Infosys Cuts FY27 Growth Even as AI Deals Surge

Infosys cut FY27 constant-currency revenue growth guidance to 1% to 2% on October 23, from 1.5% to 3%, after a quarter of heavy deal wins. AI work rose 29% from the June quarter to 10.5% of sales, and the company still booked $5.2 billion in large-deal wins.

Chief financial officer Jayesh Sanghrajka said clients are pairing that AI demand with a harder ask on price and productivity. Operating margin guidance stayed at 20% to 22%.

Infosys Trims FY27 Growth After a $5.2 Billion Quarter

The print itself was orderly. Dollar revenue came in at $5,145 million, up 1.5% year on year and 1.2% quarter on quarter in constant currency, and up 1.3% year on year as reported. In rupees, revenue from operations was ₹49,244 crore, up 10.7% from ₹44,490 crore a year earlier and 2.1% from ₹48,211 crore in the June quarter. Consolidated net profit attributable to owners rose 6.2% to ₹7,823 crore from ₹7,364 crore.

Operating margin held at 21.0%, a tenth of a point under the 21.1% June reading. Basic earnings per share rose 8.7% in rupee terms to ₹19.32, while dollar basic EPS was $0.20, down 0.3%. Free cash flow was $928 million, 113.3% of net profit and 15.7% below a year earlier. First-half constant-currency growth was 1.9%, on $10,227 million of reported revenue and the same 21.0% margin.

THE SEPTEMBER QUARTER IN FIGURES

The deal book is the number management wanted in the window. Sixty-two percent of the $5.2 billion was net new. The haul included a new seven-year contract worth more than $2 billion with a large international financial-services client, expected to add more than one percentage point to revenue growth in FY28, and a renewal of about $1 billion. Transition on the bigger contract begins late in the March quarter, which is why a record booking can sit beside a weaker year.

The Productivity Ask Inside Those Mega Deals

Chief executive Salil Parekh used the deal tape to argue Infosys still wins the work that takes years and crosses systems. He also said AI is now a tenth of the firm.

We had strong large deals of $5.2 billion, including a mega deal of over $2 billion, reinforcing our position as a trusted partner in the marketplace when clients embark on large and complex transformation programs. Our AI revenue was at 10.5% and grew 29% quarter-on-quarter.

Salil Parekh, CEO and MD, Infosys earnings release, October 23, 2026

Sanghrajka put the other half of the same meeting on the record. Competitive intensity is up. The “higher ask on productivity” is up. Expected price increases did not come through. He said those forces, plus weaker discretionary work in retail and hi-tech, are baked into the new 1% to 2% range, and that pricing pressure continues into the second half alongside wage hikes. Parekh told the briefing it was a soft quarter on volumes and that Infosys is “only taking up contracts that meet our economic guidelines,” including walking away from a large European manufacturing deal that missed its return test.

That is the bind inside the bookings. Clients want Infosys to build new AI systems. They also want AI to make the contracts they already have cheaper. Kotak Institutional Equities had already framed the sector, before this print, as facing about 7% gross deflation and about 3.5% net deflation as buyers push productivity savings into price. Winning a large deal, the brokerage said, no longer automatically means stronger growth. The live argument around the stock is the same point in plainer language: total contract value is a claim on later years, and AI work and a discount on legacy work are often one negotiation.

CLIENTS NAMED IN THE RELEASE

• Crocs: A ten-year agreement to rebuild IT operations, with the client’s CIO talking about cost, automation and scale.
• Mondelez International: AI-enabled supply-chain decision-making, data standards and workflows, including a move toward agentic tools.
• Telia: Network and cybersecurity modernisation on Infosys Topaz.
• Knorr-Bremse, Metsä Group, NTN, KnitWell, Investec: Separate AI, SAP-cloud and core-banking programmes listed in the same release.

Those names are the growth story Infosys is selling. They are also the buyers with the leverage to demand more output per dollar, which is why the guidance moved even as the press release led on AI.

Hi-Tech Revenue Fell 17.3% in Constant Currency

The cut is not only a pricing story. Hi-tech revenue declined 17.3% in constant currency. Retail declined 7.7%. North America, still the main market, was down 1.5% year on year. Europe grew 4.6%. Financial services, the largest vertical, rose 2.1%, and energy, utilities and resources rose 7.3%. Parekh said the weak spots were client-specific in retail and hi-tech rather than a slump in every industry, and that discretionary spending remained firmer in financial services, energy and utilities, and manufacturing.

Sanghrajka added a mix point. Retail had a larger third-party component in earlier quarters, which made the sequential comparison harder. Offshoring has risen through the year and is expected to weigh on growth by about one percentage point, because more work done in India at Indian rates shows up as less dollar volume. Post-sales customer support costs hit the margin by 70 basis points after a reversal in the prior quarter. Extra amortisation from acquisitions took another 20 basis points.

Manav Medewala, a research analyst at Mirae Asset Sharekhan, put the inorganic layer in one line: if acquisitions still contribute about 170 basis points, the revised full-year range implies an organic growth midpoint around -0.2%, against about 0.5% to 0.6% on the old range. That is the quieter number under 1% to 2%. Reported growth can stay positive while the base business is flattish, which is why investors treated the outlook, not the rupee profit line, as the event.

