy to say that we won all 3.
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. And clearly, there was a solution that was robust. But 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 a 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, right, 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. So 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.
And 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 3 RFPs within this client and effectively become the dominant partner for them for their technology and operations. And finally, look, the future is changing, right? The future is changing. And I believe that we have a very defined and successful approach to the large deals business. But clearly, we'll be tweaking it as we move to the future.
Nandan and Praveen 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.
And finally, I feel that the learning piece, right, 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 wins pitch yesterday. And our pitch around this 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, very strongly. So 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.
And 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 Weiner. I'm the CEO of Wong Beauty. We are an experienced company that was acquired by Infosys about 18 months ago. And for the next 15 minutes, I'm going to throw a lot of marketing jargon at you while you nap after lunch. But 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. And in the interest of making this a good experience, I'm going to issue some PowerPoint in favor of a video that I hope wakes you all up a little.
So let's play that. I would have played it a little louder, but they wouldn't let me. So we're part of the emerging experience ecosystem inside of Mphasis. In North America, we take the lead with design and experience. We have our counterparts in the United Kingdom, Europe, Brilliant Basics.
And all of this experience fits on top of the massive digital delivery capability of Infosys. Sure, there are lots of other agencies out there, their experiences, practices out there, but nobody is sitting on top of the talent pool of 1400 engineers who can deploy the Adobe Experience Cloud. Nobody is sitting on top of thousands of data scientists. We bring a level of scale and technological credibility to the experience practice that's unrivaled. And just a little bit of marketing jargon.
Experience is what matters to customers. It makes them 7 times more likely to buy, 15 times more likely to share positive word-of-mouth. This really is a battleground in a sea of parity products and parity services where people are competing. But the reality is 8 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 would be late, 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 rashes up by the last good experience that you had. And so you can now, I don't know if this is good or not, you can now apply for a mortgage in
the United States 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. So really complicated, complex financial transaction, 100 of 1,000 of dollars in debt as easy as ordering a pizza. One of the reasons we have so much stagnation in CX is because everybody is walking around with the same user journeys. They sit somebody down in front of the 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 and sitting in front of the same unusable, boring, cumbersome screen for 8 hours a day being unproductive. Consumers don't think of a 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. And when they go on to 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. And so 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. And Karim actually is 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 could be more data.
The insight you get from that data builds even better experiences and you start a virtuous loop of continuous improvement. We see 2 elements to building great experiences. The first is insight. And with Infosys, we have built a proprietary agile insight called the Motherboard. Big data is great, but qualitative data is the Holy Grail to understand why people actually do things.
And Yogi has 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. And 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 2 flavors is more appealing. You can get answers from consumers literally overnight. And because of Infosys, this platform is now AI enabled.
We can send consumers to the supermarket with their cell phones. They can upload videos. It will be transcribed in real time. And the next feature that we're adding is 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 did their days do, 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. But the reality is some experiences are better than others. Some things are more beautiful, more intuitive, more usable.
And we've been able to build an experience practice that has earned vast amounts of creative recognition globally. We received 74 awards in the last 2 years for experiences that we have built. And yes, 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 Hx ecosystem. And that produces great work for our clients. And 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 disruptive world. And by bringing creativity and insight to the front end of the input to 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 legacy consultancy walked in with the exact same user journeys and said, we're going to do
for you what we did for other 7 clients. We've got
the unique insights and the unique creative approach that differentiates us. Unless 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, it led to $15,000,000 or $60,000,000 in technology implementation revenue without an RFP. So creativity and experience are business drivers, too. I'm going to share really briefly a couple of stories.
1 for a global apparel brand. They were kicking butt on every flood, online sales, brand equity, everything you could look for, except for their loyalty program. The loyalty program is underpenetrated and loyalty programs are really important because when you sell for wholesalers, the only direct view you get at your customers is your loyalty program. Similar 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.
And 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. And in Zuber awarding 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 need to build employee preference. And so they wanted to create a seamless, consistent global employee experience that answered the important questions of our time like how does on boarding work or how do I let my boss know about maternity leave or what black hole did my expense report fall into.
So we move 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. But 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.
