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Infosys Ltd
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A very good evening, everyone, and thank you for joining Infosys' third quarter financial results. My name is Rishi. And on behalf of Infosys, I'd like to welcome you to our press conference. We decided to meet you virtually this quarter, keeping in mind the alarming rise in COVID and the need to ensure necessary precautions. We hope you and your family are staying safe and keeping well.Before we commence, I want to take a moment to mention a few guidelines. [Operator Instructions] In case you get disconnected, please rejoin using the same link. With that, let me invite our Chief Executive Officer, Mr. Salil Parekh, for his opening remarks. Over to you, Salil.
Thanks, Rishi. Good evening. Wish you all a Happy New Year. Trust you and your dear ones are well and safe. Thank you for making the time to join us today. I am delighted to share with you, we have had constant currency terms. Our year-on-year growth was the fastest we have had in 11 years. The growth was broad-based across industries, service lines and geographies driven by a differentiated digital and cloud capabilities. This is a clear testament to the enormous confidence clients have in us to help them accelerate their business transformations. This outcome has been made possible by the relentless commitment from all of our employees to these challenging times. I'm extremely proud as well as grateful for their extraordinary efforts in delivering success for our clients. Our growth has been accompanied by resilient operating margins at 23.5%. We've delivered these margins while we have kept in the forefront, our focus on our employees with increased compensation and benefits. Our digital business grew by 42.6% and now is 58.5% of our overall revenues. Within digital, our cloud work is growing faster and our Cobalt cloud capabilities are resonating tremendously with our clients. The strong overall performance stems from 4 years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continuing reskilling of our people and deep relationships of trust that our clients have with us. With the strong momentum in the business and a robust pipeline that we see, we are increasing our annual revenue growth guidance which was previously 16.5% to 17.5%. We're increasing it to 19.5% to 20% in constant currency terms. Our operating margin guidance remains 22% to 24%. With that, Rishi, back to you, and let's have the questions from everyone on the call.
Thank you, Salil. We will now open the floor for questions. Joining Salil is Mr. Nilanjan Roy, Chief Financial Officer, Infosys. We will now open with the first question. The first question is from Anisha Jain from ETNOW who joins us on video.
Salil, first, to you, I have a 2-part question. Obviously, the Street will be very excited by the guidance upgrade that has come in terms of the revenue. But are you confident that the strong demand outlook will continue not only in the short term but also in the medium term? What are you understanding in terms of the client spends and the budget, et cetera? And will this also reflect in the deal momentum going forward? The question for Nilanjan is actually on the margin picture. I would want to understand that margins have been fairly resilient until now. But with the increase in the supply side pressure, is there -- what's the outlook basically on margin going forward? And also, how confident are you of meeting the demand given the high attrition that we are seeing? So what's happening on the employee front with the attrition being higher 25.5%?
So thanks for your question. I think, first, we've increased our guidance. So there's a tremendous confidence in what we are seeing with our clients. We had large deals of $2.5 billion, 25 deals in the quarter. Our pipeline itself is very strong, and we remain comfortable, of course, that the guidance is, for this financial year, which ends in March. But overall, the demand environment looks really strong as we are comfortable as we look out beyond March as well. The demand outlook is good. The digital transformation is strong, and our work in cloud and digital remains very good. We are also very strong with our supply capabilities, and so we remain comfortable in delivering all the work for our clients. Let me pass it to Nilanjan for the second part.
Yes. So 2 questions you had, and the first one on margins. We've been able to broadly hold our margins this quarter. We were 23.6% last quarter, now we're 23.5%. And a broad walk would be about 80 basis points has got invested back into our employees, either through corrections or through promotions. 40 basis points, we've actually lost because of lower utilization, which in a way is good news as the supply side, as you know, pressure builds up. So our utilization coming down is a bit of good news. On the other hand, this has been made up by about 20 basis points of rupee currency. And we also made up about 40 basis points from SG and other one-offs and 50 basis points from a very strong cost optimization program. So all in all, that takes us to 23.5%. And our guidance for the year, as you know, is 22% to 24%, and we remain quite comfortable operating in that range. Coming to the supply side, like we've said, we've taken up our graduate hiring program to 55,000 looking at this demand. And of course, we are very, very keenly looking at the attrition figure. One, of course, is to how do we bring this down and we see the stability sort of coming in this quarter, although some of our numbers are more on an LTM basis. So you would see those numbers inching up. But I think quarterly, we have seen some sort of stabilization and we're continuing to focus on all of these employee interventions. And at the same time, we don't want to let go of any demand and, therefore, our hiring program as well as lateral program continues unabated.
