Discretionary spending is still low: Salil Parekh

Discretionary spending by clients is still low from where it was several quarters ago with the exception of financial services, according to Infosys CEO and managing director Salil Parekh.

Infosys raised its revenue growth guidance to 3%-4% in constant currency for the ongoing fiscal.

“We had a very strong Q1. Good financial services volumes in the US gave us more confidence for the year. Then we saw the large deals in Q1 itself that gave us more visibility for the full year. Then the acquisition with respect to in-tech. Those combined give us the support to increase our revenue growth guidance,” Parekh says at a press conference after the company announced its first-quarter results.

Infosys headcount fell for the sixth consecutive quarter in Q1 FY25. It was down by nearly 2,000 at 3,15,332 employees.

Infosys plans to hire 15,000 to 20,000 freshers in the current fiscal. “We will be going to campus and fresher hiring – both on campus and off campus –  will be in the range of 15,000 – 20,000 in FY25,” says Parekh.

On the Karnataka government’s recent move to mandate quota for locals in private jobs, the Infosys CEO says the IT firm will support whatever regulations and guidelines that come. “We will wait and see what they look like. But our approach is to make sure we align to the new laws and regulations that come out,” he adds.

Net profit of Infosys rose 7.1% year-on-year to ₹6,368 crore In Q1 FY25 compared with ₹5,945 crore in the year-ago quarter. Revenue from operations increased 3.6% year-on-year to ₹39,315 crore compared with ₹37,933 crore in the corresponding quarter last year.

Operating margin stood at 21.1%, a growth of 0.3% year-on-year and 1.0% sequentially. Attrition came in at 12.7%, up from 12.6% in Q4 FY24 and down from 17.3% in Q1 FY24.

Earlier this week, IT firm HCLTech’s CEO C Vijayakumar said he expects discretionary spending in FY25 to be the same as last fiscal. HCLTech’s revenue growth guidance is in the range of 3%-5% year-on-year for FY25.

Last week, Tata Consultancy Services (TCS) managing director and CEO K Krithivasan said it is too early to say whether growth momentum is sustainable because market conditions continue to remain the same as they were in the last quarter. “The reason we are hesitant to call this growth sustainable is because we do find market conditions volatile. Customers take decisions at a very short notice based on what they perceive of the market conditions,” Krithivasan said. TCS plans to hire close to 40,000 trainees this year.