Infosys clocks weakest Q1 in six years, picks Dash for CEO
Despite reporting its weakest June quarter in six years, Infosys is betting on a tried-and-tested veteran to steer the company through turbulent times. India’s second-largest IT services firm on Thursday appointed Ashiss Kumar Dash as its CEO-designate, effective April 1, 2027, at a time when automation is sweeping India’s $300 billion IT industry.
Bengaluru-based Infosys had a slow start to the financial year, despite meeting analysts’ expectations and outperforming three of its four major rivals. The company generated $5.08 billion in revenue in the June quarter, up 0.83% sequentially and 2.8% year over year.
At the post-earnings press conference, Infosys chairman Nandan Nilekani had effusive praise for Dash. “He’s worked in every part of Infosys, whether it’s delivery, whether it’s sales, whether it’s account management, whether it’s launching a new data center in Bhubaneshwar, everything, and I think he’s someone everyone loves, respects. He’s an uncomplicated guy, focused on what needs to be done,” Nilekani said in his first keynote address in almost three years.
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Infosys reported revenue of $5.08 billion, up 0.83% sequentially and 2.8% annually. Net profit was $819 million, down 11% compared to the previous quarter and up 1.3% compared to the same quarter last year.
Infosys attributed the falling growth forecast to between 1.5 percent and 3 percent to a softening in technology spending by global customers due to high interest rates and ongoing geopolitical tensions.
Ashiss Kumar Dash has been with Infosys for over three decades, having joined it in May 1995.
President Nandan Nilekani highlighted Dash’s combination of strong business performance, technical expertise and ability to deliver bold transformation while preserving the company’s values and customer trust.
The decline in headcount to 328,062 and improvement in staff attrition rates may raise concerns about workforce stability, but it reflects the company’s strategy to adapt to changing customer demands for artificial intelligence and efficiency.
Dash, currently California-based executive vice president and global head of energy, resources and services, becomes Infosys’ seventh CEO after Infosys added over $10 billion in business under Salil Parekh, who joined in January 2018.
Nilekani said Dash succeeds Parekh, where the industry and the company have flourished.
Careful guidance
In the June quarter, Infosys outperformed three of its peers: Tata Consultancy Services Ltd (TCS), which recorded fixed income growth, and HCL Technologies Ltd and Wipro Ltd, with declines of 0.9% and 1.4%, respectively. Among IT’s Big Five, only Tech Mahindra outperformed with revenue growth of 2.2%.
“Overall, we continue to see the macro environment remaining uncertain,” Parekh said in the earnings release. Shareholders were disappointed when Infosys’ shares fell 5% on the New York Stock Exchange. Earnings were reported after Indian market hours.
The demand outlook mirrored that of larger rival TCS, which saw no signs of the environment changing. TechM, the fifth-largest firm for now, is the only Big Five company that looks optimistic.
This warning was also reflected in Infosys’ guidance. The company realized its weakest forecast in the last four quarters, targeting 1.5-3.0% growth for the whole year on a constant exchange rate basis. A fixed currency does not take into account currency fluctuations.
Parekh admitted that business has its ups and downs now.
The company generated $417 million in revenue from advanced AI in the June quarter. “AI revenue is moving so fast that it moves up and down quite a bit on a quarterly basis,” Parekh said, adding that the AI business is growing by double digits. The company first announced artificial intelligence revenue of $280 million in February.
While artificial intelligence revenue increased, the company’s number of employees decreased by 532 compared to the previous quarter, falling to 328,062.
Conversion times
An uncertain demand environment is forcing many customers to postpone technology spending and redirect it to their core business. Many of these are a result of the ongoing Gulf war, which has disrupted supply chains. Dash will take over at a time when the tech world is turbulent, but the company is confident in his skills in artificial intelligence and transformation.
Nilekani said Parekh stepped into the top role in unstable times and brought him calm. “Salil has been the CEO of Infosys for almost 10 years. He came (when) I don’t know how many of you were there 10 years ago, but he came at a time when things were a little unstable and brought calm… He completely transformed towards the digital age and started the AI differentiation and transformation,” said Nilekani.
Dash has been with Infosys for over three decades. He joined the company in May 1995 as a senior contract manager. He is based in California and is expected to be based in Bengaluru when he takes over. Dash is expected to have a five-year term, until March 31, 2032.
Dash’s appointment marks the first time that Infosys and Wipro have engineering graduates at the helm. While Dash is from IIT-Kharagpur, Wipro CEO Srini Pallia is from the Indian Institute of Science in Bengaluru.
margin gain
Net profit fell 11% sequentially but rose 1.3% year over year to $819 million. Operating margins increased 20 basis points from the previous quarter to 21.1%. Management attributed this to buying business at higher prices and using existing bench strength. HCLTech and Tech Mahindra’s margins increased by 40 basis points and 60 basis points respectively.
“Comments by management on slow volume expansion and competitiveness in pricing show how the overall environment has changed. There will be pricing pressure and the fact that Infosys lowered the upper end of its guidance in a historically strong quarter is testament to the impact of AI on growth,” said Shubham Dalia, chief IT analyst at Nirmal Bang Institutional Equities.
HCLTech too gave its weakest July forecast in at least four years and retained its April view of 1-4% revenue growth in FY27. The fourth largest firm, Wipro, on the other hand, expects a sequential revenue decline of 1.5% at worst and revenue growth of 0.5% at best. TCS and Tech Mahindra do not provide quarterly or full-year guidance.
