Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Infosys Ltd (NSE: INFY) Q4 2026 Earnings Call dated Apr. 23, 2026
Corporate Participants:
Sandeep Mahindroo — Financial Controller & Head of Investor Relations
Salil Parekh — Chief Executive Officer & Managing Director
Jayesh Sanghrajka — Chief Financial Officer
Analysts:
Ankur Rudra — Analyst
Bryan Bergin — Analyst
Unidentified Participant
Jonathan Lee — Analyst
Presentation:
Operator
Ladies and gentlemen, greetings and welcome to Infosys Limited Q4FY26 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. Should you need assistance during this conference call Please signal an operator by pressing Star then zero on your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Miindro. Thank you and over to Mr.
Mahindra.
Sandeep Mahindroo — Financial Controller & Head of Investor Relations
Thanks everyone. Welcome to this earnings call to discuss Infosys Q4FY26 financial advice. Joining us on this call is C and MP Mr. Farel Parikh, CFO Mr. Jason Rajka, along with other members of the leadership team. We’ll start the call with some remarks on the performance of the company, subsequent to which we’ll open up the call for questions. Please note that anything we say that refers to our future outlook is a forward looking statement and must be read in conjunction with the risk that the company faces.
A complete statement explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I’d now like to pass on the call to Salil.
Salil Parekh — Chief Executive Officer & Managing Director
Thanks Sandeep. Good afternoon, Good evening, Good morning to everyone. Thank you for joining in. We delivered a strong performance in the financial year 2026 with a growth of 3.1% for the full year in constant currency terms. Our Q4 revenue growth was 4.1% year on year in constant currency terms. We had strong growth in financial services, in the communications industry, manufacturing industry and for the Europe geography for the full year. Last deals were strong. For the full year we had $14.9 billion of large deals.
This is a growth of 24% over the prior year and for Q4 we were at $3.2 billion, a strong showing for the quarter. We shared our AI strategy during our AI Investor Day a few weeks ago. We see a large addressable market for AI services across six areas. AI strategy and engineering, data process, legacy modernization, physical AI and trust. With our Topaz fabric platform for AI, a COBOL platform for cloud, we have differentiated capabilities to serve our clients across the six areas of AI. Some examples of the work we are doing For a consumer products retail company, Ralph Florian, we helped build a conversational and personalized AI tool that led to converting customer interest into a shopping experience.
This resulted in an increase in their revenue by 12% and customer engagement by 50%. For a large transport company, Hertz, we helped with a legacy migration to bring 3 million lines of Cobol code to a modern microservices environment using AI foundation models. The cost was 60% lower, the timeline was 60% quicker than how they would have done it without AI. For a large energy company, BP we deployed 50 AI agent initiatives across trading, supply chain sustainability and core operations to transform the software development, knowledge automation, legacy modernization and digital decision support.
This resulted in 95% payment accuracy, 50% faster contract validation and 18% improvement and it operations efficiency. We have strategic collaborations with emerging foundation model companies such as Anthropic and OpenAI which help us support our clients transformation for software development, legacy modernization and agent building. We also have established strategic AI collaborations with Google, Gemini, Nvidia, Microsoft, AWS, Google Cloud and Intel among others. We’ve deployed over 30,000 developers on GitHub Copilot as we look ahead to financial year 2027, we see large opportunities in AI services, continued competitive intensity and AI productivity impact.
With a clear AI strategic roadmap and real world toolkit of Topaz fabric, we are well positioned to support our clients transformation, technology and operations objectives Our revenue growth guidance of financial year 27 is 1.5% to 3.5% year on year in constant currency terms. We expect acceleration in growth in financial services and the energy utilities resources services vertical. From financial year 26 to 27 we expect H1 to be stronger than H2 consistent with our normal seasonality. Our operating margin guidance for financial year 27 is 20% to 22%.
With that, let me hand it over to Jayesh for his update. Thank you Samit Good morning, Good evening everyone and thank you for joining the call today. Financial year 26 performance demonstrates our ability to maintain financial discipline and operational excellence in a challenging and evolving business environment. Client spending is guarded with greater focus on cost optimization engagement as against growth led transformation programs. We are seeing increasing momentum in AI driven initiatives particularly around productivity, automation and platform like modernization initiatives.