HCLTech Lifted Its Outlook as Infosys Cut

The same September quarter did not produce one Indian IT verdict. HCLTech narrowed and lifted its FY27 constant-currency revenue growth range to 2.5% to 4% from 1% to 4%, and set services growth at 3% to 4%. Its sequential constant-currency growth was 2.3%. Advanced AI revenue at HCLTech rose 28.4% sequentially to $219 million. Tata Consultancy Services grew 0.5% sequentially in constant currency, booked $9.6 billion of deals, and put annualised AI revenue at $3.1 billion, about a tenth of sales. Wipro’s IT services revenue was flat in constant currency at about $2.61 billion, large-deal bookings fell 58.6% to $674 million, and its December-quarter guide is a sequential change of -1.5% to +0.5%.

LARGE-CAP IT AFTER Q2 FY27

HCLTech is the relative winner of this cycle on the guide. Infosys is the one that had to say the second half looks tougher than the first, even with a $2 billion-plus deal in the bag. TCS’s K. Krithivasan has argued that roughly half of the AI deflation in its book has already shown up, and that modernisation and vendor consolidation can offset some of the lost effort. Infosys is not making that claim this quarter. Parekh also listed a messy macro tape: ongoing wars, rate moves, a 10-year yield near 5%, and tariffs still sitting on Global 2000 clients.

A Second Trim in Three Months

This is not the first time FY27 has been written down. On July 23, after a June quarter that already missed the growth Infosys had hoped for, the firm cut the upper end of the year from 3.5% to 3% and left the floor at 1.5%. Parekh said then that the high end had assumed a macro improvement that was no longer realistic, and that a one-time client decision would spill forward. The July cut that set 1.5% to 3% is now the middle step, not the last one.

HOW FY27 GUIDANCE MOVED

1. Start of FY27: Constant-currency revenue growth set at 1.5% to 3.5%, with operating margin at 20% to 22%.
2. July 23, 2026: Upper end cut to 3%. Range becomes 1.5% to 3%. Margin range unchanged. Large-deal TCV $3.6 billion. AI at 8.2% of revenue.
3. October 23, 2026: Range cut to 1% to 2%. Margin range still 20% to 22%. Large-deal TCV $5.2 billion. AI at 10.5% of revenue.

Three months separate the two cuts. In that window the deal tape improved and AI’s share of sales rose by 2.3 points. The outlook still went down. That is the irony in the numbers, not a slogan: the firm is winning more of the work it says it wants, and still has to tell the market that revenue will barely grow in constant currency this year. The September-quarter results posted for investors now carry the lower range as the official year view.

Why Infosys Is Still Hiring 20,000 Graduates

Headcount rose even as the growth range shrank. Infosys added 4,480 people on a net basis, taking the workforce to 332,542 from 328,062 in June and 331,991 a year earlier. It hired 8,000 college graduates in the quarter and is still aiming for about 20,000 over the full year, with more than half of that already done in the first half. Voluntary attrition over the last twelve months was 12.7%. Utilisation is about 85%, which Sanghrajka called the right zone, leaving little slack to squeeze.

THE PEOPLE MATH UNDER A 1% TO 2% YEAR

• Net adds: 4,480 in the quarter, to 332,542 people.
• Campus: 8,000 graduates this quarter, about 20,000 planned for FY27.
• Exits: 12.7% voluntary attrition, or roughly 45,000 people a year on Sanghrajka’s rounding, which still has to be replaced.
• Train-up: Freshers take six to eight months to deploy, so hiring runs ahead of visible demand.

Parekh called the net add a sign of confidence. Sanghrajka tied the plan to attrition, utilisation, demand and productivity, which is a more cautious list. If clients keep taking AI savings in the rate card, a larger bench is a cost as well as a pipeline. Hiring is being steered toward AI and other growing pockets, and Parekh said a majority of Infosys staff in the United States are local hires after a shift the firm started years ago. The on-site to offshore mix has still moved in recent quarters, which matches the one-point offshoring drag on growth.

The Board Raised the Dividend as ADRs Slid

The board declared an interim dividend of ₹26 a share, 13% above last year, with a record date of November 3, 2026. Sanghrajka used the cash conversion and that dividend to argue the balance sheet is not the problem. Indian shares closed at ₹1,153.8 on October 23, little changed, because the results landed after the local close. US-listed shares fell in New York trading once the guide was public. Dip-buyers on the tape pointed at the dividend. The harder reading is that a second cut in three months, on organic growth that may be about zero, is what the multiple will follow until the $2 billion contract starts to show up in FY28.

Margin defence is the other test. Infosys kept 20% to 22% for the year and printed 21.0% in a volatile quarter, with cost and efficiency work offsetting wage and investment spend. Sanghrajka warned that H2 still has to absorb compensation increases and the same pricing intensity. If AI revenue keeps compounding from 10.5% while legacy billing shrinks, the mix can hold the margin even as the top line crawls. That is a stable company and a slower one, which is exactly the year the new guide describes.

The seven-year financial-services contract is scheduled to start contributing in a meaningful way only after this fiscal year. Until then, Infosys is selling AI, hiring graduates, and telling clients the productivity is already in the price.

Disclaimer: This article is news reporting and analysis of Infosys’s September-quarter results and FY27 outlook, and is for information only. It is not investment advice, a recommendation to buy or sell Infosys shares, ADRs or any other security, and it is not a forecast of returns. Readers should consult a qualified registered investment adviser or broker before acting on any figure or statement here. Revenue, profit, margin, headcount, deal and guidance figures reflect company filings and management comments as of October 23, 2026, and may change with later results, restatements or market moves.