Thanks, Margaret. Hello, everyone, and welcome to Infosys Earnings Call to Discuss Q4 and FY 202021 Earnings Release.

I am Sandeep from the IR team in Bangalore. Joining us today on this call is CEO and MD, Mr.

Salil Parekh; COO, Mr. Pravin Rao; CFO, Mr.

Nilanjan Roy; along with other members of the senior management team. We’ll start the call with some color on the performance of the company by Salil, Pravin and Nilanjan, before we open up the call for Q&A.

Please note that anything which we say, which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risk that the company faces. A full statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov.

I’d now like to pass it on to Salil.

Thanks, Sandeep. Good evening and good morning to everyone on the call.

Thank you for joining us for this session. I trust you and your families are well and safe.

We’ve had an exceptional year and an exceptional quarter. Our year-on-year constant currency growth was at 9.6% for Q4.

Our volume growth for Q4 was at 4.6% quarter-on-quarter, reflecting accelerating momentum in the business. Our revenue growth was at 2% in constant currency quarter-on-quarter, with 1 point higher offshore effort mix, lower contribution from third-party deals and our typical weak seasonal [Technical Difficulty].

You can take the hold. Please wait.

Hello. Can you hear me?

Yes. Salil, we can hear you.

Margaret, can we go ahead?

Okay. Carrying on -- in my opening statement.

For the full-year, our growth in constant currency was at 5%. Our digital business grew by 34% year-on-year in Q4, representing 51.5% of the overall business.

Our large deal wins were at $14 billion for the full-year, growth of 57% from the previous year and were $2.1 billion for Q4. Our net new percentage for FY 202021 was at 66%, helping us set up for strong growth in financial year 2022.

With these exceptional results, we had industry-leading growth in financial year 2021. We continue to gain market share.

I’m grateful for the trust our clients have in Infosys as we partner with them for the digital transformation programs. Our growth was broad based with several of our industry segments showing strong growth year-on-year and stems from a market-leading capabilities in digital, cloud, cybersecurity and in data and analytics.

This is what allows us to be the most critical partner for our clients’ digital transformation programs. Our operating margins for FY 202021 improved by 320 basis point -- points to reach 24.5% for the full-year.

It was also at 24.5% for Q4. Our free cash flow was close to $3 billion, a 39% larger than in the previous financial year.

Our cash and balance sheet was at $5.3 billion at the end of the financial year. I’m extremely proud of our employees and their enormous commitment especially during this past year, but in general across the years.

We will launch a second compensation review in a phased manner, starting in July 2021. Our employees and our entire leadership team work cohesively and for the benefit of our clients.

This approach of One Infosys has really enabled us and enabled the company to have a successful financial year in financial year 2021. Looking ahead, we see continued strong demand from our clients, especially in digital, cloud and in data, and we have a strong foundation of a large deal of success in financial year 2021.

Hence, our constant currency full-year revenue guidance for financial year 2022 is growth between 12% and 14%. For operating margin our superior margin performance in financial year 2021 was in part because of improvement in our strategic cost leavers and in part because of cost avoidance and deferment.

With normalcy returning gradually across the world, we anticipate some of the costs to return, with that our guidance for operating margin for financial 2022 is between 22% and 24%. In keeping with a capital allocation policy, we propose to increase the total dividend per share by 54% over the previous financial year, for a full-year dividend at Rs.

27. In addition, we propose a buyback of equity shares up to an amount of Rs.

9,200 crores, which is approximately $1.2 billion through the open market method. With that, let me pause and thank you, and let me pass it on to Pravin for his update.

Pravin, over to you.

Thank you, Salil. Hello, everyone.

Hope you and your family are doing good, safe and healthy. Growth accelerated further in quarter four with year-on-year constant currency growth of 9.6%.

Growth momentum was strong across various business segments with three of them, financial services, high-tech and life sciences reporting double-digit growth. Volume growth was strong, despite quarter four traditionally being a soft quarter.

Most of the critical operating parameters continued to improve during the quarter. Utilization increased further to a new all-time high of 87.7%.

Onshore effort mix reduced further to a new low of 24.3%. Subcon costs increased further by 50 bps due to growth acceleration and high utilization.

We won 23 large deals in quarter four, totaling $2.1 billion, six each were in financial services and retail; three in life sciences; and two deals each in communication, manufacturing, energy utility resources and services, and high-tech segments. Region-wise, 16 were from Americas, six were from Europe and one from rest of the world.

The share of new deals in quarter four was a healthy 52%. For FY 202021, the large deal TCV crossed $14 billion.

Share of new deals within this $14 billion was $9.4 billion higher than TCV of all large deals signed in FY 202020. Client metrics remained robust with 100 million clients count increasing to 32, an increase of four year-on-year.