And it's not just banks. It's one of our clients, which is a giant telecom provider, has 1,000 of stores. They're merging with another one that has even more 1,000 of stores. What are we going to do with that real estate when they're done? Or drugstores and health care, insurers coming together to create the front line of primary care a place where we used to go buy beef jerky.
These are the kind of things that we're helping clients grapple with through our retail innovation practice. And last but not least, for a giant European telecom, we integrated all their different lines of business into one application. They sell broadband and not used to live over here. And if you're a broadband customer, there is an app for that. If you want a cable service from them,
there is another app that
you have to go on to. And if you wanted to manage your phone bill with them, they wouldn't need it or not for that. You had to go to the web to do that. They had no singular view of the customer and their customer had no singular way of interacting. So 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. And in the world of telecom, cross sell was everything. We moved all of those disparate applications and platforms into the palm of the consumer's hand and created a centralized marketing data repository in the back end that increase the efficiency and the uptake of offer management. So what lies ahead is more growth and more scale.
We've opened up a host of new CTOs this year and we have built extensive offshore capabilities, I was onshore for you guys in Bangalore in Hyderabad where we have talent pools and creative that live offshore and an offshore cost structure that you can deploy through an agency model. We have a new pipeline for talent for years to get through over our 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 use, the cost that they want. And 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. But 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's experiences.
That's an opportunity for Infosys to own thought leadership in each area. So we launched the C plus C Awards, which is a platform for recognizing the best collaboration between CTOs and CMOs. And 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 places 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. And 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. And 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 their necks.
Russell and friends, the safe harbor, I'll just pause for a moment on this. So 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 zettabytes to 175 zettabytes.
These are difficult units of measures. But just to put things in context, 1 zettabyte is 1,000,000,000 terabytes. And the latest version of iPhone X, which comes with 256 gigabytes of memory is equivalent to you need 4 iPhones to have 1 terabyte. So that's the scale we are looking at. And this growth is happening in all the leading industries, in all the leading economies.
And 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 7.5 times as compared to the volume that's moving to on prem, obviously on a much lower base. So in a sense, every enterprise is becoming a big data enterprise. But all this data is of little use if it cannot generate actionable insights.
And that's where the big opportunity lies for us at Infosys because all the 1300 plus 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 efficiencies and bringing the right level of governance. We have a structured approach for this. This is not something
which is 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 a framework that we are using to take our clients on the maturity journey of becoming an insight driven enterprise. So 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. And 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.
But the biggest disruption comes in the last page, which is the augmentation by new technology evolution. Some of you would have seen in the Living Labs downstairs if you visited the 5 gs booth that as 5 gs comes into play, we would have far greater opportunities for augmented realities, 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. And 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. So 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. And 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 2 case studies. 1 is in the context of a retail bank and another is in the context of 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. And mainframe systems are quite important to the functioning of these large banks because they provide good resilience, they provide good computing power.
But they are not that effective when you are competing with a data native, digital native bank, which is emerging through the Fintech revolution. Now this client has 750 petabytes of enterprise data. That's 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, the 200,000 users spread across the globe in multiple countries. We rely on 400 plus commercial softwares, which are used to India's data, mine data, process it, generate insights, generate reports.
Reports could be for various purposes for sales, marketing, regulatory, risk, compliance. And they have over 1,000 plus business processes that are relying on these reports, some running in real time, some running in batch mode. So credit card check, credit card fraud checks, etcetera. 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 their data to be hosted on the cloud, taking care of all the requirements both from a regulatory and compliance perspective. So data lineage is important, accessibility of data is important, all the aspects which are important for a bank to function smoothly.
And we build this capability where nearly 50 petabytes of the 7 50 petabyte 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 1 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.
And 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. So 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. And in many of these areas, we've achieved a 50x improvement in cost, time and efficiency.
But 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. So this bank recently launched for an attractive customer segment where they were not operating, they were able to launch offering within 6 months. Under normal circumstances with their legacy landscape, they would have taken 2 years. And 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. And 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 2 hours. It significantly improves the performance of supply chain on capital. Earlier, if they were migrating workloads and if they had to take 1 petabyte out of 7 50 petabytes, just the sheer design engineering effort involved would require them close to 5 to 6 weeks. That's come down to 2 days. And then there are commercial savings on the analytic capacity for processing a petabyte of data as well as for the commercial software tools.