Let me start with the key highlights for the year and the quarter. FY26 revenues crossed 20 billion and grew 3.1% in constant currency terms within the upgraded guidance band given in January. This was after lower third party cost which was down by 1% as percentage of revenue and 0.7% reduction in on site mix. Acquisitions contributed about 70 bits on full year growth for FY26. Communication, manufacturing vertical and Europe geography grew more than double the company average led by ramp up of the large deal wins.
Additionally, FS and EURs grew above the company average in constant currency terms. Volumes for the year were flattish. Growth was led by increase in realization thanks to Project Maximus. Adjusted operating margin was stable at 21%. Gains from currency and Maximus were reinvested in talent, AI investment and sales. For marketing Q4 revenues grew by 4.1% year on year. Sequentially revenues declined 1.3% in constant currency due to seasonality and slower decision making in the month of March. Growth in Q4 was broad based across major geographies.
Communication EURs and LS vertical grew well above the company average on a year on year basis. In constant currency terms, Q4 operating margin stood at 20.9% down 0.3% sequentially existed for the Labor Code impact in Q3 on site mix further reduced to 22.8% from 23.1% in Q3. Utilization excluding trainees was 83% in Q4 and 84.4% in FY26. Utilization including trainees was at 81.1% for FY26 reflecting the investment made towards creating future capacity. Strong focus on collections aided by technology interventions helped us reduce DSO including an unbilled net of unearned to 78 which is the slowest in seven years which is the lowest in seven years.
Reported EPS in INR terms grew 23.8% YoY in Q4 and 11% in FY26. EPS adjusted for income tax orders and the Labor Code grew double digit for the year at 13.9% in Q4 and 12.1% for the full year. In INR terms. Free cash flow adjusted for the Labor Code and income tax refund stood at $33.5 billion for FY and $882 million for Q4. Adjusted free cash as a percentage of net profit continue to be well above 100% at 106 for FY26 and 111 for Q4. We had a strong large deal win in financial years with a PCV of $15 billion with 55% net new large deal pipeline continues to remain strong.
Our $50 million plus clients increased by 3 and 100 million plus clients also increased by 3,400 million by 2 in financial year last year. Headcount at the end of the year was over 328,000. Voluntary attrition reduced by 1.5% to 12.6% the year, reflecting continuous softness and our interventions toward talent retention. We onboarded more than 20,000 freshers in FY26 and expect to hire a similar number in FY27. We will continue to calibrate the overall requirement depending on growth expectations and attrition trends.
Operating margins for Q4 declined by 0.3% to 20.9% sequentially. Major components of the changes are as below headwinds of 50 basis points impact from past acquisition on account of additional amortization of intangibles 30 basis points for normalization of last quarter’s one off gain 20 basis points from compensation related costs offset by lower variable pay. This is partially offset by tailwinds of 40 basis points for currency and 30 basis points for Maximus comprising of Value based Selling, Lean and Automation and critical portfolio Q4 yield on cash and investments balance was at 6.2% and 6.7% for the year.
ROE stood at 31.6%. Consolidated cash and investments were at 4.5 billion after returning over 4 billion to shareholders in FY26 Reflecting our strong cash envision, we signed 19 last deals during the quarter with CCV of 3.2 billion. This includes five Asian financial services and manufacturing, four in retail, two in two each in life science and communication and one in AURL. Region wise we signed 11 deals in Europe, five in America and three in the rest of the world. In FY26 we signed 96 large deals with PCs of 15 billion 55% net new.
This includes three mega deals for the year. Tax rate for the quarter is lower due to reversal of prior year tax provisions as a result of favorable tax orders. We expect effective tax rates for the financial year 27 to be in the range of 29 to 35. In line with the Capital Allocation Policy Board has proposed a final dividend of rupees 25 per share which will result in a total dividend of 48 per share, an increase of 11.6% over last year once the final dividend is approved by the shareholders. Coming to verticals financial services for FY26 grew above company average at 4.4% led by ramp ups of large deal wins and continued momentum in AI led transformation, legacy modernization and lender consolidation.