We added 130 new clients in the last quarter. Net employ addition during the quarter was over 10,300 and share of women employees increased to 38.6%.

Voluntary attrition for IT services calculated on an annualized basis increased to 15.2%, as demand for talent increased. We have implemented salary increase effective January 1, 2021, and as mentioned by Salil already, the next cycle will kick off from July 2021 in the phase manner with the start date of July 2021 for majority of our employees.

Moving to business segments, financial services continue to report industry-leading performance with growth momentum improving further. In the last few quarters, we have seen strong demand uptake in areas that banks are hard to significantly invest in post-COVID such as customer experience transformation, front to back digitization, mortgages transformation, call center technology and operations, lending services, as well as higher investments in large end-to-end digital transformation programs.

In FY 202021, we have 125 large deals from the segment, including six in quarter four, which provides a solid base for growth in the coming year. Sequential improvement continued in the retail segment, along with improvement in deal activity.

While many of the sub-segments in retail remains challenged, we see opportunities in areas like infra labs modernization, adoption of micro services architecture, cloud strategy and workload migration and cybersecurity. Given the pace of recoveries in second quarter of FY 202021 and net new large deal wins in second half of FY 202021, we remain optimistic about this sector as we look ahead into FY 202022.

Communication segment weakened marginally in the last quarter. However, with the deal wins, we expect the performance to improve in the coming quarter.

Digital led transformation, consolidation, 5G, edge computing, cybersecurity, next-gen technologies like AI, IoT will be the disrupting themes in CMT. Energy, utility, resources and services vertical remained soft for most of FY 202021, due to constraint spend in the oil and gas, travel and hospitality, and resources sector.

However, we see signs of stability returning to various sub-segments, given some of the recent large deals wins and quality new account openings. We see opportunities in the areas of cost takeout, vendor consolidation, cloud led transformation and asset monetization, smart grid initiative and uberization of services.

We have a strong deal pipeline, despite pressure on discretionary budgets in some of the impacted customer industries. Manufacturing was one of the most adversely impacted sector because of COVID.

While automotive and industrial segments are emerging strongly as the economies open up. Aerospace sector will take few quarters to get back to previous capacity.

We have seen significant traction and momentum as evidenced by the new wins throughout the year including the largest ever deal in Infosys history signed in quarter three. We are very positive on the sector on the back of strong relationship built during the pandemic and continued net new wins throughout the year.

Even as the effects of pandemic continue and as companies emerge from crisis, our pipeline in the sector is strong and we are confident of gaining market share. Infosys BPM has grown at double-digit rates, with clients investing significantly in digital transformation to enhance efficiency, effectiveness and experience in business processes within their enterprise and global shared services environment.

Lot of this growth is driven through combined IT plus BPM deals, capital carve outs, vendor consolidation and managed services. The digital portfolio contribution to overall revenue increased further to 51.5% in quarter four, with robust growth of 34.4% year-on-year in constant currency terms.

In FY 2021 digital revenues have grown by 29.4% in constant currency terms. We continue to expand these digital capabilities, especially with Infosys Cobalt Cloud portfolio.

In the last quarter we announced the partnership with LivePerson for Conversational AI to help brands manage AI-powered conversations with consumers and employees. We also launched Infosys Cortex, AI-First, Cloud-First Customer Engagement Platform and applied AI cloud build on NVIDIA DGXTM A100 systems.

We completed a definitive agreement to purchase assets and onboard employees of Carter Digital, one of Australia’s leading and award winning experienced design agencies. In quarter four, Infosys was ranked as leader in nine services related capabilities across digital pentagon areas by industry analyst.

With that, I hand over to Nilanjan.

Thanks, Pravin. Good evening, good morning and thank you everyone for joining the call.

We entered FY 2021 with three focus areas, operational agility, liquidity and cash management, and cost takeout. We maintained razor sharp focus on each of these areas throughout the year and our FY 2021 results are testimony to that.

We close the year with 5% revenue growth in constant currency terms and 24.5% operating margins. This was backed by largest ever deal closures of $14.1 billion, a growth of 57% year-on-year, 29.4% growth in digital revenues, improved operating parameters with both utilization and offshore effort mix at all time highs of 84.7% and 74.2%, respectively.

Operating margins for FY 2021 increased by 3.2% over FY 2020. As mentioned earlier, this was due to a combination of factors comprising of strategic cost levers, cost deferrals and other cost benefits, some of which are expected to normalize ahead.

Record free cash flows for FY 2021 of approximately $3 billion, an increase of 38% over FY 2020 was driven by a strong focus on DSO and CapEx optimization. DSO for the year was 71 days.

