Infosys Q2 Report: Net profit rises 20.5%, Salary Hikes in January, Special Bonuses, New hires and more

Infosys is India's second-largest IT services firm. So, its quarterly reports are an important milestone for the industry. The IT major, on Wednesday, reported a 20.5% growth in its consolidated net profit for the second quarter ending September 30. The net profit was Rs 4,845 crores in the period vs Rs 4,019 crore of last year, same period. Further, Infosys reported a 14.45$ rise in its net profit from Rs 4,233 crore posted in the previous quarter (Q1).

With this, the company has also revised its annual revenue growth forecast between 2-3% in constant currency. Earlier it was a flat rate at 2%. The biggest surprise for Infosys, however, came from margin gain; a healthy 260-basis points (bps) improvement over the preceding quarter and 360 bps over the corresponding period in the previous financial year at 25.4%. This narrowed the margin gap with industry leader TCS whose margin at the end of Q2 stood at 26.2%.

The company has attributed much of this gain to the cost-cutting measures. It had initiated them at the beginning of the year. It included deferment of salary hikes, freeze on discretionary expenses like travel and brand expenses, gain from changes in onshore-offshore mix, and use of automation and subcontracting.

“The strength and resilience of Infosys were fully visible in Q2 with operating metrics witnessing a healthy increase; broad-based growth, highest ever large deal TCV at $ 3.15 bn and attrition reducing to single digits”, said Pravin Rao, COO. “Employees have been a critical part of our success. As a recognition of their stellar performance, we are giving 100% variable pay along with a special incentive for Q2. Additionally, we are rolling out salary increases and promotions across all levels effective January 1.

Thus, Infosys will roll out salary increases, promotions effective January 1.

Salary hikes will be identical to previous years. Infosys paid 6% to over 85% of its employees in 2019. Voluntary attrition was at 7.8%, the lowest among many quarters. Employee count stood at 2,40,208 people. "The attrition is significantly lower and it is to our comfort. During the pandemic, we had a tremendous focus on employee intervention. We have created a focus on physical and emotional involvement and over 200 interventions," said Rao.

Infosys hired 5,500 people including 3000 freshers in the second quarter. Further, the company plans to hire 16,500 freshers this year and has a target to hire 15,000 people next year.