Overall market sentiment remains positive resulting in continued consumer spending across US banking, capital markets and Europe. CY26 budgets are expected to grow in US we signed a large GCC deal for a regional bank in the US an industry first and a large AI first GCCB. We have strategic AI partner for 18 out of the top 20 clients in this vertical. Significant large deal closures and a new account opening in FY26 along with a strong large deal pipeline will drive growth acceleration in FY27. Clients in manufacturing remain cautious amid softer demand, particularly in automotive and parts of Europe.
There is continued uncertainty on account of tariffs and ongoing Middle east conflict which is resulting into delayed decision making in pockets. Discretionary spending remains constrained while clients prioritize in cost optimization and operational resilience. Large deal pipeline comprises of infra outsourcing AMS rollout, etc. Near term and FY27 growth will be impacted due to low revenue from one large client. Across the EURS segment. Demand environment remains constructive supported by a strong large deal pipeline.
Clients continue to prioritize cost reduction and operational efficiency which is a driving vendor consolidation. In energy we see increased outsourcing leading to healthy deal momentum. Utilities demand is structurally higher driven by grid constraints, renewable integrations and acceleration electricity needs for data centers. 80% of the large DCV of FY26 was net new which will help growth and acceleration in FY27. In retail segments, clients are operating in continued uncertainty from supply chain disruptions, geopolitical conflict and shifting trade policy.
Consumer demand remains muted across the sector and budgets are tightly controlled with discretionary spends. Under pressure, clients expect savings from AI led productivity to do more. With the similar budgets we will see higher demand for AI assisted legacy modernization. SOPA’s fabric and AI Next platforms are helping clients in ideation from concept to deployable stage with the right card rates for privacy, ethics and control. In communication sectors, growth for FY26 was led by large deal ramp ups.
Overall environment remains cautious amid macro uncertainty and margin pressures for clients. Budgets are flat to negative which is impacting discretionary spend. Non discretionary spends are selective and increasingly AI led. There is a shift from generative to agentic AI with clients consolidating ID and VPN cuts. We see a strong uptick in AI deals in areas like IT operations, software replacement and mainframe migration. As we enter FY 2010, we continue to see a measured and selective approach to enterprise budgets amid macro and geopolitical uncertainty, higher interest rates, rapid technology shifts and high competitive intensity.
We expect FY27 growth to be 1.5% to 3.5% in constant to currency terms. The FY27 guidance includes contribution from Stratus which we closed earlier this week, but excludes worsen JV and optimum healthcare acquisitions that are yet to be closed. Reduction of 0.75 to 1% due to a lower revenue from one of our large European manufacturing clients. This was due to reduced client spend on account of challenging macro environment along with our conscious decision to not pursue a certain deal that was not aligned to our return expectations.
Further reduction in onset mix by 0.75 to 1%. We expect third party costs for FY27 to remain at similar levels as FY26. Our operating margins guidance for the year is 20 to 22%. This assumes headwinds from wage hikes, productivity pass Throughs and AI investments offset by initiatives under Project Maximus. The impact of optimum healthcare status and worsened on operating margin will be approximately 0.7 on a full year annualized basis post closure. With that we can open up for the questions.
Questions and Answers:
Operator
Thank you very much. We now begin with the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchton telephone. If you wish to remove yourself from the question queue you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles participants. You may press Star and one to ask the question. First question is from man of Yogesh Agarwal from HRBC Securities.
Please go ahead.
Salil Parekh
Yeah, hi, there’s couple of questions. Firstly, can you talk about the push pulls for the guidance like at the lower end, at the upper end, what are you assuming? And secondly, you guys had a very successful Project Maximus. The quality of business, the revenues has also improved. But the entire INR depreciation which is very significant has not impacted the margin outlook. So I was just curious which are the areas where all the INR depreciation
Operator
Has been invested and if you can talk a little bit about that. Thank you.
