Ladies and gentlemen, good day and welcome to the Infosys Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Mahindroo. Thank you. And over to you, sir.

Thanks, Margaret. Hello everyone and welcome to Infosys earnings call to discuss Q1 FY21 financial results. This is Sandeep from the Investor Relations team in Bangalore. Joining us today on this call is CEO and MD, Mr. Salil Parekh; COO, Mr. Pravin Rao; CFO, Mr. Nilanjan Roy along with other members of the senior management team. We’ll start the call with some remarks on the performance of the Company by Salil, Pravin and Nilanjan, before opening up the call for questions. Please note that anything which we say which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risks that the Company faces. A full statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I would now like to pass it on to Salil.

Thank you, Sandeep. Good evening and good morning to everyone on the call. I trust each of you and your loved ones are safe and healthy. We’ve had an exceptionally good quarter in our first quarter of this financial year. I’m extremely proud of what we have achieved as a team. The results for Q1 were strong across multiple dimensions. Revenues, continued differentiation in our digital offerings, large deal wins, operating margins, collection and cash flows and reduction in employee attrition. Let me share with you some highlights. Our revenues grew at 1.5% year-on-year in constant currency terms. Digital revenue grew at 25.5% year-on-year in constant currency and now accounts for 44.5% of our revenue. We delivered 22.7% operating margins, which is an expansion of 220 basis points year-on-year and 160 basis points sequentially. This was achieved after rewarding our employees with higher variable pay. Our employees have displayed incredible dedication and resilience and have been an integral part of our Q1 performance. Large deal wins were at $1.7 billion for the quarter. Large deal pipeline has improved over the past three months as clients look at expanding engagements with us due to their trust in us and our exemplary service delivery in the crisis. Our voluntary attrition in IT services is down to 11.7%. Increased focus on collections in the results, and this was evident in our operating cash flow of $783 million for the quarter. Our balance sheet remains strong with cash and investment position at $3.8 billion with no debt. I’m also happy to report that yesterday we announced a landmark digital transformation engagement with Vanguard. We will partner with Vanguard to drive the digital transformation of the recordkeeping services on to a cloud-based platform. Coupled with our strong Q1 results, this gives us a powerful foundation for the rest of the year. While achieving these outstanding results in Q1, our focus and attention has been for the wellbeing of our employees and the highest level of service delivery for our clients. We’re focused on the safety and hygiene of the environment in our office locations and also leveraged our technology infrastructure to enable 99% of our 240,000 employees across 46 countries to work-from-home. For our clients, we have ensured the highest level of service. The extensive digital investments we have made over the past several years enable us to operate with tremendous stability and combat uncertainty with resilience. This is serving to increase the trust that our clients have in us. We reoriented our client focus with speed, given new and emerging needs, cloud and digital, cost efficiency and automation and consolidation discussions. Our investment in localization in the U.S. over the past several years, resulting in six digital centers, college hiring and the majority of our U.S. workforce being local, helped us to better manage the evolving visa regulations in the U.S. Our business model is more resilient as we look ahead. We have put in place a comprehensive cost program and cash management program as the crisis started, and it has provided us significant benefit and will form the basis of our operating approach for this financial year. We remain committed to support the communities we live and work in. In India, we’ve provided medical support through supplies, technology supporting and contact tracing for government agencies. We’re also providing medical and contact tracing support in the U.S. and UK to different government bodies. Notwithstanding the large stimulus programs in the U.S. and Europe, there are still economic uncertainties in those markets, as there are still emerging medical scenarios. There are also emerging medical outcomes in India that are not fully known. However, with what we have learned in Q1 and ongoing strong planned contracts, we feel the strength of our franchise is coming through clearly. And with that, we will reinstate our guidance. For the full financial year, our revenue growth guidance is 0% to 2% year-on-year in constant currency. Our operating margin guidance for the full year is 21% to 23%. With our continued attention to client needs, employee wellbeing, cost and cash focus, and strong client reaffirmation, I’m more convinced now that we will emerge stronger from this crisis. With that, let me hand over to Pravin. Thank you.