Thank you. Moving on to the next question. The next question is from Reema Tendulkar from CNBC TV18. Reema joins us on video.
Gentlemen, congratulations on a very, very strong set of numbers. Salil, my first question is what changed in 3 months for you to give such a large upgrade to your guidance? And secondly, on deal wins. We have the large deal win number at $2.53 billion. But increasingly, the anecdotal evidence suggests that we are seeing a lot of shorter deals. So could you give us some sense of the sub-$50 million deals? How much higher is it today, say, compared to 3 months ago or a year ago? And even if you could tell us the deal pipeline, how would it compare to say a year ago? How much higher would that number be?And Nilanjan, you indicated correctly, right? The last 12-month attrition does not accurately capture the attrition number. So could you give us a sense of the quarterly annualized attrition? How would that number trend? Has it been flat quarter-on-quarter? Do you think attrition has peaked?
Thanks for your question. I think first on the guidance, we are really in a situation where all of the choices that we've made over the last several years, specifically building on digital, on cloud, on the new areas that our clients are looking for are what clients are buying, are what -- where we see the resonance with clients. All of those digital transformation programs are very strong. And we could see our execution remained good, and that gave us a really -- the ability to increase our guidance even as we are in the fourth quarter here. We believe strongly that this is a sort of growth in the market, and we are fortunate with the trust of our clients to capture that. In terms of the pipeline, there are $2.5 billion large deals and for us, large deals are deals which we classify over $50 million in size. And so this is a very strong indicator of how the business is evolving. We have 25 deals in that space, $2.5 billion. The overall pipeline today is larger than what we had at any time in our past. We remain comfortable with the pipeline and with where digital transformation programs are going. We remain aligned to what our clients are looking. Now with that, let me pass it to Nilanjan.
Yes. So Reema, on the attrition, like I said, we are very sharply focused on this figure. And of course, this is an industry issue. And if I step back, really, I think the volume growth for this industry has to come from pressure, right? Because churn at 1 level is yesterday's news. So as the freshers feed in across the industry, just not in Infosys, but as they feed into the industry, I think you will see this number inching down across for all the players. We have seen, in this quarter, while we don't declare the number, we have seen a stabilization. And as we look ahead, we are seeing some drop off of that, but we will have to wait and watch. But clearly, as we ramp up the freshers into the system, I think you should see some benefits across. So we are quite happy with where we are, but I agree that the numbers are high.
Thank you. Moving on to the next question. The next question is from Sajeet Manghat from BloombergQuint.
My first question is to -- is basically on the growth which you have been seeing. You've guided for 20% growth for the full fiscal. Do you see the momentum of these and the negotiations which you're currently in to take you to FY '23 with a similar growth rate expected? Or you see some tapering happening as we go into FY '23? And secondly, a bit of color on the kind of transformation deals which are happening. Is it just digital transformation are now -- companies are now also looking at other processes as well, which makes -- which companies, like, you can undertake going forward. BFSI and industrials, how do you see growth coming in from there? Do you see some bit of sluggishness coming in, especially Europe, where we've seen a good impact of -- COVID impact which is happening in that region there? And for Nilanjan, you mentioned about SG&A and of course, optimization were 40 and 50 bps you were able to bring in. Is it -- was it a temporary one? Or can you bring in subsequent quarters as well to maintain that margin?
Thanks, Sajeet. I think, first on the growth, yes, the guidance increases for this financial year, the demand outlook is very strong. The pipeline is larger. What we are working on today with clients on their transformation programs is still looking very good for us. Of course, we don't give guidance for the next financial year just now. But everything we see in the demand environment is positive. The types of work that we are seeing that these relate to all aspects of our large enterprises, whether it's relating to how they're engaging with their customers, how they're engaging with their employees, how they're engaging with the ecosystem. Essentially, everything is becoming more and more driven by how do you make it digital.For example, we have a platform called Equinox, which is essentially a platform, which anyone can use and consume products we've built to build a completely new commerce capability, and we are seeing tremendous traction of this platform with all of our clients. We have similar platforms in different industries, which we are seeing some benefit from. In terms of growth by region, Europe was very strong at 27% in the quarter. Financial Services also was strong for us at 15% in the quarter. So all of our markets are looking quite good in terms of growth, of course, one of the strongest is manufacturing, which was at about 48% growth in the quarter. With that, over to you.