So 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. And 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. And this is a case of a fashion lifestyle retail company $25,000,000,000 in turnover. 3 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. And they had about 50,000,000 registered consumer users. And all the insights about consumers were scattered across different applications, some sales applications, some marketing applications. And 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.
And that in the last 3 years has helped achieve the performance which you see on the right side. With online sales jumping to 3,000,000,000, they've grown at least 20% faster than the peer group companies in the industry in terms of online sales. And 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's helped 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 lifecycle 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 120,000,000 consumers with up to 5,000 attributes per consumer. And 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 to 18 months and a number of initiatives are underway. And just to give you a feel of the kind of interventions that are happening, there are consumers who are trained followers, who buy a merchandise looking at what others in their peer group are doing. So 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 wearing the product, a number of times the product was purchased in the last 24 hours. So the consumer genome that we created, it helps mine the psychographics of the 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. So 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. So these are some of the innovations we are doing. There are many others that we are doing on edge computing and we are quite confident of helping raise the performance on the digital channels for this client. But 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 industry.
So the patterns are usable and repeatable. In a nutshell, our data and insights practice today, we are servicing clients in over 20 industries, 500 out of our 1500 clients are being serviced. So there's a significant headroom for growth in this space. And 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 and L and balance sheet and they're willing to pay the premium. Today we have 24,000 professionals in this economy and 1,000 plus 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 we are putting on the last session, so I don't have much choice but to finish it on time. So we'll try to make it very quick. So 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 journey for clients.
Just to set a context and I'm going to give you a few numbers so that you can kind of understand the magnitude of what the cloud opportunity is. By you can 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. So 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 $50,000,000,000,000 of total GDP and that would take roughly $5,000,000,000,000 in the next 5 years to digitize those organizations. Of the $5,000,000,000 if you assume it's 3,000,000,000 in a year, this opportunity is half of it, which is roughly $500,000,000 500,000,000,000 a year is the cloud opportunity underneath the digital transformation journeys of clients.
And 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 accelerated bucket, which is actually where the digital journeys of cloud are. And 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 the data. They want to actually take all the ER piece, 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.
And 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. And 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. So 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. And if you go back to the enterprise software era, where for every dollar of software spent, there was $3 of system integration services, the pre conceived notion was system integrators don't have a big role to play.
It was roughly for a dollar of spend, dollars 30 for system integration services. In fact, 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 a dollar of cloud spend and create a $3 of system integration services. And 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, unveil to
fitness operations of the cloud and the data which is actually there, how do you actually enable it, scale it with the cloud. And that gives you the opportunity of almost every $100,000,000 of subscription, around $300 odd 1,000,000 of services. So with that context, the cloud opportunity for Infosys 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 $500,000,000,000 of spend of the cloud, 2 thirds of it is on the public cloud and 1 third of it is actually on the private cloud.
However, the private cloud space is growing at 50% while the public cloud space is growing at 14% to 15%. So 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 they call it, there are 5 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. Business, the strategy is to actually create a hybrid cloud environment for clients. And 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 emphasis 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 S4HANA on a public cloud. Around 82% of 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. So 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 S4HANA.
In fact, SAP mentioned in the quarterly results 2 quarters ago that by 2022, they want the entire state of SAP to be on S4HANA and they're going to stop enterprise support on their core platform. And 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 and the ability to make it cost neutral and flat lined is the proposition of Infosys. And why do customers want to do this? So that they can expose that entire SAP architecture through AI and automation to their Leonardo platform, which is where they build their AI and automation to their Fury platform, which is where they build their experience layer and their data platform through a bunch of acquisitions they did. And they are unable to do so because of lack of modernization of that landscape.
And this is going to allow them to do so. 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 enterprises, 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.
So what are we doing about it?