We had a specific focus on CapEx reduction during the year. Although, there was some increased technology related CapEx largely to support remote working, we continue to optimize on CapEx related to physical infrastructure creation.

CapEx for FY 2021 reduced to $285 million, compared to $465 million last year, despite the higher technology enabled spend. Consequently, FCF conversion as a percentage of net profit was 113.4% for FY 2021, compared to 91.8% in FY 2020.

FY 2021 EPS grew by 12.5% in dollar terms and 17% in INR on a year-on-year basis, driven by strong topline and margin expansion. Return on equity for FY 2021 improved by 1.6% to 27.4% over the last year.

Coming to quarter four performance, we saw another quarter of revenue acceleration with growth accelerating to 9.6% year-on-year in constant currency terms. After observing the effects of salary increase across job levels, operating margins in Q4 stood at 24.5% versus 21.1% in Q4 FY 2020, an expansion of 3.4%.

This compares to operating margins of 25.4% in quarter three. The sequential margin movement is primarily due to a 1.3% impact due to the compensation increases rolled out effective Jan 1st, a 0.3% impact due to increase in G&A costs, partially offset by lower lead costs, improved operating parameters and cost optimization, and other one-off.

Our balance sheet continues to remain strong, liquid and debt free, cash and cash equivalents increased further to $5.28 billion at the end of FY 2021. Yield on cash balances continue to decline.

The yield was approximately 5.1% in quarter four, compared to 6% in quarter three. Quarter four also marked the 23rd consecutive quarter of positive ForEx income, despite significant currency volatility across the globe.

As you know, we have been increasingly emphasizing on taking total shareholder return and increasingly aligning our executive compensation to TSR creation. I’m happy to share that TSR for investors in FY 2021 was in the top quartile of our peer group and ahead of market indices.

In line with our capital allocation policy of returning 85% of FCF over five years, the Board has recommended the following, a final dividend of Rs. 15 per share, which will result in a total dividend of Rs.

27 per share for FY 2021 versus Rs. 17.5 per share for FY 2020.

This is a 54% increase in dividend per share for the year. Buyback of equity shares of up to Rs.

9,200 crores through open market route post approval of shareholders in the AGM. Final dividend along with share buyback would lead to cash payouts of Rs.

15,600 crores excluding taxes in the coming months, another step to demonstrate our commitment of consistent TSR generation for our investors. This would mean total payouts of approximately 83% of our FCF for FY 2020 and ‘21 through dividends and buybacks compared to the 85% over five years that we announced during the rollout of our capital allocation policy in July 2019.

Coming to guidance with a strong exit momentum and the ramp up of landmark large deal wins, we had built a solid base for double-digit growth in FY 2022. We expect FY 2022 revenues to grow by 12% to 14% in constant currency.

Operating margin guidance for FY 2022 is 22% to 24% after considering the impact of compensation reviews, transition impact of large deals and partial rebound of costs like travel, et cetera. With that, we can open up the call for questions.

Thank you. Good to see the progressive capital return policy amounts.

I just wanted to check on your visibility for the year ahead, say, compared to earlier pre-COVID years at 2018 and 2019. How is it different compared to that?

And are you baking in any level of conservatism perhaps into the range based on supply pressures you alluded to and perhaps normalization of signings momentum we have seen earlier in the year? Thank you.

Thanks, Ankur. This is Salil.

In terms of what we’ve seen in the demand environment, I think, it’s one of the strongest demand environments that we’ve seen for a while. The revenue growth guidance at 12% to 14% gives a very clear indication of the comfort we have in the growth outlook.

I think in terms of supply pressures, yes, there are always supply pressures across the market. But as we had said earlier, we recruited over 20,000 people from campus in financial year 2021.

The plan for financial year 2022 is at about 26,000 today, which could increase and we have overall capacity with what we see both in college hiring and lateral hiring to fulfill this demand. So overall, we’ve seen it’s extremely strong growth outlook and we feel comfortable at this stage to conclude the fulfillment as required for this demand.

Thank you, and that’s fine.

Thanks for taking my question and congrats on a good year in a very difficult environment. Two questions from my side.

One is, how should we think about normalized growth rates for you since here on? I know this year you’ve guided very strongly.

But there are some spikes coming in with some of your large deals, specifically your largest ever deal. Expect it looks like you’re looking at much more subdued sequential growth rates, compared to what we saw in September and December.

So how should we think about that? That’s question one.

Two, in your margin guidance, how should we think about progress? We normally have a pattern to margins where you have wage hikes impacting and then things pick up?

How should we think about the seasonality of margins going into this year? And again, specifically, Q2 is when I believe your largest deal is also ramping up and you just talked about the additional wage hikes as well.

So should we expect a slightly different seasonality in Q2? How should we think about that please?