Yes. So Sajeet, on your question on margins, I think over the last few years, we have a very robust cost optimization program, which we run across the organization. We have a number of levers, which we deploy across this, the on-site mix; the offshore mix; the pyramid, both on-site offshore; automation, which remains a big part of our cost optimization, and in fact, we've taken it to the next level by using bots at an extreme large scale. And of course, there are other measures like subcons, et cetera. So we deploy these over each quarter. Sometimes some of them, like in this quarter, the on-site offshore worked negatively against us, but we were able to have other cost optimizations come into place, namely the automation. We have also started looking at pricing in this high-demand environment. It's important that we start pricing our talent correctly as well. And therefore, whether it's discounts, et cetera, we are able to have some conversation. Now of course, we realize this is long haul. It doesn't happen overnight, the existing commitments already to clients. But at least in new deals slowly, this will start getting priced and not only by us, but also by the entire market as these costs starts hitting the industry. So we have a number of things which we're continuously doing, and we remain quite confident about this program as we look ahead.
Thank you. Moving on to the next question. We have Kushal Gupta from Zee Business on video.
[Foreign Language]
[Foreign Language] We had really spectacular growth at 7% at constant currency for the quarter, and we see that momentum in good shape with the demand environment. What you mentioned about inorganic growth in terms of acquisitions, our acquisition of growth remains very focused. We have a good pipeline of potential candidates. Our focus has been what can we acquire, which will give us the boost, as you were saying, on the digital transformation area. These relate to, for example, cloud or cyber security or IoT or other areas which are supporting digital. And we look at different companies in that. Of course, it's a combination of how will it fit culturally, how will we do the integration and what is the valuation. But this is an ongoing process, and we have a good pipeline that we are evaluating in terms of acquisition opportunities. Nilanjan, will you cover the next half.
So Kushal, your attrition kind of question. We -- I think we have a 3-pronged strategy. I think first is about careers is how do we show a more longer-term career to all our employees. That includes a cycle of promotions, progression so that people have a visibility on that. Those are, of course -- it's rewards and compensation. So we competitively always benchmark [Foreign Language] we also rolled out special talent retention programs in this quarter as well, and we will continue to do whatever is necessary in going ahead. And thirdly is also reskilling that remains very, very critical in this market as we have continuously upgrade our employee skills. So we have this 3-pronged strategy across these, and we are confident that we will be able to handle the attrition issue. For now, of course, there's a lot of market dynamics. But over the longer period, definitely, we will see this coming down.
Thank you. Moving to the next question. We have Harshada Sawant from CNBC Awaaz.
It's a great quarter for you. [Foreign Language]
[Foreign Language] for that question. Your pricing [Foreign Language], what we are seeing is we had a strong set of large deals, and we are seeing the pricing environment is quite stable. One of the things that Nilanjan mentioned earlier, which is there is real value to some of -- a lot of the digital work we are doing and we are putting that in place as we discuss large programs with clients and clients are receptive in this environment, because they're seeing that we are the leading player for digital today in helping them in their transformation. So we feel quite comfortable that while in this quarter, pricing was stable, we will see something going ahead as we see improvement in the value that we communicate.Now what is the type of spend? There are 2 types of spend. One, companies are increasing their spend on what they want to do for digital cloud solutions. So just as a percentage of their revenue, the amount that they want to spend on technology is going up. The second is in many companies, we are seeing that we are looking at this also from a CapEx perspective from something they want to invest for the future. It is not just an OpEx spend. We are seeing a good traction in that sense on the spend that's available when companies decide to launch on the digital transformation, and we feel comfortable to be partnering with them on that job. Nilanjan, over to you?
