Infosys reported the lowest annual revenue growth at 1.4% since it was founded in 1981. The IT giant’s constant currency revenue grew 1.4% in financial year 2023-24, narrowly missing its own forecast, as clients continued to cut spends after a pandemic boom. And in a sign that pain in the IT sector is far from over, Infosys said it expects revenue to grow 1-3% in the current financial year too.
The lacklustre revenue forecast for FY25 comes amid heightened uncertainty in the macro-economic environment. This includes the US Fed’s rate cuts being pushed amid high inflation, lower discretionary spending and a political turmoil. The company’s worst growth in the past 15 years was during the global financial crisis in 2009-10 when the figure fell to 3%. It has, however, retained its operating margin guidance at 20-22% for FY25.
“As we look at the start of FY25, we see the discretionary spending and digital transformation work at the same level, and we see the focus on cost efficiency and consolidation continuing. The guidance for FY25 as a band is higher than where we finished last year. While the difference is small, it’s still a little higher from where we finished last year. There are some put and takes in terms of different industries and given the outlook on discretionary spend and digital work remaining the same and more focus on cost efficiency and consolidation, we have created that revenue growth guidance,” said Infosys CEO Salil Parekh.
Infosys’s headcount declined for the first time in over 20 years, with a reduction of 25,994 employees compared to the previous year, bringing the total to 310,000 employees at the end of FY24.