Thanks, Diviya. This is Salil.

I will start on the first part and Nilanjan will comment on the seasonality of the margins. In terms of -- what we’ve seeing in terms of the pattern or steady state growth.

Today, our focus really is on this financial year and the growth guidance of 12% to 14% for this year. We currently see demand in very good shape.

It’s of course a function of how that demand plays out. As you pointed out, in the last financial year, we had 5% growth in an extremely difficult year, where we’ve seen many within the industry shrinking.

So we believe by gaining market share, we believe we are the industry leading growth at this stage. And with what we’ve seen in the guidance is the demand environment has stays the way it is and every indication that it really given the broad economic recoveries in most of the markets as we serve our clients in.

We anticipate that this looks like a good demand environment for some time. However, our guidance is only for this financial year.

Pravin, over to you. Sorry, Nilanjan, over to you, please.

Yeah. So I think, Diviya, we don’t really give a color on the trajectory of the margin.

So it’s -- the guardrail for us like we mentioned between 22% to 24%. We have factored in the second wage hike from 1st of July.

So, yes, in quarter two, you may see some margin pressure there. And later on in the year, there is, of course, some things like travel, et cetera, will open up.

But underlying all this, of course, we continue to work on a strategic cost leavers, which are each quarter in terms of the mix and the pyramid and the automation. And that’s an underlying cost, which we keep on neutralization, which even happening.

So, I think, like I said, 22% to 24% is a comfortable range which we operating in and have factored in the increase of costs of travel and the wage hike.

Hey. Thanks for taking my question.

I have two -- Salil, I have two points related to the quarter and maybe one that’s more broad based. So any specific call outs on Q4 sequential growth numbers?

Obviously, there’s a delta here between volume growth that was very strong and the actual sequential growth and you mentioned 100 basis points expansion offshore mix, which probably had some sort of a cannibalizing impact. And you also said something about less contribution from third-party deals, maybe you can specify on that?

And then appreciate the fact that quarterly bookings can be lumpy. But from the broad picture perspective, can we get some color pipeline trends, directionally are we up?

I think that could be kind of helpful? Thank you.

Sure. Thanks for your question.

Questions on the waterfall, as you pointed out and we shared, I shared in the earlier statement, the volume growth was 4.6%, where the revenue growth constant currency was 2% quarter-on-quarter. We saw about 1 point increase offshore effort mix as you rightly indicated that which show -- does it show up in addition within volume and the actual revenue.

Our third-party deals were deals where we work with third-party hardware, software process. And those deals typically have a cycle that we’ve seen across the quarters in the past year.

In Q4 there was somewhat lower than what we had originally anticipated, most of them are coming through in Q1. And then there’s typical seasonality that we’ve seen over the years in Q4 with what we’ve shared and that came into play a little bit.

However, the demand output for us remains exceptionally strong on larger wins with 66% net new for the full-year last year, give us a very strong base for growth for next year, and so 12% to 14% is strong guidance for us for growth for next year. On the second one, Nilanjan, do you want to go ahead on that one please?

Moshe, can you repeat the second question.

Yes. The second question was more about bookings and appreciated the fact that these can be lumpy on a quarterly basis.

But just to get a grasp a better feel on booking maybe from a pipeline perspective, maybe we can get some color on that, directionally have you been able to replenish a lot of the pipeline that turn into bookings and are bookings up year-over-year, just to get a feel on where we are directionally?

Let me start that. Sorry, Nilanjan, on the pipeline and Pravin, if you want to add anything.

On the overall pipeline for us bookings, we had $2.1 billion of large deals in Q4, which is very strong healthy mix over 50% net new. So we consider that of course the $7 billion of Q3 was incredible, but that’s now a sort of a sustainable rate in the way we look at our business.

The pipeline is, yes, starting to get replenished quite well after an exceptional set of large deal wins. So we see the pipeline coming back robustly.

We see good demand again across different industries and we feel quite good going into this financial year that both the deals we close will support the revenue growth. But equally the pipeline will also start to come back and give us good traction for large deal wins in financial year 2022.

Thank you very much.

All right. Thanks for taking my question.

Salil, just to probe further on the medium-term outlook that you spoke earlier, so I would imagine improving visibility on medium-term with a greater sense of scope from enterprises as they’re accelerating the digitization milestone plus vendor consolidation and improving pipeline that you mentioned. So what are your thoughts beyond FY 2022 and your confidence of keeping on to double-digit type of a trajectory?

And also is the FY 2022 guidance -- revenue guidance imply a higher offshore component, so does it mean that volume growth compared to the 12% to 14%.