Yes. Thanks. So I should note, the travel question, absolutely. I think we are, as the industry entirely is, in a way, not traveling and therefore, there's a benefit which we've seen versus the pre-COVID era. But even if you strip that out, you have seen that improvement in our underlying margins. Of course, as the next year progresses, we will have to see where does the travel open up, in what stage. But having said that, we've also seen that we've been able to sign these billions of dollars of deals pretty much virtually. And in that sense, that's good news that we are able to work remotely in this new environment quite well. And hopefully, as the world opens up, we don't need to go back to the same kind of mad rush that we still have. But I think that's something we will continue to look at, these headwinds, whether it's travel or cost increases on our employees. And like I said earlier, our cost optimization program continues to be really in top gear, and we have to work continuously to offset that. So we remain quite confident in our 22% to 24% range for this year.
Thank you. The next question is from Sharad Dubey from ET NOW Swadesh.
Congratulations for your strong results. [Foreign Language]
[Foreign Language] What we are seeing is there's a lot of different digital transformation going on in different sectors. So 1 example was manufacturing, which is growing at 48%. We are also seeing, for example, in the retail sector growth of 19.8%. We are seeing financial services, which I mentioned earlier, at 15.5%. Our Communications segment is looking strong at over 22% growth. Life Science is also looking very strong. What we see is across many industries, companies are looking to launch their transformation. And in doing that, we see programs which will go through a long duration. Many companies which have seen what has happened in the last 18 months, with all of us working in a different way, are starting to realize the benefit of driving digital. How do you get a better connect with customers? How do you make sure your employee connecting better? How do you make sure your internal processes are more efficient? We will -- this is all aligning with customers to drive their own growth with employees to make sure that there is a much more robust set of connections. And that's helping us to see digital transformation being driven. Today, really, it's broad-based. The strongest being manufacturing for us, Life Sciences, Communications and also Retail. Nilanjan, over to you.
Yes. So Sharad, as you see, our portfolio, if I look at the margin side, we have multiple numbers of deals. There are large deals, which are entering the third, fourth, fifth year where we are doing much more optimization. There may be new deals entering the portfolio, which are freshly minted and in a sense, have initially higher costs. And when we look at the overall margin structure, that's all what we put together. So the whole portfolio of what is happening, these are getting much more profitable on one side and one side, new deals are coming in. So that's one part of the overall margin management equation. Secondly, like I said, like, we are putting a lot of cost optimization, automation is one. The others, of course, the pyramid and the freshers, like we said, when we started the year [Foreign Language]. In the quarter, maybe we've taken that [Foreign Language]. And that's helping at the bottom of the pyramid as well. So there are a number of levers, and we keep on deploying those which are more relevant for the business and they are helping us to make sure that these margins remain flat from quarter-to-quarter.
Thank you. Moving on to the next question. We have Sankalp Phartiyal from Reuters News. Sankalp joins us on video.
Salil, I had 2 questions. One is that you said the pricing environment is very stable. But given the kind of uncertainty that the resurgence of COVID and Omicron wave has brought about, could you give me a sense of what the demand environment, the pricing and even the run side of business, the traditional business looks like in your biggest markets? That's one. The other thing I wanted to ask was that we've -- I was just attending Wipro's press conference as well before coming here and they seem to say that attrition is going to be a problem for the next few quarters, but perhaps will be moderate. You had outlined some plans. Can you tell us what more are you doing to attract talent to your company and make them stay here? Because you're competing with start-ups that potentially offer more money and more SOPs and incentives. And also if there's any change in hiring plans, whether you're stepping up freshers and lateral entrants?
So thanks for those questions and we will come back on the attrition on the recruitment, which is today, robust. On the pricing, what we discussed earlier, we are seeing a relatively stable environment in pricing. If I look specifically at the deals we've had in this previous quarter versus the quarter before that, so we've not seen any big changes. What we are also putting in place or have put in place, that Nilanjan shared earlier, are ways to communicate where we are creating tremendous value for our clients through the digital work. And there, we will see over time that there will be some benefits to pricing. As we are seeing, what we have done with compensation over the last 12 months with 3 different times, we have increased the compensation and a very significant focus on our employees. Those things will come and we'll be in a position, over time, to get that sort of a pricing impact with our clients as well. So we feel quite comfortable today with a good demand environment, relatively stable pricing and some initiatives, which are medium term, which will help us with more value with respect to the digital work we do. Nilanjan, over to you.