Salil Parekh
This is Jayesh here. At the lower end of the guidance we have assumed higher deterioration in the environment and at the upper end we have assumed improved environment like similar to what we’ve done in the last year as well. In terms of margin work, I did give you a broad margin work but largely we have invested all the benefit that we got from Rupee as well as from Maximus back into the business. Whether it is sales and marketing cost which has gone up by 40 basis points on a full year basis, the AI talent and the AI partnership, et cetera that we have.
So I think all of that has been absorbed in the margin in the financial year.
Sandeep Mahindroo
And just a quick follow up, you mentioned productivity pass through impacted margins. I was just wondering why should that be the case if there was productivity improvement?
Salil Parekh
Market is competitive, right? As I said, the competitive intensity in the market has gone up and the productivity will get passed back to the client last week.
Operator
Thank you. Thank you. Next question is from the line of Ankuruda from JP Morgan. Please go ahead.
Ankur Rudra
Thank you. I noticed you’ve chosen to guide in a 200 basis point band versus a slightly wider band in the last couple of years. Is your visibility better this year versus the last few years? And furthermore, if you can dig a bit more into the guidance as a follow up of the previous question you’re guiding for 2.25% organic at the midpoint, approximately which appears to be a bit of a slowdown versus the two and a half percent or 2.4% organic. Can you maybe talk about what’s in the outlook and if you can especially elaborate on if the slowdown is because of a demand environment, B structuring AI lucration or C the impact from that one large account which is ramping down this year.
Thank you.
Salil Parekh
Yeah. So Yves Ankur, if you look at the guidance last year we gave a three point guidance because the whole environment changed pretty much very close to the time when we were giving guidance. And we had very little clarity in terms of how that environment changed because of on the back of tariff, tariff changes is going to impact the client behavior, et cetera. Where we stand today, I think there’s a better clarity in terms of what’s happened. The environment has been like this for last last few quarters and we know how clients are behaving at this point at least at this point in time.
Of course if things change the client behavior we think that’s given always. But at this point in time from a competitive perspective we have a better clarity and that will have better handle versus the last year. Like the construction of the guidance. What we are seeing positive where the changes are. Jaish mentioned many of those points. I’ll elaborate. We are seeing the growth on AI services. We are seeing very good traction on that. We are seeing, we’ve started a program where we are working with large companies with a smaller footprint that Infosys has.
We’re expanding that quite nicely. Then we saw the last deal. The NET New was 55% so that will contribute for the next, for this financial year in a significant way. And then on the other hand there is the productivity benefits that are coming through which the clients are looking for with AI on the existing portfolios. Then Jay shared a couple of situations with Manufacturing Europe with on site mix some technical factors. So those if I sort of add and subtract is where we came on that guidance.
The environment I find is good, pipeline is good. The way we had done it on that AI investor day we had sort of said look there’s a growth side with what will be the AI. We have a couple of other growth drivers and then there’s a compression side and that’s the balance that we are seeing in the past year with 3.1%. And if you adjust for the one timers the one time from the prior year growth rate which was more than the compression we were seeing. And this coming year the guidance that we have started with also sees that.
And then we see, as Jayesh said on the environment, how it changes, improving or not improving and then see how the year goes after that.
Ankur Rudra
Thank you for the elaboration. If I could just a quick follow up. What would need to happen for you to see an acceleration at the midpoint on an organic basis? Thank you.
Salil Parekh
These are things which are always more difficult to estimate, as you know well Ankur on However, the view emerging is that the situation in the Middle east may find some sort of a good, good outcome resolution. Then the underlying economic strengths are pretty good. In the markets where we are large that could give rise to a more stable macro environment. Our traction and partnerships are good. So those things, the first and the second accelerate and we will see some good outcomes. But it’s more of going in.
We see the environment today. It’s not. We’ve not seen some big change to give us a view that we have to do a three point range and so on at this stage. And overall we see growth which is more than compression.
Ankur Rudra
Appreciate it. Thank you.
Operator
Thank you. Next question is from the man of Brian Bergen from TD Cohen. Please go ahead.
Bryan Bergin
Hi. Thank you. I wanted to ask on the AI productivity that you’re seeing here. So with the AI model advances happening as fast as they are, has the amount of productivity during compression that you’re seeing changed in the current contracts relative to what you may have been seeing say one or two quarters ago? And can you dimension maybe the mix of the business that is directly exposed to the productivity pass throughs versus maybe the mix of the business that is more insulated?
