Infosys Ltd beat analysts’ expectations as it grew at its fastest pace in three years in the last fiscal year, even as it flagged the potential impact of artificial intelligence technologies. The advance of artificial intelligence (AI) may squeeze revenue in the current fiscal year, India’s second-largest information technology (IT) services company said, much like peers which have noted client-specific challenges and the rise of automation tools.
The Bengaluru-headquartered company reported $20.16 billion in revenue, up 4.57% from a year earlier. A third of its incremental revenue came from manufacturing, a sector which brings a fifth of its business.
For the company, macroeconomic conditions remained mostly unchanged in the March quarter. “We are not seeing something that has unusually changed from the last quarter to this quarter,” said Salil Parekh, chief executive of Infosys, during the company’s post-earnings press conference on Thursday. He added that the company is eyeing more business from financial institutions and energy and utilities companies.
Financial institutions make up almost a third of the company’s revenues, whereas energy and utilities firms bring a little more than a tenth. Net profit jumped 4.9% to $3.31 billion.
Infosys beat a Bloomberg analyst poll’s expectations of $19.15 billion in revenue. However, the company’s shares traded 6.7% lower on the New York Stock Exchange, indicating investor disappointment.
At the earnings call, Parekh flagged the threat of automation tools.
“So, the compression is coming on some of the services, and the growth is coming on other services, and the compression is typically in the areas where the AI foundation models and some of the tools are very efficient,” he said.
Much like Infosys, its Big Five peers Tata Consultancy Services, Wipro, HCL Technologies and Tech Mahindra have all voiced concerns about the troubled demand environment, as geopolitical and trade uncertainties force large clients to defer tech spending. Automation tools and increasing insourcing by large companies are further eroding the business of IT services companies.
TCS and Wipro ended FY26 with lower revenues, marking the first time two of the country’s four largest tech outsourcers ended with a full-year revenue decline. TCS and Wipro ended with $30.08 billion and $10.48 billion in revenue, down 0.54% and 0.32%, respectively. Managements of both companies highlighted concerns regarding uncertain demand and client-specific issues.
One bright spot was fifth-largest Tech Mahindra Ltd, which ended last year with $6.39 billion in revenue, up 1.9% from the preceding year. It reported growth after two years of a revenue decline, but remains cautious about demand. Third-largest HCL Technologies Ltd clocked the industry-best revenue growth of 5.95% to $14.66 billion. Still, it outlined slower growth in the current fiscal due to four clients pausing and pulling back their tech commitments. It guided for 1-4% full-year growth in constant currency terms.
According to Sushovon Nayak, lead IT analyst at Anand Rathi Institutional Equities, Infosys earnings were weaker than expected. “Street expected 2-5%, which would have been toned down after the HCL print. At the midpoint, organic FY27 growth cc would be 2.25% ( vs. 2.4% cc in FY26). The miss could be attributed to a mix of lower revenue from large European manufacturing client and its decision not to pursue a return-dilutive deal (together 75-100bps). Moreover, increasing offshore efforts mix, coupled with some AI-related revenue deflation may have also weighed on growth,” Nayak said.
Infosys now expects 1.5-3.5% revenue growth in constant currency terms in FY27, higher than 0-3% it estimated in April 2025. That would mean a slower growth than HCLTech, which expects growth up to 4% on the upper end of its guidance. The guidance does not factor in about 200 basis points of growth from two acquisitions Infosys closed in the previous fiscal.
The company declined to comment on succession planning for the role of its chief executive.
“As we look ahead to the financial year 2027, we see large opportunities in AI services. We also see continued competitive intensity, and we see an AI productivity impact,” Parekh said.
The company, which reported about $280 million in revenue from AI services in the December quarter, did not share the same for the March quarter.
While Infosys’ profitability fell 80 basis points to 20.3%, TCS, Wipro, and Tech Mahindra’s margins rose between 10-290 basis points. In contrast, HCLTech’s margins fell 110 basis points to 17.2%.
Much of Infosys’ decrease in margins came from the upfront costs associated with acquisitions it announced last fiscal. Infosys spent more than $800 million on acquisitions last year, its highest since listing.
The decrease in margins accompanies an increase in headcount, as Infosys added 5,016 people in FY26 to end with 328,594 employees. This implies that the country’s top five presented a mixed picture in terms of headcount. TCS cut more than 23,000 roles, mainly because of the layoffs it announced last year, whereas Tech Mahindra cut headcount by more than 1,100.