So the 3x potential I spoke about is the reason why the bet on the cloud is the biggest in the era we are in. So we're building a bunch of teams 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. And we are kind of actually propelling the value to come out of its foundation to the cloud. So 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 cleared a Poly Cloud layer. It's a
cloud management layer, which kind of sits on top of multiple cloud, heterogeneous, desperate cloud ecosystems around it. And this layer almost manages the cloud ecosystem underneath. It not only does make it interoperable, but it also takes the best to build of different cloud ecosystems and you could actually build a best in class hybrid environment. It gives you the telemetry image which Karamesh spoke about, the ability to sense what's happening around the cloud ecosystem and configure and calibrate it accordingly. And then thereafter, clear a smart catalog so that you could almost like a glass pane kind of configure the way you want to.
And the Poly Cloud now
is a platform from Infosys where we have
been 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. So 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. And we want to actually pivot and orchestrate that whole mechanism to transform those workloads into the cloud. So here is the analyst feedback, 38 out of the cloud and cloud ratings, 20 of them were in the leadership leadership quadrant in the top 1 or 2 players. And for the first time in the last 15 years, we actually became the Microsoft Global Alliance SIO Outcomes Partner of the Year because we had the largest influence of Azure consumption by any provider across the world.
And that has never happened. And that's because we took a strategy of transforming workloads and making that a path to the digital journeys of clients and that has actually taken us to the consumption on every big public and private cloud player in the market. We are in the top 1 or 2 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. So I'm going to speak about one case study. It's about a global automager.
They sell 3,000,000 vehicles every year. And this is a procurement platform, which is on dollars from 1,000,000 suppliers with 4,000 buyers which are actually using the procure to pay platform. And 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 speed at which 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 $100,000,000,000 of spend. We just thought $1,000,000,000 of spend on this platform And to scale it to $100,000,000,000 of spend because most clients, so they are building these systems which are scalable and they can actually go down and go up based on market demand and the ability to reduce lead times, the operational efficiency and high buyer productivity. And 80% is literally 80% is touchless procure to pay system in this particular client.
So the ability to do this enabled by the cloud and this is enabled on S4HANA on Azure.
And 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?
Daimler AG has more than 130 years experience, tradition and innovation building the best and most beautiful cars in the world.
We are 3 purchasing units. The car purchasing truck group and
the nonproduction materials, those are
making the new procurement system. The old system was outdated, both from
a functional perspective and also from
the IT perspective. Our IT strategy is speed, being fast, being fast for the customer. This is one of the reasons why we chose Azure because it's extremely fast in terms of getting hardware ready for the system.
Within IT and the business decided to go to the cloud, we took the best available components on the market. So I started for awarding and forcing components, and we put this together with emphasis in the SAP landscape for all the procurement processes. I was confident from the first minute that this will be successful with Microsoft and the Azure Cloud. We realized that the new procurement system needed a lot of speed and agile way of working to deliver the customer experience. Treasures not only gives an infrastructure which was very robust and scalable, but it was delivered with high speed and agility.
Only 3 months later, we kicked off the first functionalities within the SAP landscape. With a project at this scale and this size, it would have taken many, many months longer on premise. SAP on HANA coupled with the Azure infrastructure is extremely secure and reliable. So we believe that this stack will stand the test of time. So in summary, the cloud is the single biggest digital opportunity for Infosys because we're not looking at this as pivot to transformation.
We're looking at this as the ability to take customers through the journey to be digital fast enough. And we're looking at it as an ecosystem of partners where we orchestrate and we control the narrative for our clients. And 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.
We're commencing the open house session now. 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 whistleblower aspects earlier in the day. Okay. Go ahead, Sandeep.
Sandeep from Middle White. So one question on the digital thing. First of all, thanks for the very good set of presentations throughout the day and very efficient demos. So just one question to you, Salil, the proportion of digital has been increasing continuously because it is only place 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, 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? Or 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? So
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 have a clear we don't share the outlook of what the core growth going forward is. But 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, at least from an external perspective, where the core is and where we think the evolution of the core is going on in the sort of 3 year or 5 year horizon. We've simply looked at it more in the annual horizon.
This is Tal Gipa from Kotak. Have actually three questions.
The first question that I have is can you hear me? Okay, 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 midlands?
