India's second-largest IT company has announced that it will roll out major salary hikes for employees in October and January. The salary hikes, while good for the employees, are likely to weight on margins.
Notably, the company has retained its 20-22% operating margin guidance for financial year 2027, despite wage hikes and slower growth.
According to Chief Financial Officer Jayesh Sanghrajka, two key tailwinds are likely going to offset the margin pressure: rupee depreciation and 'Project Maximus'.
"Every 1% change in the currency or depreciation... typically gives you anywhere between 15 to 17 basis points on margins," Sanghrajka outlined while answering a question during the post-earnings conference call.
ALSO READ: Infosys CEO Admits AI Revenue Trajectory Is 'Up And Down' Despite Hitting 8.2% Mark
However, he specifed that since the company has diversified revenue base and 45% of the income comes from outside America; therefore, any appreciation in dollar also means weakening of currencies in other countries.
"The important thing to note also is whenever dollar appreciates against rupee, it generally appreciates against most other currency also. And we have roughly 45% of revenue coming from non-US geography and that kind of offsets some part of the rupee depreciation benefit," the CFO underlined.
As far as project maximus is concerned, the IT giant's management seemed to be betting big, as they emphasised on how the project helped them maintain margins despite big investments in business and talent acquisitions.
"Project Maximus is working well. If you look at last three year period, we have been consistently able to hold or improve our margins despite investment in business, whether it is talent or whether it is sales and marketing. And we believe the project will continue to deliver value from pricing, from utilization, et cetera," Sanghrajka said.
The project is essentially is a margin improvement plan which is aimed at optimising costs. At the time of its launch Project Maximus consisted of five key pillars with the motive of boosting margin growth.
ALSO READ: 'A Huge Positive': Infosys CEO Shrugs Off Threat Of Microsoft, Big Tech Entering AI Services
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