Salil Parekh
On the first one we have not with the models and the technology is moving with great innovation. We have not seen in one or two quarters the change that you referenced. What we are seeing is the competitive intensity is pretty high. So every now and then we see, you know, a competitor doing something which looks outside the range of what we think the models can do today. That sort of thing we do see, but not that just the tech in the last two quarters. Meaning over the last years of course there have been changes in the terms of expos.
I think we have not like shared that data, but I think we’ve shared very clearly what our service line data is. And you can make some estimates with that, I think.
Bryan Bergin
Okay. And then my thoughts on kind of how you’re thinking about the overall business and headcount hiring intentions for fiscal 27, I think I heard you Say roughly targeting the fresher target of around 20,000 again. But do you envision a scenario where I guess the total headcount could ultimately be down in total when the year is over? And also if you can now talk about the subcontractor intensity that you’re anticipating in the year ahead
Salil Parekh
On the overall headcount. First, as you pointed out, we will recruit 20,000 college graduates. That’s our plan. Today we have a model which does some of it at one particular time and the rest of it throughout the year. So we have like a variability built in if we see some changes. But what we see Today we think 20,000 looks like a good place to start. We still have now if I look out for this quarter, next quarter, very good demand for people which are coming at higher levels, lateral recruitment.
So I think that will continue. I don’t see that our headcount is going to be like we don’t have a plan but the headcount will be less at the end of the year. Now we’ll see how the demand environment plays out, but it’s not going in. Sort of a view that we have, of course we have Basically look at Q1, Q2 and the rest we build out on the models we have.
Sandeep Mahindroo
Yeah.
Salil Parekh
And on the subcon brand. If you look at last few years, subcon as a percentage of revenue has come down. Obviously it’s also a factor of the growth. So typically we use subcons to meet the demand which comes in immediately. We don’t have the, the requirements skill set and then we backfill that through the employees and that’s a cycle that goes on. So we don’t really expect subconscious significantly change from this number over a medium term period. We expect it to maybe go towards the lower end, I mean slightly go down from the current level but at this point in time not significantly change.
Operator
Okay, that’s helpful. Thank you very much. Thank you. Next question is from the land of God of Reteria from Morgan Stanley. Please go ahead.
Salil Parekh
Hi, thank you for taking my question. My first question is on the construct of growth. When I look at that, there are broadly three factors that comes to my mind. The first is the macro. Compared to last year it appears that the headwinds related to tariff etc are not there. So there is slight improvement which is reflected in 40% of your portfolio that you talked about. The second factor is AI services which probably has become larger than the last year and growing faster, which again is a tailwind.
And the last factor could be the deflationary impact on existing business on account of productivity savings. So the fundamental question is that the first two tailwinds look better than last year and the growth rates in organic terms does not look better at the midpoint of guidelines. Is it that the deflationary impact assumed in your guidance at the midpoint is slightly higher than what you have seen in the last year? Hi Gaurav, this is Salil. I think what you described is the way it starts off, which is we see very strong activity on AI services on the macro.
You know, as the year progressed last year, the situation of the tariff got better and better understood, as you know. Then when the war started, that again had a little bit of a constraining effect on the macro. There’s a general view that there’s coming to a resolution, but it has not happened. So while some of the economic indicators are forecasted in a better way, it’s not yet into the system in that sense. We’ll see where it actually comes in then. If you look at the couple of things that Jayesh shared on the specific on the manufacturing Europe, on the specific on the onsite mix, when you put all that together, we see actually something which looks stronger in that sense to what we saw last year.
Now the compression is definitely there, but it’s not. I don’t know if I have a sense that it’s more than last year. We are definitely seeing the compression, but we also see the growth. And that’s how we are sort of bisecting it, if you will. Maybe a couple of points in addition to what Saran said. If you look at last year, we started with 0 to 3% and then as the visibility improved every quarter, we either tightened the band or improved the guide from where we are. The idea of guidance is to reduce our symmetry and provide a view as to what we see today.