From an eventual outcome perspective, a significant percentage is still an RFP base. But your talent of winning in an RFP base is if you are able to feed in those smart 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. But eventually, based on their own context and other things, sometimes it lands into an RFP thing. But if you are upfront, if you are proactive in terms of shaping some of the thoughts, then your standards of win rate is significantly higher.
I would say still a significant percentage would still be an RFP take. The second question I had is on consulting. Now I think there was a restructuring or there was a reorientation plan for the consulting team. There was a new leader as well inducted Infosys consulting. Can you just walk us through the progress made in making consulting back to robust growth framework again?
With consulting, a couple of
things have happened. 1, we started to focus essentially on scale markets and new services. And 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. And 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 S4HANA, on some of the 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.
Yes, hi. This is Divanshu from MK Global. My question is on margin. So Niranjan, you indicated about $100,000,000 to $150,000,000 of cost savings through operational changes you have brought in the organization. So how much of that has already been realized in year, we also mentioned in quarter 2, we got about 110 bps improvement due to various levers on utilization, cost efficiency from Q2 to Q1.
So we are roughly about halfway there already in terms of incremental year on year savings. And of course, we will look for the rest of the year how do we push that up. But our current outlook, like I said, is between 100 and 50. Okay. So one more question on margins.
Praveen, you indicated about tracking the capability index of mid to senior level employees. And later, Nilanjan also talked about broadening of the pyramid. So are we indicating a change of roles for mid- to senior level management or some involuntary attrition here?
So we are on a continuous journey to upskill and reskill workforce. As Nandan also talked about and you have seen that common thread across all presentations, with all the changes happening, it's important for us to start reskilling, upskilling. And historically, in our industry, in the past, there was lot more value for people as they grow up, managing more people works as we were placing more value. But in today's world, I think people have to be much more hands on. And so there is lot of effort in terms of free skilling, lot of programs to enabling middle management and so on.
So that's what we were talking about. And 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. And one of the effort is obviously, we have better skilled people than 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 is 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 particularly people are not scaling up. But there is tremendous amount, its idea is not to let go people, there 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 Sudhir. My question is to Praveen. Firstly, thanks for that interesting presentation on the supply side aspects. So if you look at the I mean, there has been
a lot of focus on
in terms of reskilling and training, etcetera, etcetera. But over the last 4 years, if you actually look at the average per capita training managements or training effort as reported in the sustainability report of Infosys on an annual basis, it has
been showing a consistent decline. So how do
we actually rate 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 of pressures and hence the training effort is lower? Or 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?
See, most of the effort,
I mean, we talked about Lex, right, our next generation learning platform is something which is probably 1 year in play. And 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. And as we have said, we have curated a best in class content, people can access
it anytime. We also talked about those statistics. But this is a
Lex on their own versus what we have administered. I will have to probably go back and respond to that question. But the fact is all this transformation in terms of reskilling and other things is probably a 1.5 year journey. Yes. Hi, sir.
This is Madhu from Centrum. So how has been the experience with Boondi and Brilliant Basics? Because sometimes when we see when services firms acquire these consulting firms, typically, they're in attrition at the high end level. And what are we doing to retain the top management of Woongod in terms of ESOPs and incentives?
So as you heard Ben was sharing earlier, the ecosystem around experience has been massively uplifted within the company with Wrong Duty and Brilliant Basics becoming part of Infosys. One interesting statistic, the attrition within Wong Doody 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 1,000,000,000 basics or long duty have, with the huge access to the large enterprise client base of Infosys with 1500 clients is massive. And 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 in a more scale digital businesses in terms of experience, not just digital marketing focus, and that's giving us a lot of growth opportunities.
At this stage, we see the growth trajectory positive with both of them, and 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.
Yes. And sir, one more on the on-site offshore mix. We mentioned that as a significant margin lever. But when digital is growing at 30% YOY and digital typically tends to have, at least in some projects, tend to have higher on-site. So how easy is to get this offshore mix at an overall portfolio level?
So the idea is it's so 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. And at the same time, make sure we optimize the overall business. So we have to find ways, which is what Nilanjan was sharing on the on-site offshore mix, which are more in our core services as well. But 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.