Yes. So on the attrition question, like I mentioned, of course, we remain very, very focused. That's absolutely critical for us, and this is -- takes up a lot of our time. Besides what Salil mentioned in terms of the compensation interventions, really the whole career progression, career pathing of many of these employees as we communicate our long-term value proposition with Infosys for many of them. I think that's something we are rolling out. We are also looking at differentiated talent this year in our campus hires, so digital specialists who are with different skillsets coming into the company. And thirdly, of course, reskilling, which remains very, very core to our fundamental business model and how do we digitally skill tag employees, give them incentives to get reskilled in new technologies. So it's a plethora of things which we are looking at consistently and consecutively. Like I said, today, there's an industry issue. This is not a specific any company issue. And as more and more freshers entered overall across the ecosystem, I think you will see this attrition across the industry and also with us coming down.
Thank you. Moving on to the next question. We have Shivani Shinde from Business Standard who sent us her questions on text. And gentlemen, I'm going to read it out. Shivani -- for Salil, Shivani asks what impact do you see of the recent COVID variant on business and operations? And what happens to back-to-office plans? Next, she asks what happens to the COO role? Will Infosys not have any COO? And Nilanjan, for you, Shivani asks, what has been the impact of currency? What has been the impact of currency on margins? And what is the hiring target for FY '23?
So thanks for those questions from Shivani. I think, first, what we are seeing with the current Omicron wave is, in many ways, all the impact will probably be in this quarter. We've seen some of that start, of course, in Europe. We're seeing it run through U.S., of course, in India. We're seeing a big, big wave in Australia as well. We've built some estimations just based on what we think will be the way this will play out. In some ways, it seems to be a sharp up and a sharp down. In many ways, maybe the impact of an individual may not be the same number days. And equally, we've built very resilient processes where work-from-home has worked really well in the past and as we quickly put in place already. Having said all of that and factor that in is how we build our guidance update. So we are very comfortable today with what we are seeing with how we'll deliver work for our clients given what our estimate is, as we look at the situation ahead from today. What we do with the return-to-the-office discussion, we have started to see a really good uptick on that in about a month, 6 weeks ago already in India and in other parts of the world. Of course, given what is happening today, we are very focused on employee safety and well-being. And right now, it's much more remote working and work-from-home. But as we have learned, if it follows what we've seen in some other countries, this wave could be a shorter duration and then hopefully, towards the back part of the quarter, we will start to see more of the return to the office work, but it's completely flexible today and very focused on what employees needs are while we are making sure that all the work for clients is getting done.
Yes. So just to add to what Salil said, today, about 83% of our employees in India have got doubly vaccinated and another 10% have got a single dose. So nearly 93% of the workforce in India is vaccinated. So that is a metric which we've been tracking and increasing over this period. Coming back to the hiring plans, of course, we have a very fluid plans, both of freshers and laterals in the year. We have, like all other companies, gone out to campuses to hire. But I think one of the big advantages during this time is we've been able to master both off-campus hiring fresher program and a campus hiring program. So we have the flexibility, both to hire during the off-campus period as well as demand changes. Plus, we have sort of a fixed demand, which we will go out in campus. So that gives us a lot of flexibility as we look into the year ahead.
Thank you. [Operator Instructions] The next question is from Saritha Rai from Bloomberg, who joins us on video.
I wanted to ask you what your -- what signals you're reading from clients as you plan for the calendar year in terms of whether traditional outsourcing or consulting? And how do you see this balance skewing in favor of consulting as all of you want that balance to weigh heavier on the consulting side. I -- Salil, you can take the question and I'd love to hear from Nilanjan as well.
Thanks, Saritha. I think what we are seeing for the calendar year from clients is a continuing of what they want to drive in terms of their change, their digital changes, their cloud changes and all of the programs they're driving. So we don't see that something has changed, either gone up or gone down. It remains at that same level of intensity and spend, which has been fairly high, as you've seen for the last few quarters. In terms of consulting and technology, our experience with clients is really -- they are ready to build out the next phase of the technology environment. There's tremendous focus on modernization. There's a lot of focus on making sure that the digital infrastructure, technology infrastructure is in place, the cloud infrastructure is in place. Everything that is built is in cloud. Everything that's built is cloud native, where we are looking to work with private cloud or public cloud in many ways, leveraging what we're doing in Cobalt. So really, the technology, digital transformation is the center of what we are seeing with clients. And in that, we've been extremely well positioned because that is truly the strength of Infosys. The delivery engine is extremely robust, and we have a portfolio of capability of services, which are focused on cloud and digital, which are helping our clients to transform. Of course, consulting is a critical part, but consulting is a critical part as it helps to build the framework for these transformations. The vast majority of what clients end up doing after the initial consulting is related to the technology spend in making all that work. Our own consulting business is growing extremely well in that sort of a joined up way with consulting and technology.