And this is what we see today. We do have a plan in manufacturing in Europe where we have stayed away from a deal where it did not make us meet our return estimation. There’s some ramp downs on the client happening because the client is going through a challenging macro environment. So that is baked in. We have also baked in the on site mix that will impact the exit trajectory of onsite mix is already pretty much 40 to 50 basis points from the future year perspective. So that is baked in the guidance already and the resultant is 1.5 to 3.5% guidance that we have announced.
Of course, if the visibility improves as we go through the year, we will re look at the guidance.
Ankur Rudra
Thank you for the Detailed answer. The second question is on the new AI services, would it be fair to say they come at relatively higher revenue productivity than the core business and
Salil Parekh
Also better gross margins or not? Lapi Jaish,
Jayesh Sanghrajka
Any color on when would the wage hike cycle kick in during the current financial year? Thank you.
Salil Parekh
So Gaurav. Yes. Generally the AI project come at a better pricing and therefore it reflects in a better margin. Of course it also has a higher cost compared to the regular project because the talent is a premium talent at this point in time. So it’s always a factor of how much ahead of the curve you are in terms of benchmark. And that’s what will define the premium that you will get in the market. If you are at the at the benchmark level, you wouldn’t get a premium. If you are ahead of the curve, you do get a premium.
And at this point in time, if you look at the numbers in terms of deals that we are winning, we have won $15 billion deal that kind of talks about our positioning in the market. You did see on the AI day everything that we presented in terms of our capabilities and what clients are saying in terms of our AI capabilities. So I think that kind of gives us the comfort and confidence that we are in the right direction. And it’s also reflected in the pricing and the margins. On the origins in terms of wage increases, we haven’t really decided the timing at this point in time.
We do take multiple factors. When we decide that in terms of the level of attrition that we have, when did we do the last wage increases, what the market scenario, what’s the inflation, etc. We will take all of those decisions into consideration and decide. Thank you and all the very best.
Operator
Thank you. Next question is from the line of Sumit Chain from CLSA India. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. So Falil firstly wanted to check in the last two months with the latest launch of anthropic models, have you seen increased productivity demand from the clients? I mean you mentioned in the press conference that nothing material has changed in the last three months. Can you just specify what kind of client conversations are you happening around productivity
Salil Parekh
There? The sense I have is the need for productivity is similar. There is some level of competitive intensity which is higher which then leads to more sort of demand. There are some cases where it’s way outside the bound, where there is not a lot of engagement, then that is something which we don’t see a way of getting to. So we are not going down those paths. But those are very Infrequent if you look at the vast majority, we see not just like something is complete. Big changes has come literally in the last two months or so at this stage, but things are moving fast.
Productivity over time, which is over multiple quarters year that has changed. But it’s not that something suddenly is like a step change in the last two months that we’ve seen.
Unidentified Participant
And Khan, can you also help throw some light in the new deals what you have signed? I mean are the productivity levels with usage of AI tools similar to what you are in a way passing on in the existing business? Can you give some, you know, because order book looks pretty strong on a yoy basis for the full year, but that is not translating into your improved organic growth in FY27. So is it like the base business is seeing a much higher deflation than you know, what each one of us were expecting?
And with the improvement in AI models, can it actually further accelerate in the coming, coming quarters? So can you show throw some light as to how you are seeing the market
Salil Parekh
Today? I mean we are not, we are not sharing the specifics on what we’re seeing in the portfolio in the growth compression side as opposed to what we’ve shared which is our overall guidance with some of the points that Jayesh mentioned, the on site mix, the manufacturing, et cetera. So I think we see with that solid growth outlook where we’re keeping pace, making sure that what we’re seeing in the AI services growth, some of the other areas of growth that we see is growth which then manages the compression that we see on some of the other parts of our business.
So we don’t have a way of sharing that this is the compression, this is the gross and then this is a net sort of a growth, if you will.
Unidentified Participant
Got it. I think that’s always a difficult thing to quantify. But also if you can just flag in terms of any quantification, you can give the impact of the European manufacturing client sort of ramp down or maybe some competition kicking in there. And I guess Jayesh, you also mentioned that the shift to more offshore will have a 40 to 50 bps impact in FY27. And I guess there were some articles around Vanguard and sourcing. So if you can quantify these three things, how much is the impact on your guidance in this year?