So the real challenge is to build a scale business at this level of growth, yet keeping our economic model in good shape. And that's where we are working very hard.
This is Sandeep here from CTS CIMB. I think Praveen's presentation has mentioned that 17% of the Feet actually got repurposed. So that looks like a big number. So first, I want to understand over what period of time this has happened, but the same does not get reflected into the margins. So by what time you believe that incremental saving on this base would actually flow into the margin?
Because this looks like more
a client push rather than a
pure proactive automation kind of a definitive margin we were time we believe that this could be a definitive margin lever rather than a hopeful margin lever?
On the automation and the 17% Feet released, see the reality today is every client across enterprise is looking at cost takeout and run side
of the business, which is still
a significant part of most of us, ourselves as our competitors in this industry. So there's tremendous pricing pressure, tremendous commoditization happening. But despite that, because of our efforts in automation, I mean, we 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 our ability to invest in business. So 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. But at the same time, through our efforts, despite winning in a competitive situation, we are able to improve our price points through automation.
And in the last one year, I mean, that 17% we are talking about is 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. So 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 sort of approach we've put in place. As Praveen 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.
This is Abhishek from Melara. 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 4 or 5 quarters, the year on year growth for top customer and top 2 to 10 customer has been moderating and top is declining. So what answers this dichotomy? In our approach in terms of naming the accounts is we have really looked at your top 100 accounts and we have identified accounts where the opportunities to improve. And 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. I can also, I mean, some of these also vary quarter on quarter.
Sometimes your top 10 accounts grow much faster than our average growth and sometimes slow. I don't we don't see any secular trend there. But our effort is to expand beyond our 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. So 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 plant base.
Okay. And just a second question. You mentioned just now that the on-site mix is reducing despite digital contribution rising. So is there a change in terms of project starts versus 2 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, I mean, even if in the past, when we look at earlier days, when you had ERP programs or something, in the initial phase, you 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. Even digital, I mean, in the last few years, people have started embracing Agile in a big way. Earlier, the thinking was Adele means only on-site. But through our distributed Adele methodology, we have very clearly seen how Adele can be executed in an on-site offshore model. And I think in the last 2 years, data clearly shows while our digital has grown, but our on-site ratio has been in the same range that we have actually reduced our on-site trend.
But 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 the iterative way. So it's not necessary that you have to have a higher percentage of people on-site.
Mukul here from Haitong. So another one for Praveen. I think quite a few interesting data points you mentioned today. Praveen, you mentioned that 3% to 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. And second, from a whole company point of view, from 1 to 3 year perspective, where do you think this will stabilize that? So far,
we have focused on large programs, large projects, which are typically fixed price projects. So our automation efforts, when you look at the automation universe, that's where we are focused on in the last year, year and a half. And all the benefits I'm talking about is only in that particular universe. Now the opportunity going forward is to now start looking at other fixed freight, whether it 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. So that is our effort now going forward.
Because I think we are pretty much for most of the large programs, we have pretty much squeezed the maximum out of it. And any new large programs comes now, we have enough automation levers to do it. But the bigger opportunity is to expand the universe and Milajan also topped up on it. That's where we are focusing on going forward.
So 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 the portfolio. So there are always that, I mean, 2 parts of the business, right? From a client perspective, it is run the business, train the business. As I keep on saying, there's tremendous pressure on IT budgets are not increasing, but there is a need for all enterprises to invest in new technologies, transform themselves, compete against the digital native. The only way I can do is
to take cost out from business
as usual and repurpose the spend in your areas. So you will always find in Randi Business, there is an opportunity for us in Randi 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. And that is where the opportunities, but it's very difficult to predict. The way we look at it is we were that's an odd part of business out there.
There's an opportunity for us to help clients and grow in that space. And that's how we are trying to going aggressively, winning those deals and using automation, productivity, we are trying to make sure that we are not compromising on our profitable growth. And at the same time, we also have an opportunity to work with the clients on the transformation journey as well. So that's the way we look at it. We are not really setting targets saying that in next 3 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 call side, we also help them in driving growth and helping them in the transformation. And the portfolio and the needs in each part of the business is different and that's how we really look at it.