Thank you. Moving to the next question. We have Chandra Ranganathan from Moneycontrol. Chandra joins us on video.
Salil, a recent ISG report spoke about how a majority of the deals were actually small deals and how enterprises are breaking up transmitted projects because they want to execute it really fast. So how do you see Infosys winning in such scenarios? Are you seeing more of these smaller deals in the market? And Nilanjan, a question on fresher salaries. Is there a case for hiking fresher salaries considering it's pretty much stagnated? It's just seen a hike of 8% to 9% in the last decade. Do you see a case for that? Final question, Salil, if you can give us an update on the income tax total since the returns ended in December. And for some cases, it's been extended to March. If you can give us an update on that as well.
Thanks, Chandra. I think in terms of what we are seeing in terms of the deals, the overall environment for large transformation programs is very robust. We have seen 25 deals in this quarter, which are each about $50 million. Where we have a difference, which we've talked about before, is what happened with what we call the mega deals, which are much more volatile or lumpy. We still see a good pipeline where our clients are looking at, but those are not predictable in the sense of whether they come this quarter or next. Our own experience is the volume of deals is very strong and robust. In many cases, there are transformation programs, which clients have launched. There are new programs being launched by other clients, and those programs need different kinds of capabilities to be brought together, where we are helping to bring multiple service lines to help on that. And sometimes clients break that up into different phases. In many of these cases, once one of these transformation program starts and if things are going well, they continue on to different phases, each of them being significant outlays from a client perspective. Let me address the income tax project and then Nilanjan can address the other part. On the income tax project, we are an extremely proud in that on December 31, we had, as was reported 5.8 crore return were filed through that time frame. On the day, itself over 46 lakh returns were filed. The deadline at that day was maintained -- is the way that the income tax department saw all of these things working and, really, all of the people who are using the system saw all of that working. We are extremely grateful we can help and contribute in the vision for the digital India that this is enabling. Going forward, we are working, of course, very closely with the new department on the next set of areas that will become part of this system as new modules are put together, but we are extremely happy and proud with how the December 31 closing and the ending of that deadline went with the 5.8 crore returns filed.
Yes. So Chandra, your question on the fresher salary, of course, we always continue to look at that. We need to be competitive always. And looking at the overall demand and supply scenario. So for instance, this year, digital specialists is something which we've looked at where they're full stack programmers. We've been able to take up salaries for that set of new joinees. You're also aware of our strong program of hiring -- of training people in Mysore. Of course today, Mysore remains closed, but we continue to still have 4 months of virtual training before people are put onto production. So all this goes into the overall value proposition, which we are offering new joinees. And like I said, we have a target of about 55,000 this year, and we're quite confident of meeting that.
Thank you. Moving to the next question. We have Shilpa Phadnis from the Times of India on video.
I think companies are looking at a blended rate to balance a pyramid. It's a mix of skills and technology. If you can talk of the pricing environment, because pricing, for some of the hot skills, has gone up by 4% to 8%. On one hand, you have supply-side challenges and clients willing to pay this premium for these hot skills. How are you staffing these large deals that require these skills? And then my second question is on how the integrated infrastructure deals are breaking up? Companies are looking at a modular way as to how they can be backloaded for profitability. So if you can help us understand whether it's re-platforming coming into play here.