So on the multiyear view -- the sort of the overall theme for us is, we see very strong demand from clients, good traction on the cloud, good traction on data analytics, a very good work on AI automation, a good traction across cybersecurity. So all of the elements in which we build capabilities, we feel comfortable that clients are moving ahead quite aggressively in those areas.

We don’t however have a guidance or even an outlook at this stage, which is multiyear, as you know. We have the one year guidance in terms of revenue.

But everything we see indicates that the buying from clients is fairly strong. So really it’s more a function there of the overall macro in terms of GDP.

If that holds up multiyear that will still give us a good outlook. But at this stage we see good demand, good pipeline, good traction, so nothing to change anything in the way we are seeing business.

Of course, the guidance is only for one year.

Sure. And just the second part of that, is there a higher offshore component in -- built into that guidance for FY 2022.

So there again, sorry, I didn’t address that, we don’t specify the volume component in the guidance. We do have a view once we complete the year we will have a look at it.

But it’s not part of our forward-looking guidance on the volume, which will be split in terms of the revenue for next year.

Okay. And just finally, how do you expect the core to deliver which has declined almost double-digit this year, so your views on that?

So there what we’re seeing is large enterprises are looking at their core escape and applying tremendous automation to it and looking for efficiencies. Our own approach is to help them achieve that automation, that efficiency and that benefit, which they are then taking and investing in their digital growth agenda items.

We continue to see that sort of a movement. Again, we don’t have a specific guidance on the evolution of the core for the full year.

But that’s the broad trend we’ve seen in the past few quarters and we continue to see that going ahead.

Thank you.

Yeah. Hi.

Thanks for the opportunity. So first question, Salil, are you seeing your spend coming back on the discretionary longer term payout kind of deals or project or do clients continue to spend more is still on those costs takeout, cost savings, cloud migration kind of a project?

And second question is that how do you see the mix in your pipeline in terms of, say, less than $500 million and more than $500 million TCV kind of deals?

On the first part, I think, there’s both types of work that you reference, the cost focused work, the efficiency focus work and also the digital transformation type of work that we get from our client. If you look back in financial year ‘21, if you look at the sort of work we announced that we’re doing with Vanguard.

It’s a digital transformation that starts from the business, looks at technology and looks at operations. Equally they’re doing other programs with other clients, which are more focused on cost takeout and some even on consolidation.

So they’re quite well represented in what we’re seeing in the outlook today. In terms of the size, we don’t specifically comment on the breakup of the pipeline.

Having said that, the pipeline, the actual wins last year were quite well distributed and the pipeline has a similar type of distribution. Of course, as we mentioned last year, we had one specific deals, which was the largest in the history of the company.

Those are deals which happen every now and then. So those are not really predictable in that type of a horizon.

Understood. I have just one more question for Nilanjan.

Nilanjan, do you see any impact from the recent tax changes that are proposed in the U.S., impacting your effective tax rate in the coming years? Thank you.

Yeah. So, as you know, again, this is just proposals and there’s some papers out.

This, of course, has to go through both the houses, senate and in Congress. There two things, the first sort of people are talking about one is, of course, the minimum alternative tax, which is largely for U.S.

based corporations who have international subsidiaries. So that’s a different impact and not -- doesn’t impact us.

The other, of course, is the rate increase, which they’re proposing on corporate tax itself from the 21% to 28%. Now, having said that, our most of operations are run through our U.S.

branch, we don’t have a U.S. subsidiary through which we run most of our operations and therefore increase in any tax rate there, one is, of course, you will get set off in India from a foreign tax credit partially and there can be a minor impact if there’s any flow through over and above that.

But like I said, we run it through a branch structure and therefore the impact is -- will be less.

Understood. Thank you.

Salil, in your prepared remarks, you had mentioned cost avoidance and deferment as, sorry, instrumental in 2021 narrative. I was hoping you could elaborate on that.

I wasn’t sure if you were referring to the cost within Infosys or at on the client side is, is that what you mean?

No. I think…

Yeah. Go ahead.

Yeah. Go ahead.

Yeah. So I think like we’ve been saying over the last four quarters and during the calls as well, right?

So last year, as COVID hit, we were very clear, looking at the volatility and uncertainty in the economic environment, that we had to do certain cost postponements, or for instance, salary hikes, which were due in June of July last year. That was postponed into quarter four.

We just announced that in the beginning of January. So that was one of them.

Even the promotion cycles were delayed in FY 2021 and we started that only in Q3. Similarly things like recruitment, et cetera.

So that was one part of it. And those are the costs which will come back now in FY 2022.

For the full year impact of the compensation hike of quarter four will be felt into FY 2022. We’ve also just announced that we will look at under compensation cycle commencing 1st of July, that will impact three quarters of FY 2022.