Ganesh Pai from Nomadhan. Just a couple of questions. From a strategy perspective, is there a growth margin trade off from a medium term perspective? Because 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?
Or are we going to be like in the 21%, 22%, 20% kind of band for the medium term? That's question number 1.
So the way we've seen it is there's no growth margin trade off. We put a set of investments in place over the last 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.
Praveen 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. But 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. So is it something new that's happening in the market? Why have you not addressed this in the past and why we are addressing it now? Has something opened up?
Has something changed in the market?
Now apart from India, in the last 2 years, at least for the past 6 to 10 years, I would say we have influenced public services, which have been focusing on public services in the U. S. Market. And in the recent past, probably the last year or 2, we have started looking at Australia and UK as well. So I would say it is more about in the past, we were not looking at, now we have identified at the white spaces and we believe that there are opportunities.
So that's what Mohit said in his presentation.
Pankaj from JN. So 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 advisers, 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 €500,000,000 kind of deals to come in probably much more. So 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. So if you can give some idea about the financial construct of such deals, how do you evaluate participation into such deals?
Each of the large deals are I mean, most of the large deals are different and they have different complex complexities involved. Majority of still large deals still come through the traditional construct, but there are always large deals which comes with some unique financial constructs. Ravi talked about in his cloud presentation, he talked about large deal bundling in software and taking into end ownership. More and more when you're starting about an element of cloud in the large deal, then the construct some people expect you to take into end ownership. So that means that you have to take and then you have to take ownership of the cloud, you have to take ownership of the software apart from the services.
So the large deals are increasingly becoming complex. And we find then some of the odd deals here and there are some unique commercial constructs. And we don't shy away from them because end of the day, we have to also be innovative in the market. And as long as we are able to execute well and it meets whatever parameters we have internally, we are happy to do that. But 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 2, and you had revealed a 3 year strategy, and year 3 is going to be accelerate from what I remember. Could you kind of talk about what that really entails for the organization and what it means for the continuation of the strategies in year 3?
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 3 year plan. So I think many today, 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 2 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. And on the margin, we have levers now, which show us that we can also have discipline on how margin will evolve. So in terms of the 3 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.
And then we start to look at where we go over the next 3 to 5 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 Subha from DSP. I think Praveen, you just touched upon this in terms of the construct of these large deals, which include bundling of cloud as well. But as you go ahead and like Ravi said, it's more about orchestration opportunity that you're seeing. Will there be like pass through revenues that will come through the Infosys revenues because of which the margin construct could 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 and L of the company?
So right now, most of these are really pass through deals because we are taking end to end ownership and it passes through our books. But we can always look forward to different constructs in future. As I said earlier, I mean, there is only small percentage at this stage. But as it becomes bigger, we have to look at, are there any other mechanisms to still take ownership, but do things differently. But doesn't that have a margin impact given that, that part
of the revenue will come
at lower margins versus the services revenues?
Yes. I mean, we look at as I said, we look at it as a portfolio. Largely, inheritancehip probably comes at a lower margin than rest of the deals, But 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. I mean, all the initiatives which I talked about in cost optimization, the engine also shared a lot of things, right? So it's a balance we have to determine. We have to figure out continuously figure out ways to take cost out, waste out from the system. At the same time, do that because that is a market reality.
We have to deal with it. We can't walk away from that.
And second, Nilanjan, when you said digital pricing is a lever for you from a margin perspective. So today it's 38%, 40% of revenues are digital. So what proportion of these revenues you think you could use this digital pricing as a margin lever?
So like
I said, I think the whole idea is to get much more structure around our digital pricing on digital skill sets. So for instance, do we have a total service offering backed up by digital rate card, around experience, around proficiency? How do we make sure that's used widely across the organization and not in certain pockets. So it's got different elements of how we price our services. And like I said, the discourse first has to start from value to the customer and then bring them on to the price lever.
And 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 $70,000,000
$80, dollars 100 an hour. You're not looking at dramatic increases. We just want to make sure it's consistently applied across the landscape.
Shyam from Banyan Tree. You talked about like employee utilization rates going up. They're around 85% now. So in your opinion, what is the practical max that we can push it to?