Thanks, Shilpa. I think on the pricing, what we are seeing, as you were pointing out is there's a lot of value that is created through the digital transformation work. We are seeing, of course, through this last year, increase in compensation costs, and we've had 3 of those within our structure. We know that the large enterprises are looking at the world around them. And for the first time in a very long time, they're seeing inflation that is in the environment. With all of those factors, we are now more and more comfortable that we are able to discuss with our clients the value through the digital programs and that translating into some pricing improvements over time. In terms of the infrastructure, work and platforms, we are very much seeing that. I think there's large cloud transformation that is in play with clients. We mentioned our digital business growing at over 40%. Our cloud business, which is a subset of that is growing faster still, and we see that being building out the new cloud ecosystems of our clients, whether they're going with public cloud, whether they're going with private cloud or whether it's in a SaaS partnership, whether it's building new platforms, which are fully cloud-native, cloud-first platform. So very, very critical and a large part of where we see the future growth coming from.
Thank you. Moving on. The next question is from Surabhi Agarwal from The Economic Times. Surabhi joins us on audio.
I just wanted to understand that you have raised your guidance by 3 basis points, right? So what gives you the confidence at a time when Omicron is raging across the world. And does this fresh wave mean more opportunities for IT companies? I mean, of course, it's a health care crisis. But apart from putting that aside, from a business point of view, does that mean a fresh wave of opportunities for companies like Infosys?
So thanks for your question. I think in terms of raising the guidance, the Omicron situation is separate and I'll come back to visit. It's obviously a very serious concern for the health and safety of our employees, but everyone around the world. Our guidance really came from the extremely strong performance that we saw in the third quarter with 7% growth quarter-on-quarter, 20 -- over 21% growth year-on-year. And the pipeline that we see of these that we are working on and the large deals that we were -- that we converted in Q3, which is at $2.5 billion, 25 deals across all of our segments. So those are the factors that we put in place and then seeing that we are very comfortable in scaling up our capabilities and capacity in supplying what our clients need in service and providing the service that they need, all of those factors came in to increase the guidance. I think Omicron is a very important and serious health situation, where we are extremely focused on the safety and wellbeing of our employees. We've already moved very quickly as we had done the last time on the work from home. Nilanjan shared the statistics on our vaccination. All around the world, we are supporting our employees, and we have estimated what could be some of the impact on how that work from home will be executed for our clients. And then factoring that in, we have come up with the guidance which will increase for the full year.
Right. Another question I have is given the talent shortage in the industry, how are you, one, making sure that people who are there with you stay? And secondly, does the skilling programs change like Mr. Roy mentioned, that 55,000 is the fresher hiring target for this year. So are you training them in a way that they can sort of makeup for the shortage in the lateral hiring due to the crunch?
Let me start and if Nilanjan has anything to add, we will do that afterwards as well. The main focus for us was to make sure -- is to make sure that everything we are doing with our employees is something that is supporting them, whether it's the engagement with them, looking after them, reskilling. That is a big part of what Infosys have been doing all through the initial screening, but the ongoing reskilling. The support through COVID, there were lots of different things where we enable medical and other support for our employees and then making sure that they're developing a long-term career with Infosys, building their skills and so on. This past quarter in Q3, we added over 12,400 people into the Infosys family. Nilanjan shared earlier that our plan for this financial year is to recruit 55,000 college graduates. All of these things are making sure that we have ready people working on projects that our clients are looking to drive in their digital transformation and also helping to build a long-term career for all of the employees within Infosys.
Thank you. The next question is from Sai Ishwar from The Informist. Sai Ishwar joins us on audio.
So Salil, sir, I just want to know the comment -- your comment on FY '23 budgets. I mean, the calendar year budgets for FY '22 from clients. And also, since BFSI is your biggest bucket, do you see the clients, BFSI clients, especially pricing in for federal reserves, interest rate hikes? And Nilanjan, another question for you just a straight question. Can you also share color on the ballpark figure on FY '23 campus hire targets?
So first, in terms of the calendar year, which has just started, we don't give a guidance beyond that. But the view that we have today is all of our discussions with our clients is giving us good confidence that, that digital transformation programs are continuing at the same pace and that they're moving forward across different industries with what they have planned. In terms of financial services, as a point of the Fed increasing or indicating that they will increase the interest rates. Today, our financial services growth was strong in Q3. We continue to see a good pipeline for programs that we're working on. There also, the digital transformation in the cloud work is going extremely fast. At this stage, we are not seeing that any of them have changed their spending or their technology focus with the Fed interest rates. Of course, we will see how the year progresses and if that makes any changes ongoing.