Thank you, Salil. Hello, everyone. The pandemic has created an unprecedented impact on global economies and the way businesses function. At Infosys, our primary focus has been on employee safety and planned continuity. Thanks to our evolved BCP measures, we have been able to respond well to the situation through multiple measures for employees, like enabling work-from-home for our global workforce, health and safety measures, evacuation of stranded employees, enhanced support, remote engagement, overnight policy changes, and extended communication. On the client side as well, we responded very swiftly in enabling them to run their operations seamlessly, which is visible in our strong and resilient quarter one performance, which I will now touch upon. Clients have recognized us for the speed, security and effectiveness of our remote enablement efforts. Our steps on supply enablement and client centricity led to lower impact of COVID on quarter one, compared to what we were expecting at the start of the year. Despite the COVID-related challenges, we registered 1.5% year-on-year revenue growth in constant currency terms in quarter one. Financial services, hi-tech, life sciences and healthcare segments witnessed positive growth on a year-on basis, while communication, manufacturing, and energy utilities, resources and services segments were flattish. Retail segment saw weakness as expected. Geography wise, Europe grew by 4.4% year-on-year in constant currency while North America remained stable. As expected, utilization in quarter one was lower. However, onsite utilization remained steady for quarter one, after a drop in early part of the quarter. This was due to our extended focus on cost optimization and hiring freeze. Onsite offshore effort mix deteriorated slightly from quarter four but was better than quarter one FY20 by 70 bps. Only 10% of the revenue impact in quarter one FY21 was due to supply side issues as we have achieved remote work enablement for over 99% of our employees. Large deal wins were healthy at $1.74 billion for quarter one. This excludes the largest ever deal signed in Infosys history that we have closed in quarter two. We won 15 large deals in quarter one, out of which 5 deals were in financial services, 3 deals in retail, energy, utility and services and hi-tech, and one deal in manufacturing. Region wise, 13 were from Americas and 2 were from Europe. Share of new deals was 19%. From this quarter, we will be disclosing voluntary attrition for IT services, the key monitor [ph] for us. Voluntary attrition for IT services declined to 11.7% compared to 20.2% in quarter one last year, significantly lower than our comfort band of 14% to 15%. Let me talk about some broad themes that are playing out before I touch upon the segments. Clients are looking at building resiliency in their operations, improving efficiency and cutting costs. There’s a growing interest in remote workplace solutions, employee experience, cloud solution and cyber security. There is growing acceptance that pace of digitization must accelerate. There is weakness in spending, especially in the area of discretionary spend, as clients continue to focus on preserving cash and maintaining liquidity. All this translates to a deal pipeline which is robust with focus on cost takeout, digital transformation, captive takeover and vendor consolidation. We are increasingly seen as a preferred partner for clients due to our focus on digital capabilities, differentiated localization strategy and improved geographical footprint. Moving to the business segments. Financial services, after an initial drop in early part of quarter one, saw a faster recovery in business volumes and deals during the quarter, especially in U.S. and APAC banking. Strength in the vertical was also driven by high levels of remote enablement for our employees in different geographies. We see some softness in the capital markets and cards and payment sectors. Likewise, near zero interest rates are also expected to affect profitability of banks. On the positive side, we had multiple deal signings in quarter one. In early quarter two, we signed a largest ever deal in Infosys history in this vertical. Retail segment remains under pressure, with clients in non-grocery, apparel, lifestyle and fashion, restaurants, logistics subsegment seeing demand contraction and supply chain disruptions. Non-home and health CPG companies are also in similar turmoil. As the challenges persist, we see clients looking for opportunities to improve efficiency of their tech spend, and we continue to see a robust pipeline of deals in this segment. Performance in communication segment stabilized on a sequential basis. Although, clients, especially in media and entertainment industry are under pressure due to weaker advertisement spend and cancellation of events. Network resilience and business continuity remain highest priority, while companies are also investing in digital channels. We expect some delays in 5G rollouts due to COVID-19-related disruptions. Energy, utility, resources and services vertical is seeing pressure due to lower activity in energy and resources segment. Overall, we have been winning deals in this segment and a continued strong pipeline make us hopeful on the future prospects despite near-term volatility. Similarly, manufacturing, we are seeing weakened performance on a sequential basis due to demand, production and supply chain disruptions. And this is expected to continue in near term. Auto and aero sectors are majorly impacted with factory closures, delays and cancellations in aircraft purchases and so on. We remain, however, encouraged by new account openings and steady deal pipeline in the segment. Our digital portfolio and prowess continued to grow. In the last quarter, we have been rated as leader in seven services related to capabilities across digital pentagon areas by industry analysts. With that I will hand over to Nilanjan.