Salil Parekh
If you look at what I said earlier, 1% impact, 75x to 1% impact will come from the European client, which is combination of a deal which did not meet our returns expectation and the rundowns in this client. Through the year as the macro environment is challenging in that sector. So 70 basis points is a reduction in onset mix. We are expecting 40 to 50 basis points is already visible in the exit trajectory. And we do as we see forward. We still believe there will be even further improvement on the onsite mix.
So that will also impact the revenue growth from that perspective.
Unidentified Participant
Got it. That’s very helpful and all the best. Thank you.
Salil Parekh
Thank you.
Operator
Thank you. Next question is from line of Jonathan Lee from Guggenheim Partners. Please go ahead.
Jonathan Lee
Great. Thanks for taking that question. Percentage of net new deals came in at the lowest level we’ve seen in recent years. Can you help unpack whether that’s a function or capability set, AI pressure potentially impacting demand environment or any other factor there? And can you walk us through your expectations for net new deals for the year given what you’re seeing today in the pipeline?
Sandeep Mahindroo
Jonathan, Sorry, can you repeat that question?
Jonathan Lee
We’re seeing percentage of net new deals come in at the lowest level we’ve seen in recent years. So can you help us unpack whether that’s a function of capability set or AI pressure impacting the demand environment or any other factor there? And can you walk us through what you expect for net new deals for the year given what you’re seeing in your pipeline today?
Salil Parekh
So Jonathan, if you look at the combination of net new and the renewal is what percentage of deals are coming in for renewal and what percentage of deal are in the pipeline from net for the full year? If you look at we did sign $15 billion of these, 96 of them, pretty much 55% net new in that. So I think by any stretch of imagination that’s a strong performance. It’s a 35%, almost 25% growth on a year on year basis.
Jonathan Lee
Got it. And as a follow up, can you help us understand what transpired over the course of the quarter and how that may have tracked relative to your internal expectations? I’m hoping to get a better understanding of when you may have started to see some of the outside deflationary impact or some of the downtick in revenue realization or any other dynamics at play there.
Salil Parekh
I mean, we don’t really give a visibility in terms of what were we setting as goals or looking at plants in terms of large deals and performance against that. I think in our view $3.2 billion is a strong performance. Yes, we do see in some pockets some slower decision making in March, but I don’t know if it has got a significant impact on the large deal sign ups. I wouldn’t call that at this point.
Operator
Appreciate the COVID Thank you. Thank you. Next question is from the line of a Bol Singh from Nwarma. Please go ahead.
Jayesh Sanghrajka
Yeah, hi, thanks for taking my question. Two questions from my side. The first question, Sunil is basically on the AI deflation or the completion part that we’ve been discussing a lot. So just wanted to get some color as to where do you think we are in that revenue depletion cycle. So let’s say if I were to compare it to the last digital cycle, we had revenue compression which kind of increased and then we reached a trough and from there basically that started coming down and along with we had incremental revenue coming from the digital business.
I would assume the cycle should pretty much follow the same order. So while our Genai revenue and which is for the other companies also is reporting very strong growth, the revenue compression continues to be quite substantial at this point of time. So do you think we are already at the trough of that revenue recognition cycle? If not, I mean, I mean I know it’s difficult to quantify the timeline. So basically are we still there is more depression that you think that that might come in or do you think we are basically done with the verses behind and the deflation will still continue but it might be not as much as let’s say going forward as it was before.
And then I have a follow up for Jayesh.
Salil Parekh
So hi, this is Alil on that what we are seeing is there are different sort of dimensions to the compression, meaning we are now working with clients where some of the productivity discussions were baked into the deals over the past year or so and then you have a multiple year outlook. So all of that has not happened on the first year it goes through it. So the actual compression will be dependent on the mix first deal, second deal and so on. We have not like we’ve not got a sense of where we are on that path but we have a sense of like what the foundation models and other tools are able to sort of support and use that as a basis for what we are doing with forward deals like three year, five year deals and so on.
