Infosys Q3 results: Robust tech deal wins, focus on GenAI drive revenue

India’s second-largest IT services firm Infosys reported Q3FY25 earnings with a profit of ₹6,806 crore, an 11.4% increase year-on-year. Revenue rose 7.6% to ₹41,764 crore. The company attributed this growth to large-scale digital transformation projects and strong AI/GenAI-led partnerships for the period ended December 31, 2024.

"We are enhancing our enterprise artificial intelligence (AI) capabilities, particularly in generative AI, which is gaining client traction," said Parekh. He added that this focus resulted in strong large deal wins and an improved deal pipeline, boosting confidence for the future.

Infosys secured $2.5 billion in large deal total contract value (TCV), with 63% from net new deals, marking a 57% sequential increase, according to the company. In Q3FY25, the company announced a strategic collaboration with StarHub, alongside extending its partnership with Old National Bank to accelerate operational transformation. Additionally, Infosys is collaborating with RheinEnergie to support enterprises in energy transition and sustainability.

Other notable partnerships include an agreement with Zooplus to enhance service capabilities and a strategic collaboration with Kardex to transform operations using SAP S/4HANA.

Infosys also extended its collaboration with Microsoft to accelerate the global adoption of generative AI and Microsoft Azure. Recently, the company launched small language models—Infosys Topaz BankingSLM and Infosys Topaz ITOpsSLM—using NVIDIA AI Stack and established a Google Cloud Centre of Excellence in Bengaluru to drive enterprise AI innovations.

While Indian IT firms are expected to follow suit, companies like TCS, L&T, and HCLTech have refrained from disclosing revenue specifics from generative AI, citing its integration into all deals. TCS CEO K Krithivasan noted clients are investing in generative AI for projects like drug discovery. HCLTech is integrating AI services into 100 clients by FY26.

According to Gartner's DD Mishra, Infosys maintains a healthy balance sheet and aligns with IT services industry growth forecasts. The company aims to shift perceptions from being a low-cost provider to a leader in business transformation, particularly in enterprise applications for Oracle and SAP ERP platforms.

Mishra however believes that although its product offerings are competitive, they have not been heavily marketed, leading to limited client exposure.

Meanwhile, the company’s headcount also increased for the second consecutive quarter, at 323,379, with over 5,000 new employees added in Q3, with Infosys planning to onboard 15,000 to 20,000 freshers in FY25.

Moreover, Infosys raised its revenue guidance for FY2024-25 to 4.5%–5% in constant currency. This is an upward revision from the 3.75%–4.5% guidance provided in the second quarter (July–September) of FY25. This is the second time the company has revised its guidance. In Q1, the company had set its growth guidance at 3%–4%. With Infosys revising its revenue guidance upwards, it signals better spending from clients, believe experts.