Thanks, Pravin. Good evening, everyone. I hope all of you are well and healthy with your families and loved ones. As we mentioned during the last quarter and elucidated by Salil and Pravin earlier, the Company’s priorities during the quarter were focused on three key dimensions: Firstly, ensuring that we continue to stay relevant to clients and meeting our delivery commitments, whilst keeping the health and safety of employees a paramount. Revenues in quarter one were $3,121million and grew 1.5% year-on-year in constant currency terms, which is satisfying in the context of the larger economic crisis and competitive context. Secondly, tight management of costs and cost control initiatives. This was a combination of a three-pronged approach which we adopted. A, cost avoidance measures like hiring freeze, reskilling, bench talent to improve utilization, et cetera. These measures are critical to avoid any margin deterioration in the future. B, short-term discretionary cost cuts, some enforced by COVID, like travel and other cuts of professional charges, marketing, rate negotiation with vendors et cetera. And C, our ongoing strategic cost levers of automation, pyramid, onsite mix and subcons. Consequently, operating margins increased to 22.7% compared to 21.1% in quarter four, an expansion of 160 basis points, explained as follows: 70 basis points benefit from rupee depreciation, offset by impact of revenue hedges and cross currency; 230 basis points benefit due to lower travel and visa costs; 110 basis points benefit due to lower SG&A costs as mentioned above. These were offset by 150 basis points headwind due to operations parameters like lower utilization, higher onsite mix and lower RPP and 100 basis-point increase in salary costs including higher variable pay costs and others as we rewarded teams in the time of the crisis. As you can see from the above factors, some of these are of course, one time temporary gains, whilst others are long-term structural improvements. The final priority during the quarter was focused on cash and liquidity in the midst of this crisis. FCF of $728 million grew 50% year-on-year and was at a record high, supported by robust collections, despite some increases due to client extension requests, government tax deferrals in some jurisdictions, and tight CapEx control. FCF as a percentage of net profits was a creditable 130%. While we aim to increase capital return to our shareholders, we continue to maintain a very strong debt free and liquid balance sheet. Cash and investments at the end of quarter one was $3.8 billion, excluding the $536 million earmark for dividend payout made in early July. Yield on cash balance declined to 6.11% in quarter one, compared to 7.06% in quarter four, due to declining interest rates in India. Quarter one was also marked the 20th consecutive quarter of positive ForEx income, despite significant currency volatility globally. Return on equity increased to 27.7%, compared to 25.9% in quarter four ‘20. EPS dollar growth was 3.8% and 13.1% in rupee terms on a year-on-year. Our margin aspiration in these stressed times is focused on resilience and stability, and consequently, our operating margin guidance remains unchanged as last year within the band of 21% to 23%. With that, we can open up the call for questions.

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Keith Bachman from Bank of Montreal. Please go ahead.

Hi. Thank you very much. I want to ask two questions, if I could. The first question is on your revenue comments for the year. You just posted 1.5% year-over-year constant currency growth and you’re talking about kind of 0% to 2% for the year. It would seem to me that if the economy is improving and the backdrop is improving that growth would actually improve during the course year. But I just wanted to hear a little bit about the puts and takes that we should be thinking about over the next couple of quarters as it relates to revenues? And I have a follow-up question, please.

Thanks, Keith. This is Salil. I’ll address that point on the revenue. So, what we saw, as we came into close of the quarter, was good large deals win, as we shared, $1.7 billion. And then, we had the announcement yesterday very strong partnership with Vanguard. And in addition, we’ve seen as we pivoted to the new needs of our clients, especially focused on the cloud area or the area of cost efficiency and automation, or the area of consolidation. We could see some good traction in those areas. And that gave us the confidence with respect to demand outlook and revenue. However, there is still the global medical situation playing out, while as I said in my opening comments today, the broad economic indicators in our major markets are more positive. We still don’t have complete control on the medical situation in those markets or indeed in our market, in our geography in India. Keeping all of those factors in mind, we first decided that it was time to reinstate guidance; and second, to clearly communicate that we were looking for close [ph] this year. And that’s how we came to a view of 0% to 2% guidance in constant currency terms.

Okay, great. My follow-up question then is on workforce. And what I mean by that is, the distribution of work, in the June quarter on-site was 28 and offshore was 72. And given they’re still -- this is an election year in the U.S., politics and visas will probably increasingly be an issue regardless of which party wins. But, how are you thinking about the distribution of work over the next 12 to 18 months that may or may not be related to visas. But I would think it’s going to be harder, not easier. But if you could just talk about the distribution of work over the next 12 to 18 months, and how you think about where work gets done? And that’s it for me. Congratulations on a very strong quarter, given the backdrop.

Thank you Keith for the question. I’ll start with specific set of comments and Pravin may add a few thoughts on the distribution. One of the things we put in place a couple of years ago or more actually was an extreme focus on localization within the U.S. And while we obviously had no inkling about the situation that is developed today, both with no travel in the crisis and the changing visa regulations, the fact that we recruit locally and we have the majority of our team in the U.S. that’s local, we have a college recruitment program and a full pyramid, all of those help us to mitigate these scenarios both on travel and on both on visa. Let me pause and Pravin if you want to add anything, please.

