DBT Bureau
Bengaluru, 1 July
Infosys is planning to reduce its dependence on subcontractors further apart from improving its utilisation levels in coming quarters to improve its operating margin.
In the Annual General Meeting (AGM) held recently, the company management said its internal programme to reduce cost would continue to remain another lever for reducing cost and improving operating margin.
“Sub-contracting has reduced significantly from the past levels by around 3% over the last two years. We think we can further optimize this spending and are working towards this. This is also part of one of the levers under our project Maximus on a margin expansion programme,” the company said in an exchange filing. The company uploaded the transcript of its AGM on Monday on exchanges.
Subcontractors are the third parties to whom IT firms delegate some projects for execution.
“Similarly, our utilization has improved during the previous financial year, and we believe we have some headroom there as well to improve this further towards a comfortable level of 84-85%,” the management said.
Infosys posted an operating margin of 20.7 per cent for FY24, a decline of 30 basis points over the previous year.
It also said that a comprehensive margin expansion programme was running to improve margins from large deals.
“In terms of our large deal wins, we had an excellent year. For the full year, our large deals have been $17.7 billion, comprising of 90 large deals. We have a very comprehensive margin extension programmes, running internally to monitor not only large deals but across all deals and also will be catered under this,” the management said.
Despite the demand slowdown, Indian IT firms were able to protect their margins in the last financial year through a slew of measures. Reduced hiring, cutting headcount, reducing dependency on subcontractors, and improving employee utilisation levels are some of the measures that companies are following to improve their operating margins as they face headwinds in revenue growth.