So those are the cost deferrals what I call. The other cost reductions like travel, et cetera, and part of that will start coming back as the world opens up probably closer in the second half and travel looks better.

Of course, for first half we don’t see much of change there. So these are what we calling, of course, coming back and some of the tailwinds in last year becoming headwinds.

And of course, underlying that we have underlying cost optimization program around that strategic leverage of Offsite/Onsite offshore mix around the pyramid, around automation, we continue to press on every year as well.

Got it. Thanks for that clarification, Nilanjan.

Thank you.

Welcome.

Yeah. Good evening, gentlemen.

Thanks for giving me this opportunity. First question, Nilanjan, between the three options of open market buyback, tender buyback and dividend, if I were a shareholder, and of course, subject to our individual taxes, our limited understanding is that the tax transmission loss on open market buyback is higher than in the other two cases, given the applicability of CG.

So just curious on the thought process of returning this Rs. 9,200 crore capital through open market route and instead of, let’s say, tender or dividend growth and will this be a recurring mechanism?

Yes. We are completely guided by our capital allocation policy of returning 85% over the five-year period from FY 2020 to FY ‘24 and that talk about a progressive dividend policy and supplanted by buybacks or dividends, any special dividends.

I think, consistently the message back from the market and investors has been, they don’t prefer one-off special dividends, they would like to see a consistent progressive dividend policy and the like dividend policy and backed by, like I said, these one-off. So the Board considered the buyback as the best way to return and now versus open market and tender, of course, the choices are -- the reason for them are different, of course, in tender you are committed to a maximum price as well, in fact, a premium, which you actually lock onto, whereas in open market, you have committed only to a maximum price and you buy over the next few months subject to the maximum as well.

So the opportunity for EPS secretion is potentially we have seen going by the past trade we have done is higher in case of an open market. As regards the tax implication, we understand that SEBI has now mandated the stock exchanges to indicate even in an open market, the benefit in terms of buyback because the company has paid -- will pay buyback taxes.

So in the hands of shareholders that the SEBI, I believe has told the stock exchanges to indicate deals where the company is buying back these shares. So that was available in the tender offer previously.

I believe SEBI has now rolled it out across common but this is -- we don’t have any notification, but this is our informal understanding.

Sure. So you meant to say, Nilanjan, that it will not be further -- capital gains will not be taxed in the hands of shareholders, is that…

Of course, tax, we don’t have any -- we -- that’s what we informally understand. We don’t have anything in writing.

Yeah. Yeah.

Thanks of course.

The investors will have to see that. The investors will have to see the individual cases.

We can’t comment on that.

Sure. Sure, Nilanjan.

And a follow-up question is that tender buybacks have been very effective price signaling mechanisms in case of Infosys itself and some of our competitors earlier. On the other hand open market buybacks have a typical defensive connotation, whereas objective is more price support rather than by signaling.

In that defensive context, actually the maximum buyback price of Rs. 17.50 looks very aggressive.

So just curious on the thought process of arriving at this Rs. 17.50 number, should this be read as a management signal like in tender buyback or you’re just looking some extra buffer because markets are being very volatile both sides and this is a long run process of six months?

Yes. So, as you know that this is the maximum price, so unlike in a tender, where you actually give a premium and commit to the premium, this is the maximum price and this gives you headroom.

And since the -- from the date of announcement, there’s a process where it will get approved in the shareholder meeting in -- sometime in June and then the open buyback will offer. The runway over this prices over the next maybe seven months to eight months, which is a much more longer, so that’s the headroom which we created, and of course, the Board also looked at any possible EPS equation, et cetera, et cetera, while deciding this price.

Sure. Thanks.

That’s it from my side. Thanks for giving me the opportunity.

Yeah. Thanks for the opportunity.

My question is what further to Pankaj has asked. So if you look at the FY 2021, you guys have set up a large threshold in terms of a mega deal wins.

So do you believe in FY 2022 looking at the pipeline, you are not actually disappointed in terms of the mega deal pipeline shaping up as a whole?

Hi. Thanks for the question.

This is Salil. The pipeline is looking in good shape today.

The pipeline has been replenished as we were discussing earlier from some of the wins. It’s always difficult when you’re looking at one, which is the largest win in the history of our company.

But having said that, we see quite comfortable that the overall pipeline is in good shape and we’ll continue to create market share gains by winning large percentage of this digital transformation programs.

Okay. And second question to Nilanjan, if you do -- I believe Nilanjan FY 2022, the large deal ramped up cost as a headwind could be higher than FY 2021 or it may be almost similar and this may not be an incremental headwind to the margin in FY 2022.

And just a follow-up on attrition, despite giving away like starting from January a 500-basis-point improvement in -- increasing the attrition looks higher, because seasonality in terms of higher attrition really comes in Q1, Q2. So what has led despite a wage hike with such a high increase in the attrition?