I think and we are comfortable where we are. We typically try to operate between 83% to 85%. In the past, we have had couple of quarters more than 85% as well. But from a planning perspective, we plan for low utilization, but if there is opportunity 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.
So realment is really about maybe 4%, 5% or something.
You talked about like the onshoreoffshore mix, right? Onshore is like kind of dipping down, it's around 28% now. So can you talk a bit about the dispersion around this number? In the most aggressive, most offshore Century kind of a deal, like how much effort will be offshore?
No, I mean, every project, if you make and I think it has 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 projects, 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 plant, we are probably executing 40% on-site.
So I think today from a technology perspective, it is possible to do lot more offshore than what we are doing today. But then there is always a client context, their comfort and other things. So we'll have to work through that.
Can you ask one? So you talked about the subcontracting expenses as well, right? So 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. Now we have seen 2 cases where we have seen cola increases, but it's not as frequent as we have seen in the past. But from our perspective, we will continue to push for colang wherever possible. In some cases, we are successful in having able
to get many
cases, we buy it, but many times in Europe, we also get off to the fixed rate in that account. That's a comment. So do you
think, Praveen, that a very much more specific portion of the price increase in the overall segment, I'm seeing the big change towards digital and trying to negotiate this kind of cola based price increase?
Yes, yes and no,
I would say, because the COLA is typically where you have already committed to do large projects, 3 to
5 year thing, right? So 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. But 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. And that's where our focus is. I mean, it's not easy, but we believe that if we are able to demonstrate value, those things slightly differently, there is an opportunity for us to get higher digital pricing in the digital space.
Sure. And the last the other question I had was on on-site pyramid.
I think we understand on-site, offshore. We understand utilization
when it's an offshore pyramid. But does on-site pyramid work out well in practice? And the reason I ask is that you can have pressures coming in at $60,000 $65,000 But within 3 to 4 years, because the market is so tight,
it is not uncommon to
see them command $90,000 $95,000 in competitive firms. So does that work well in practice? Or is that a model that we yet have to test out?
See, we are 1 year into this
exercise where we have started recruiting in the last
12, 18 months. And so far for us, it's working well. We have been able to recruit and we'll continue to recruit aggressively and create that pyramid. And only time will tell whether I mean, over a period of time, whether the 60, 70 ks will become 90 ks, 95 ks. And again, I mean, end of the day, when someone is commanding 90 ks or something, these are people probably with 4, 5 year experience.
But then when people are moving up, then we are also recruiting at lower level, right, at the 60 ks, 65 ks kind of thing. So I think it's, I mean, as long as you 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, but then we are also able to command higher pricing. So that's the model we are really working on. And so far, it seems to be working. We are just 18 months in the journey, and we'll fine tune it as things change.
This is Neera from Mabank. 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? So this would mean that core services would continue to decline for the foreseeable future.
See, when
we are say, today, when we are talking about core services, there
is an element of modernization in the core services. So some part of what we do, whenever we're in a large deal, it is not just maintaining the current state of estate, right?
As part of the large deal 3 to 5
years thing, there's also a commitment to transform the landscape. And so there's some element of digital in every large deal. So 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 and which will probably figure in your digital thing. And some of the digital we are talking today may perhaps maybe in 3, 5 years may become core or legacy or whatever, right?
So that's a cycle anyway. And
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, Saleel also mentioned that in the last couple of years, we have really looked at large deal space fundamentally different. There is lot more focus on large deals. There are many things we have done in terms of being in digital strategy, seeing in deal consultants, improving our solution, being the best of investors. There are multiple things we are doing. Mohit talked about it.
I think that's probably one of the reasons why we are hearing lot more share of difference between from our sorry, from a large deal perspective. Again, from a pipeline perspective as well, as I said earlier, there's tremendous pressure on clients to invest in newer areas. And only way they can do it 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.
So we are seeing that element as well.
We'll take one last question.
Okay. So this marks the closure
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REPRESENTATIVE:] Thank you all very much for being here. Really, it was very good to see the level of questions as well, and I hope you enjoyed the Living Labs. It's something special that was created really so you can see the showcase of our work. Thank you.