Yes. Thanks Salil. So, our on-site ratio has deteriorated just marginally as compared to quarter four; it’s at 28%. And when we compare about a year back, it was actually -- I mean it’s better by 70 basis points than what it was in FY20. So from the perspective -- I mean, if you look back over several quarters, we have seen that on-site ratio vary between a narrow band. And even when I look at on the deals that we have won, nature of our work distribution and in fact solution for all these deals wins that we have had, we have always had a combination of on-site offshore and we have not seen any significant difference. Obviously, depending on the lifecycle of the project, there will be need for lot more on-site [indiscernible] particular part of the lifecycle. And there are times when you can do significant work offshore. So, we don’t expect that to tell. And more importantly, dealing with the current pandemic, we have been able to do all functions, whether it is on-boarding, whether it is delivering on client commitments without any loss of productivity, even selling as well has been done remotely. So, there are -- so, in the new normal, I think our experience that we have learnt in various lifecycle activities will come to bear. And going forward, while you don’t see any significant difference in the onsite offshore ratio, we will also probably see much more usage of remote ways of working, in the sense a good percentage of things can be worked anywhere, I mean wherever you have skill sets and it doesn’t necessarily have to be in front of the client.

Thank you. The next question is from the line of Diviya Nagarajan from UBS. Please go ahead.

Thanks for taking my question and congratulations on a very strong execution in a very tough quarter. The guidance was also an unexpected surprise. But kind of going to -- I think you’ve already explained in great detail some of the factors that drove this. My question is, how much of your wins this quarter, according to you have come from share gains? Was this increased customer requirements on certain topics, like the digitalization and migration to the cloud that you addressed? That’s question number one. Question two, to Pravin, I think you have disclosed that the voluntary attrition has come back. And I do understand that you don’t want to disclose involuntary. But, could you talk about any employee realignment that you had in the quarter, specifically around what you had in terms of the excess employee bench during the quarter?

Hi. Diviya. This is Salil. Thank you for that question -- those questions. On the first one, while we don’t have -- or at least I think I don’t have specific on share gains, what I think we see for sure is, as we look around, there is some distance we found with the extreme work we’ve done in work-from-home and service delivery that Pravin referenced earlier. And we find more discussions with clients in engaging with us, as they look at a variety of options for their needs. We also see that our performance is stronger than what the industry analyst organizations have suggested for the industry. And so, we feel that could indicate a market gain. And those are the sort of factors we consider. But, I don’t have a specific in terms of what we think with individual tiers and so on. On the second thought, Pravin over to you, please.

Yes. Thanks, Salil. Diviya, just to add on the first part, one way to look at it is, if you look at the large deal win, in $1.74 billion, 19% was net new, in some sense, that’s come at an expense of someone else. So that’s one way of looking at it. But again, there’ll always be an element of new and existing mix, very difficult to carve out in a great -- any granular level, what has come from peers. On the attrition, as I said, voluntary attrition is about 11.7%. And we have -- I mean, we don’t have any structured plan to let go people or anything. Being a high-performance company, we always have strong focus on performance and wherever people are not delivering, we let them go. And this happens periodically once a year for some set of people and every six months for other set of people. So, there’s nothing new. I mean, we have not done anything differently from an involuntary attrition perspective. I mean whatever practices we have followed historically, were same things we have continued this quarter as well.

Got it. My last question is to Nilanjan. You started the year with the top-end of the guidance in terms of the margins. So, how should we think about the puts and takes for your full year band still being at 21% to 23%?

Diviya, so as we mentioned, for us it’s very important to show margin stability and resilience. This was also the theme we adopted last year when we said we want to shore at 21%-23%, and that’s the same guidance we are keeping. Of course, as we see, the start of the year has been at the higher end, but we know some of these costs may creep up in terms of things like promotion or compensation, et cetera. And visa and travel costs may open up once the pandemic subsides faster. So, we have things which are still unknown. So, for us, it’s more about the band in which we operate and to get stability and resilience around these numbers.

Thanks for taking the questions. Just a follow-up, I kind of missed what the net new number that Pravin said. It was a little bit muffled. If you could just clarify that. And thanks again. And have a good year.

19%, Diviya, which he mentioned.

Got it. Thank you.

Thank you. The next question is from the line of Edward Caso from Wells Fargo. Please go ahead.

Hi. Good afternoon. Good evening. I was curious if you could differentiate between the trends in outsourcing-related work, because it sounds like some of the newer opportunities have more of an outsourcing deal to them relative to discretionary work, and then, what the implications are for margins?