Yeah. So quickly on the large deal, we mentioned in FY 2022 there will be actually a headwind, like I mentioned in my opening commentary.

There will be some marginal initial headwind as we ramp up on the large deals as well. So that’s factored into the margin.

But Nilanjan do you believe that could be incremental versus FY 2021 or it’s almost similar to FY 2021.

No. Since it’s going to impact my margin for next year, right, on a year-on-year basis, so in a way it’s incremental.

Okay.

On the -- this is Pravin here. On the attrition, there are two factors side, one is of course, growth has come back in a big way after the first quarter -- after -- in the first quarter of last year due to pandemic growth was very subdued.

But since then the growth has picked up not only for us, but for competition as well. And second one is, the growth come backs largely in India, right, I mean, offshore, Onsite percentage has decreased dramatically further.

Our Onsite percentage is 23% -- it is 24.3% and it was around 27% four quarters back. So it’s a combination of both.

One is growth itself has picked up and on top of it, most of the growth volumes are happening in India, and consequently, there is tremendous demand for talent and that’s resulting in higher attrition.

Okay. Perfect and all the best to the management.

Thank you.

Thanks.

Hi. Thanks.

Yeah.

Okay. Thanks for taking my question.

Just one from my side, obviously, offshore effort has improved significantly over the last year, right? Do you think this could postpone over a longer term even after normalcy resumes and if could you help us understand the more longer term impact on revenue growth and margins as a result of this?

That’s one and just a second piece as an extension of the earlier question. Corporate tax rate increase in the U.S.

from 21% to 28%, do you see any impact on the budget or -- obviously it’s a longtime aware that any earlier indication if you can provide that help budget sentiment in country? Thank you.

Thanks. Thanks for your question.

This is Salil. Let me start.

I think, as you pointed out, we’ve seen a shift in the Onsite offshore mix especially in the last year. As Pravin and Nilanjan were sharing it’s a huge shift for the last few quarters.

Looking forward, in the medium-term, it’s difficult to say, I think, there are several factors, which will support it, because it enables really the remote working to be applied in a broader context. But there are other factors where there’s a lot of digital transformation work and then we engaged from digital centers, from our digital studios, other proximity centers that we built in Europe and the U.S., and those have huge amounts of demand as well.

So we don’t have a sense today what will be this outlook going forward, there are both sides of what this can look like. At this stage for this financial year, given where the COVID situation is, my sense is at least in the first few quarters, we will continue to see what we have seen in the last few quarters.

In terms of the clients spend we have not seen any impact at this stage on the client IT spend with respect to the tax change. We will -- as Nilanjan was sharing, once the concept becomes converted into whatever regulation that is being put forward, we’ll see if that affects you.

But at this stage we have not seen any change in compliance.

But you -- do you foresee a potential impact or still very difficult to say it will run in the upside for you from a tech perspective?

We don’t see -- we don’t have a way of understanding whether there’ll be impacts from that specific point or not. However, the overall team is very positive in terms of tax spend as we were discussing in an earlier question response.

There’s huge amount of interest from clients on digital transformation, and we see that our market share is improving and we have more and more connects with clients that we are gaining growth momentum in that on that basis.

Okay. Thank you.

Hi. Thanks for the opportunity.

Just one question.

Can you hear me all right now?

Yeah. Just one question, what’s the currency assumption that we’ve taken for our margin guidance?

See we have give our…

Okay.

… overall margin guidance. We don’t really say on how we model the currency.

So I think that’s something which we historically do.

Okay. So would it be more on a constant currency basis or let’s say compared to the last year or should we think about it?

See this margin is always on a reported basis, so that -- all that is factored into our margin guidance.

Okay. Okay.

And the second question was in terms of iteration, so typically we have seen historically a bump up in terms of attrition once the salary hikes are rolled out. So how should we think about the near-term trends in terms of attrition?

And in that context, how are we looking at utilization, which are running at historical highs?

This is Pravin here. Given the high demand situation, the attrition will probably be around this level for the next couple of quarters above.

On the utilization side, we are recruiting aggressively. We are also making hikes on the campuses and so on.

So as we start getting interest of freshers into the mix, the utilization will come down. The current utilization of 87.7% is very high and not what we are comfortable with.

But over the year -- over the quarters it will trend our next year plan.

Okay. Fair enough.

Thanks a lot and all the best.

Thank you. Nilanjan, just wanted to dig in a little bit on the margin guidance for FY 2022.

Besides the impact of wage hike, how should we see the potential shift in Subcon expenses? It’s -- in Q4 it was running at five-year high level, despite continuous increase or shift to offshore and build up locally in U.S.

