Infosys’s key digital bets — experience, data and cloud — have all benefited from this trend, leading to strong growth in digital revenues even during the pandemic.
We hosted Salil Parekh, CEO of Infosys, at our flagship Chasing Growth Conference. Key highlights — pending on digital and cloud initiatives will continue to stay strong in 2021 and possibly beyond, smarter pricing of digital skills and other margin levels can offset some headwinds from cost normalisation, and deal pipeline is reasonably strong even after recent mega-deal wins. Expect Infosys to lead the industry on growth. Maintain ‘buy’.
Clients have accelerated digital and cloud initiatives in the past 11 months which will likely continue in 2021. Infosys’s key digital bets — experience, data and cloud — have all benefited from this trend, leading to strong growth in digital revenues even during the pandemic.
Infosys has a strong play in both digital transformation themes-creating efficiencies in existing operations through technologies such as automation and AI and investing in new digital capabilities. Process of investing the savings from technology led efficiencies back into developing new digital capabilities has accelerated. The trend by itself is a growth driver for IT services vendors like Infosys irrespective of whether there is an increase in IT budgets.
The CEO indicated that Infosys has always aspired to be a high margin business. Digital business on average has a higher margin than corporate average and has aided overall margin profile. Infosys is confident of getting better pricing for digital skills with focus on value-based pricing.
The company indicated that it is focused on ensuring proper communication to clients on the difference in skills and value offered by Infosys in each element of large digital programs. The approach has yielded early benefits which is encouraging but requires several more quarters to be embedded in the system.