Hi. Ed, this is Salil. Let me start with some observations on that. What we see is really more traction in what we have defined as our digital portfolio. Digital consists both of discretionary and multiyear contracts. So, we’ve not seen, at least at this stage, a separation. Clearly, some level of discretionary work in the quarter was slow and stopped, especially earlier in April. And as we got through May and June, some of that started to come back. However, we’ve not seen a huge separation because there are new projects, which are digital-oriented, which are also discretionary. So, that’s the traction we have [Technical Difficulty] and equally there are new multiyear contracts, which we start to see, which contain outsourcing like elements, which are focused on automation and efficiency. In terms of impact to margin, nothing more granular in that at least at this stage from us. The one point to add what we’ve shared before but to reiterate, our digital portfolio margins are typically higher than the average of the Company.

My other question is if you could give some color on the pace of moving forward on the part of your clients, Europe versus the U.S., is one ahead of the other? And then, maybe within Europe, differentiate between the United Kingdom and the continent. Thank you.

Pravin, will you be able to take that one, please?

Yes. I can start off. So overall, I mean, if you notice in this quarter, we had superior performance in Europe. On a year-on-year basis, Europe grew by 4.4% on constant currency, whereas North America was flattish. So, in general, we have seen -- we have not seen too much of -- I mean, even historically, when we looked at our past quarter performance, we have always seen Europe performing relatively better. But from a sector perspective, if you look at from a banking and financial services perspective, we are seeing probably lot more traction in Americas and APAC at this stage than in Europe, whereas in most of the other sectors, we are not seeing too much of difference between Europe or North America.

Thank you. The next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Nitin Padmanabhan from Investec, your line is in the talk mode. Please go ahead with your question. I would request Nitin to unmute yourself from your handsets and go ahead with your question, please. Due to no response, we’ll move to the next question, which is from the line of Bryan Bergin from Cowen. Please go ahead.

I wanted to ask on COVID-related engagements, contract tracing, remote-enabled for clients, things like that. Was that a material contribution to large deal signings or 1Q revenue? And if so, can you give us a sense of how much that might be?

I think, I understood the point -- the question was if COVID-related work, which is contact tracing, et cetera, is that a material part? If that’s the question, no, it’s not a material part. We are helping in some of the situations and scenarios, but it’s not a material part of our revenue in Q1.

Okay. That’s helpful. The second question I have, just work-from-home, how are clients thinking about long-term work-from-home, the model for services? So, in some of the large deals you won during the quarter, how was work-from-home accounted for? Are other stated delivery mix factors being made in contracts or anything like that or is it too early to call there?

I’ll start off and Pravin will have some color to add to it. The way today that we are engaging with clients, we see clients are extremely comfortable to look at work-from-home scenarios in different fashion. So, one is constrained to how the medical situation evolves and another is defined around what could post-medical scenario look like and what should be the work-from-home situation. So, we find a lot of flexibility in the clients, the way they are engaging with us in defining those situations. We even have very useful examples. For example, in the U.S., in certain geographies, we’ve been able to do new work with clients where work-from-home enabled us to deliver across the U.S. from different geographies to different client locations. So, today, there is a lot of flexibility. We don’t have a sense how this will continue. But for now, we see flexibility.

Okay. Thank you for that. Just last one here. On your outlook for fiscal ‘21, did you change anything in the process you take in how you typically arrive at guidance, particularly on revenue growth?

The process itself, I think first, as you know, we did not provide a guidance in the first, as we started Q1. There we looked at this quarter, gained some experience and saw some traction, especially in the wins. And then, there is a model for how things would look. There are some considerations, which I should reiterate that I shared in the opening comments. So, everything about the medical situation is not yet stabilized, as you well know. And so, we try to take into account the stimulus and how we’ve seen some of our clients respond and our pipeline expand. But it still looks -- it still has some uncertainty, which is obviously different from how the process has run in any other sort of typical year.

The next question is from the line of Parag Gupta from Morgan Stanley. Please go ahead.

Salil, my first question was to you. It was kind of going back to the revenue guidance a bit. So, while you just did explain a little bit on the process, but the question I had is that when we spoke at the end of the fourth quarter, you did mention that one of the reasons for not providing a guidance was uncertainties on the medical situation, and primarily with respect to a second wave of infections, lockdowns, either globally or in India. Now, given that that situation probably still kind of lingers, but you have provided a guidance. So, does that mean that some part of these potential risks are built into the lower end of the guidance or do you think that could pose downside risk if you see a big spike up in infections and lockdowns globally as well? So, I just wanted to kind of get clearer on that front.