And will there be a material change in the cost of third-party items for clients in FY 2022. It was around 3% level in FY 2021.

Yeah. So I think the Subcon costs increase is largely coming out of the higher demand environment, like Salil said, 4.6% demand and unlike in the past, we’ve seen also our Subcon increase more towards the offshore because of this higher demand and requirement, not that much Onsite.

Of course, as now our recruitment engine kicks in, we get more attrition in pipe -- into control, looking at also the wage hikes as we see pairing that down, this hopefully over the next few quarters we can start moderating that as well. And the other regarding the third-party costs, I think, they are very, very small in the overall mix as well.

So really no color on where that will go. It’s a very small part of our revenue mix.

Sure. And Salil, qualitatively you have been repeatedly mentioning that the demand environment remains one of the strongest in a while for you.

Is the broader macro environment was on -- and again I’m not asking for a guidance, do you think the opportunity for growth remains as strong as what you’re seeing beyond near-term or do you think scale at some point of time will start within a constraint?

Yeah. Again, as we discussed earlier, the guidance is for this financial year, but the demand environment and the technology spend is really very strong.

There is also a lot of large enterprises are shifting their tech spend to improve connects with their customers, improve their supply chain, improve connects with their employees and so it’s becoming in addition to cost on the P&L and investment as well. That gives us a lot of confidence that the tech spend on digital with large enterprises is looking very robust and all the capabilities we have built over the past several years positions us well to continue to benefit from it.

So, overall, my sense is, this is a good environment. We are well positioned in that space and the connect with clients on digital technology spend is in a very good place for Infosys.

Sure. Thanks for answering my question and best of luck for FY 2022.

Thank you.

Am I audible?

Yeah. So can you speak something -- are there any areas of spend which got cut back in post-COVID or pandemic and which has yet not come back, which can come back in the coming years, particularly in key large verticals?

Sorry, I didn’t follow it. You mean from a client spend perspective or our own internal spending?

Client spend perspective in your key large verticals, are there areas of spend which got cut in pandemic and which has yet not come back which you think can come back in the coming years?

So there -- and Pravin might add. As Pravin has said earlier, the several industries, for example, retail, manufacturing saw some very early impact in Q1 last year, almost every industry has each quarter improved their positioning, their spend.

At this stage most of those are back. We had overall low or minimal exposure in that sense to some of the travel hospitality areas.

So those will probably come back, but we don’t have excludes in that. From our own industry exposure, most have come back through each quarter of last year.

Pravin, if you want to add anything, please?

Yeah. I think, Salil, has probably responded to the question.

The only thing is, as we said, in some sub-segments we continue to see some business. But in every sub -- even in those cases, clients are looking at some kind of spend just from a resiliency perspective and also in terms of coming up with new ways of engaging with the stakeholders, right?

So even in those cases the spend is coming back. But somehow the, like for instance, in manufacturing, I talked about the sub-segments, it was one of the vertical which was majorly impacted.

But in the last couple of quarters we have seen some spend come back both in industrial and automotive segment, whereas aerospace segment continues to be digital. So our sense is it might take several quarters before we see normalcy in aerospace.

Similarly in the services side, travel and hospitality will probably take some time with multiple waves of pandemic happening. But even in those cases also there is some amount of spend coming back as compared with what we thought three, four quarters back.

And maybe your outlook on pricing, particularly within the digital segment, given the kind of value addition you’re bringing to the client, if you can give us, not next year, but more on a medium-term, is there a possibility of getting a price -- better pricing year-on-year going forward?

Let me start and then Nilanjan might also add on it. We think the digital capabilities that we are providing and working with our clients are really high end and high quality, and we are working with our clients to ensure that that becomes more and more visible and then over time demonstrate that value which can convert to something on the pricing.

But as you pointed out, this is more a medium-term view for us as we start to demonstrate more impact from the digital areas. Anything you want to add, Nilanjan?

No. I think you covered it well, Salil.

Okay. Thank you.

That’s from me.

Hi. Thank.

Thanks for that. So thank you everyone for joining us.

We are extremely delighted with the full year performance in financial year ‘21, 5% growth, which we believe is industry-leading growth in this market with very strong margin performance for the year and all of our parameters, including free cash flow, dividend, share buyback, all pointing to extreme care and concern for the business, for clients, employees and shareholders. Looking ahead, we feel this is a strong year for us, 12% to 13% growth really repositioned the business focused on digital services, where Infosys is recognized for these services and a strong outlook on margin of 22% to 24% for the full year.

So look forward to that, being the foundation of yet another successful year for our clients, our employees, the company and the shareholders. Thank you everyone for joining and catch up on the next quarter.

Thanks, everyone, for joining us on this call. Look forward to connecting.