Yes. So the question on fresher hiring, I think I just answered that. I think we are in the colleges as we speak. But also, as I said, we've built in the flexibility of having both a campus hiring model plus off-campus hiring model during the year, which gives us the flexibility as demand increases or decreases. So I think that's something which we have sort of perfected during this COVID time. So we remain quite confident of meeting the overall demand requirements for next year.
Thank you. The next question is from Jochelle Mendonca from ET Prime. Jochelle has sent her question on text, and I'm going to read it out. Jochelle's question is for you, Salil, on the revenue per employee. Jochelle asked revenue per employee has risen from a year ago. What is driving that? And what is the breakup between net new and renewal in large deals?
So the revenue per employee, I think is a very good indicator, which shows how our digital work is changing. We don't separate it out in any other parameter, but this gives a good indication that the more digital we are doing, the more revenue per employee will go up. And with that, now sitting -- growing at 40% and sitting at a very high level is what's reflecting in some of the parameters. In terms of net new in the last deals, our net new was 43% in the large deal. And so again, that gives us a good level of confidence that this continues revenue growth momentum as we look ahead into the change.
Thank you. The next question is from Veena Mani from Deccan Herald. And Veena also sent her question on text. I will read it out. How much are you going to invest on securing your systems as a lot of the work your employees are doing is sensitive and systems are prone to cyber-attacks?
Thanks for that question. That's an extremely critical point. We have put in a tremendous amount of work within the company to ensure that what we are doing in cybersecurity is world-class. We have a very dedicated team that focuses on the cybersecurity work across all of our projects within the company and how we interact with entities outside the company, outside so to speak, our firewall. We have a very active Board subcommittee on cybersecurity, which also looks at this on a quarterly basis. In that sense, we're doing a lot that is required to be done to make sure that all of our work is going on as best as possible using the latest approaches of cybersecurity.
Thank you. Moving to the last question for this evening. The next question is from Uma Kannan from The New Indian Express. Uma joins in audio.
My question is the future of work is hybrid. Everybody is now talking about hybrid. So what are the challenges you're facing in this model? And it's going to be 2 years now. So -- and what are the key enablers in adapting to this hybrid reality? And also, my second question is, you recently acquired Simplus Malaysia delivery center. So can we expect more acquisitions in this particular space, communications in the future?
Thanks for your questions. I think on hybrid, we've seen a tremendous amount of evolution and maturity over the past 1.5 years, 2 years as we put this into place. The first -- there is a huge amount of flexibility that is now being built into our system, which allows our employees to work remotely in any configuration. It was hugely supported by [ active hands ] and all the infrastructure that we have been built ahead of when COVID started held us in good stead as we were able to quickly drive this. Today, we are able to go back and forth with this current wave. We also moved very quickly to remote working and work-from-home. What we will do over the next several quarters as we see the situation evolving is enable employees to work in a hybrid fashion and also open up the campuses as and when the medical safety allows us to do that. We want to make sure that we have tremendous flexibility for our employees and then also support our clients where we need to -- where there are requirements where things work together for different parts where they need to be and reengage in building the social capital. That is the approach that we've put in place. We've been able to flex on this up and down as we've seen in the last few weeks with the new wave coming in. And we feel comfortable, over time, that we will do more of that in the medium and long term. But in terms of the discussion on the telecommunications space, our acquisition approach is something we've been very focused on. It's generally looking at what is going on within the digital ecosystem, the cloud ecosystem, whether it's in cyber security or experience on IoT. These are the areas that we put in the most focus and effort, and we are making sure that we look at the steady pipeline of situations in that. What we had recently was a very strong partnership with Singtel, which is a long-standing client for us and someone who has a lot of trust with Infosys. In that situation, we expanded some of the work that we did through the acquisition of that key reference. But we have, in general, an overall picture of driving acquisition in the digital space, and we will continue to do that across all of the sectors we work in.
Thank you. With that, we come to an end of this Q&A. We thank our friends from media for being part of this press conference. Thank you, Salil, and thank you, Nilanjan, for being here.
Thank you, everyone. Stay safe.
Thanks, Rishi. Thanks, everyone, for joining in and wish you all a happy New Year.
Before we conclude, please note that the archived webcast of this press conference will be available on the Infosys website and on our YouTube channel later today. Thank you once again for joining us, and we hope to meet you in person next quarter. Stay safe, and have a very good evening. Thank you.