So, what we’ve tried to build in is what we see as a situation today, which is we typically found both, from a demand perspective, so how clients are working and from a supply perspective how we’ve enabled work-from-home. We’ve adapted, the environment has adapted to the way to work around or within the medical crisis. It’s not to say that if things have a step function different outcome. In either of those scenarios, we would not have to relook at things, but there is some level of understanding, not a complete understanding of how to engage in it. As Pravin shared earlier, the fact that through our technology enablement we are managing to enable over 99% of our employees to work-from-home, we are also able to add new employees into the Company. We’re able to do transitions; we’re able to work with clients in same situation that gives us some level of comfort to start to work in this environment. But of course, if there is a different kind of an unusual medical situation that arises, we would have to relook at things. But given where we are today, we felt it was the right thing to start to reinstate the guidance.

Got it. That’s pretty clear. And the other bit was on BFSI. Again, you did mention in the previous earnings call that while banking is holding up right now, there is a possibility of loan loss defaults or credit card defaults later in the year. I just wanted to understand, based on the conversations you are having with your customers and potential customers, are you seeing some of those risks subside, given the stimulus measures, or do you still see a fair chance of some of these risks are coming to the fore in the next few quarters?

My sense is -- and Pravin, if you’d like to add after that, please? My sense is, those risks are still there. As I look at some of the provisions that couple of the large banks have taken just in the last few days for their Q2 numbers, at least the money center banks in the U.S. market, you can see that they’ve expanded those set of provisions, which would mean they see something of that nature possibly in the future quarters. We’ve not seen anything in discussions. It’s more modeling implication of some of the analysis that our leadership in financial services have done that would give us a view that there is a possibility of those things maybe over the next few quarters. So, we don’t have a sense of the timing. But that still sort of is in the background. Yes.

The next question is from the line of Moshe Katri from Wedbush Securities. Please go ahead.

Hey. Thanks for taking my question and another congrats on the performance for the quarter. Two questions. First, I appreciate the guidance for the year, 0% to 2% constant currency growth. How do we suggest modeling the quarters down the road for the next two, three quarters? And then, you indicated that the pipeline looks pretty strong. Can we get some color in terms of where we’re seeing some of the demand kind of coming through the pipeline? Thanks.

On the quarterly, Moshe, I think as you know, we don’t provide specific quarterly guidance in the way we look at revenue or margin. And so, I don’t have a simple answer for that. We do have a sense around the full year, but not a -- we don’t provide the guidance for quarterly. On the pipeline, we see good traction in some of these newer areas which relate to cloud or digital, which relate to -- there is a lot of discussions on cost efficiency and automation, we have discussions on cyber security, workplace transformation. Our leadership team has built a new set of offerings which are more tailored for this environment and we see traction of those offerings with our clients and we see possibility of some consolidation opportunities. So, those are the sorts of things we think will be more in the mix in the coming quarters.

And just a follow-on for the pipeline question. If I’m looking at the entire pipeline of business, is there a way to quantify which portion is actually coming in from renewals versus new logos?

We do have that view internally, but typically unfortunately, we don’t share that information externally.

All right, guys. Thank you.

Thank you. The next question is from the line of Sudheer Guntupalli from Motilal Oswal Financial. Please go ahead.

Good evening, gentlemen. Congratulations on a great performance. My first question is to Salil. I’m sure you would have seen the performance of some of your competitors and had done some competitor benchmarking. Of course, their performance is also very resilient, given the current context. However, Infosys seems to be few miles ahead on multiple counts in this quarter. So, if you take a step back and introspect, what do you think are the underlying factors that have driven this delta? Is it merely a function of the differential portfolio mix or something else? I would like to know your thoughts on this.

Thanks for that question. I think, there are few good factors that we can think of. One, of course, the fundamental, I think we have an extremely strong franchise that’s been built over the years and that resilience is coming through quite nicely now. I think first, one of the points Pravin mentioned, there was an extreme focus on ensuring client service delivery and employee safety, and that we move faster. In fact, we have a small business in China and we learned from how that situation developed, which was a couple of months earlier. That gave us a little bit of a time advantage to put things in place a little bit faster where our technology infrastructure, which enabled work-from-home, made a significant difference. Second, we pivoted I think quite quickly to the new needs, to the new sales opportunities. And that’s given us some good traction and even the pipeline expansion in the quarter. The third, we’ve had a good focus on the way we built our digital capabilities, and that as you can see is getting more and more traction in this environment with clients. And fourth, the approach we put in place for localization a few years ago, where we’ve really built a completely new business model, recruiting from colleges, building digital centers in Europe and U.S. and hiring locally, that has helped us manage a little bit better with the travel and the upcoming visa changes and so on. So, those are some of the factors. I’m sure there might be others, but at least those come to mind.

Sure, Salil. Thanks for that answer. And it looks like pricing and cash collections had not been a big problem so far. So, do you see the worst on these variables to be completely behind by this quarter, or can some of it actually show up in the subsequent quarters? What are your expectations on that?

I’ll request Nilanjan to address that, please.

So, as we mentioned, we have seen some pricing pressures and some requests from clients for extended payment terms. And I think that’s very, very normal in these times. We have long-standing relationships with these clients over the years, and it’s very important for us to continue working with these clients when they need it. So, it’s difficult to predict in the future how it goes because a lot of it has got to do with what’s the impact of the crisis on the clients going forward. But, like we said that we continue to work with them and we have a strong balance sheet as well. So, that makes us more confident where we are.

The next question is from the line of James Friedman from Susquehanna. Please go ahead.

Hi. Let me echo the congratulations. This is Jamie at Susquehanna. I just wanted to ask, Pravin, in your prepared remarks you mentioned that there was some modest supply chain impact from disruption to the revenue. I was wondering if you could help us quantify that or give us some additional characterization of the supply chain impact. And then, as a follow-up, I’ll just do it now. Also Pravin, in an answer to a previous question, I think that you had responded about the relative growth in the BFS sector between Europe and the U.S., but it was a little hard for me to hear. If you could just repeat that one. So, the first on the supply chain and the second on the banking. Thank you.

Sure. So, on the supply chain, what we said is, if we look at the revenue impact on a quarter-on-quarter basis, constant currency, we had 2% de-growth. Only about 10% -- less than 10% could be attributed to supply issues, 90% was more demand issues. So, it was significantly lower than what we had seen in the last quarter. So, as Salil mentioned, today we have more than 99% of people enabled to work-from-home and the percentage of people required to work from offices due to client requirement has also come down dramatically. So, we are doing good there. Second one, on the banking, BFSI, basically, I mean, the message is overall in the beginning of the quarter, there were some concerns, and we had seen some initial drop. But, as the quarter progressed, we’ve started seeing some fast recovery in the business volumes and deals during the quarter. And this was particularly in U.S. and APAC. On the negative side, we continue to see some softness in the capital markets and cards and payment sector. And similarly like it was discussed in this call, the near zero interest rates could also impact profitability of banks and it could potentially have some bearing on the tech spending. But on the positive side, we have seen multiple deal signings. In fact, out of the 15 deals, large deals that we won in quarter one, five were from BFSI space. And we just saw -- in early quarter two, we saw the Vanguard deal as well. So net-net, it’s a mixed thing. But, we remain -- I mean, given the increased volume that we have seen coming back early in the quarter and towards the later of the quarter and large deal wins, we remain optimistic about this sector.

The next question is from the line of Ankur Rudra from JP Morgan. Please go ahead.

Hey. Thank you and great execution, and thank you for the resumption of guidance. Could you elaborate, as you went through the quarter, which parts of the business surprised you positively and negatively in terms of signings and execution, maybe in terms of industries, geographies or services?

Thanks, Ankur for the question. The view in terms of the signings or execution, as the quarter progressed, we saw more and more positivity actually across the sectors. Even some of the sectors that were significantly impacted earlier in the quarter, we saw a little bit of positive action. Overall, as you saw sectors like Manufacturing, Retail were still quite difficult in the quarter. And then, of course, what we saw in hi-tech is really extremely strong in this market, and Pravin shared some views in an earlier discussion. Nilanjan also shared some views on that. We think there is a set of resilience, which really comes from a lot of spend which is geared towards companies executing more digital work, more cloud work, more work on cyber and data. And those are the sorts of things that looked positive as the quarter progressed.

Thanks. And on that note, if I could dig a bit deeper, it’s been two and a half years since you’ve scoped out the focus towards digital services through your digital pentagon and your investments towards that in the last few years. How’s demand changing due to the pandemic in parts of your digital portfolio? Are there areas where you are seeing a lot more success and areas where you are lighter and have scope for bulking up in the direction of the new demand?

If I understood the question, there is definitely areas, for example, cloud, which are just growing even faster than our overall digital business. Cyber security is good. I know all of the digital areas we are finding to be today in good shape, but some like cloud are expanding even faster.

Okay. And the second part was -- of the question, Salil, was are there any areas where you think you’ve been lighter in terms of where the demand is going, where you may look to bulk up in future?

In our scale? Okay. I don’t know if we are lighter, but in a sense you’ve seen at least two of the acquisitions we’ve done have been with SaaS, cloud services players in the last 12 months. We think there is more of it that we can do where in a sense we are not lighter, but we see the demand actually in a very good position. So, we will look to see how we can add to such capacity. On most of the areas in that pentagon, we actually have ideas and open discussions. So, if a lot of those things mesh up well, pricing, culture, et cetera, then we are looking to do some more additions.

Just a last question for Nilanjan. Nilanjan, you’ve highlighted the margin walk for the quarter. I just wanted to get a sense of -- we’re clearly at the upper end of the guidance. So, I know you’ve highlighted some of the areas with potential downside. How do you think about the need to balance investments outside of maybe promotions coming ahead as we look for growth, not just for this year but also for the next year?

Yes. So, I think as the year progresses, we will take a very structured view of how the market is operating, what we need to do to be competitive, because a lot of this is also driven by the competitive context. And therefore, some of these calls, we will take as the year progresses. I think, the investments, which are very, very critical and we continue doing our reskilling of talent. So, at this time when bench was higher, tremendous amount of reskilling of people, looking at new digital skills, those are the kind of investments we continue to do because in the long run, sustainable advantage will only come as we create that differentiation with competition.

The next question is from the line of Rod Bourgeois from DeepDive Equity. Please go ahead.

Hey, guys. Again, congratulations on the execution in this environment. Related to that as you look longer term concerning your work-from-home percentage, are you able to share a view at this point on where you think the long-term plan will be in terms of how many employees will be working from home? And then, the follow-up to that is, can you give us a sense of the structural margin benefit that you receive based on the percentages your staff is working from home?

Pravin, you want to go ahead on that one, please?

Yes. I can take it and I can probably ask Nilanjan to comment on the second part. See, overall, from our perspective, we are really looking at a hybrid model where people should have ability to work from home or work from office in a seamless manner. And the same set of people -- I mean, there may be set of people who are at times working from office, at times working from home. So, in our mind, it’s immature to attribute some percentage to it, because a lot of things depend on nature of cost, client comfort and things like that. So, our endeavor has been to make sure that we build in enough systems, processes, tools and capabilities where we can seamlessly switch. And also, right now, what we have seen is technologically we are able to deliver good quality without compromising on service levels or quality to the clients. But, in the long run, we need to really figure out how we will continue to engage with employees when they are working in a remote manner. We have already seen many people have adopted well, some people do have stress levels and other things, how do you deal with that. More importantly, for new people coming on board, how do you create -- how do you inculcate your values and culture. So, there are a lot of unanswered questions. Easy part is the technology thing which we have solved, but there are a lot of unanswered questions and there is a lot of learning as this evolves. So, I mean, we are actually -- I mean, from our perspective, we are making sure that we have a flexible model, and we continue to evolve and learn from feedback that we have seen and continue to invest in this model. But difficult to -- I mean, at this stage, we are not really venturing into asserting a guess on how much will be working from office, how much will be working from home.

Yes. On your question on margins, in this quarter basically we’ve said, the benefit on margins from lower travel and visa cost is about 230 basis points. And that’s the biggest impact. We will of course have to see as the world opens up in terms of travel and people are back, taking flights, et cetera, meeting clients, so that we will have to see in the new normal. But on a long-term basis, going from the work-from-home, I think again this has to be played out. Yes, at one end, you may see some benefits on the facilities, et cetera. But, at the same time, you have to invest in facilities in terms of social distancing, you have to invest in communication costs as people work from home, you will have to invest in more cyber security, bandwidth. So, it’s going to be a mixed bag in terms of what comes out of this. And as Pravin mentioned, it is also something about hybrid model of work-from-home. It’s not that the entire population will be working from home. A certain percentage is going to be hybrid office and work. So, we will have to see how that plays itself out.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Yes. I’d like to pass on to Salil for his closing comments. Over to Salil, please.

Thanks, Sandeep. Thank you everyone for joining the call and for your questions. We are really delighted with the results that we’ve had in Q1. We see extremely strong client relationships, good affirmation of what we have done, very good work-from-home and really client service delivery activities that Pravin shared with you. A strong continued focus on cash and the collections that Nilanjan shared with you and a real pivot to what our clients are looking for in the new environment in terms of cloud, digital, consolidation, cost and efficiency and automation. With all of those we feel we are in a good position. Of course, there are uncertainties as we go forward. When we see from the experience we’ve had in Q1, we stand to see this financial year in a somewhat better light. Thank you everyone for joining the call. Take care and stay safe.

Thank you very much members of the management. Ladies and gentlemen, on behalf of Infosys, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.