But on that sort of a scenario we don’t have a view we can share on like where that path is but we are definitely very clear on where you know like when you’re working with the foundation model and tools what is possible where, where is it effective? Different models or different tools are more relevant for different parts of the AI work that we are doing with clients that we are very, I would say close to
Jayesh Sanghrajka
Got it, got it. If I may just extend a bit on that. So let’s say the deals that we are signing at this point of time, you mentioned many of them have that productivity benefit already baked in or let’s say built into the original deal. But as the cycle evolves, are we also seeing let’s say deals which we have signed maybe six months ago or 12 months ago and there the client has come back and asked for incremental productivity benefits to be passed. I’m talking about the recent deals, not the early days.
I’m sure the early deals are seeing that kind of a response sometimes. But in these recent years also are we seeing that kind of a movement in our conversations?
Salil Parekh
I don’t think we have seen scenarios where what we signed few months back, the client has come back and asked us different productivity to be baked in. Again, what Salil was talking about when a deal comes up for bid or when you’re waiting for a new deal.
Jayesh Sanghrajka
Right? Got it, got it. Sure. Just one last question for you Jaish. In terms of the margins, I think this quarter had a very good tailwind from INR depreciation. Now we know that for as long the industry has moved mature to a state where rupee depreciation doesn’t lead to much of margin expansion over the medium to long term. But we have generally seen temporary quarterly bump up in margins because of iron ore depreciation. Has that benefit also kind of stopped trickling? Because not just for us but for most of the players in the industry we’re not seeing any kind of a margin expansion.
Is it that in this quarter specifically, is it that those benefits are being invested somewhere else or is it that those benefits have stopped accruing at all and those are being passed to the client immediately?
Salil Parekh
Two points that generally, I mean you do have rupee benefit that sometimes gets offset, most of the times gets offset by cross currency headwinds. Because when US dollar appreciates, it appreciates against most currencies and that kind of offsets each other and your portfolio of non US as it goes that offset becomes larger and larger across US and across the industry. Also you have seen that there were times when the US dollar used to be 70 plus percentage or US used to be 70, 75 plus percentage, that obviously has gone down significantly and therefore the headwinds from the other currencies come in.
If you look at this quarter specifically for us, as I called out in the margin box, there was a close to 50 basis points of headwind that we got because of amortization of one of the acquisitions related intangibles last quarter we had a 30 basis points gain. So in a way these two went into two different directions for us in terms of margin impact. Both became a headwind and then 20 basis points on account of employee related costs. So all of those were headwinds that were offset by 40 basis points from currency and 30 basis points from maximum.
Jayesh Sanghrajka
Got it. Great. Thank you so much for taking my questions and I wish you all the best.
Salil Parekh
Thank you.
Operator
Thank you. Next question is from the line of Abhishek Pathak from. Please go ahead.
Salil Parekh
Yeah, hi, I’m Audible.
Operator
Yes sir.
Salil Parekh
Yeah, yeah, hi. Hi. So I had a question around, you know the deal that we left on the table. We saw a similar comment from one of your sort of peers as well. So just curious, sort of, you know, what is happening over here? Are we being disrupted by let’s say leaner sort of, you know, more AI native sort of companies who are pricing deals very low by the delivery model changing or is this a race to the bottom from traditional vendors who are just essentially sort of creating a pricing, creating irrational pricing?
So very curious as to what’s happening here. And over the next two to three year period, do you think the industry needs to find newer, newer models to sort of price the deal and how much is sort of possible to kind of change over here in the short term? Thank you. So there. It’s not that this is something widely prevalent. We do see sometimes a particular sort of competitor doing pricing which seems sort of unusual. But this is something that’s happened over the course of the years for different reasons.
Just now it may be linked with the client’s mind to AI productivity. In other times it’s got other things I don’t see that. It’s something which is sort of across everything. At the end we had 96 deals with close to 15 billion in large deals for last year. So it’s very sort of broad based, robust outcome. Plus the pipeline is pretty good. There are anecdotal things where some of the productivity thing looks out of the range that we see with what’s possible with what we have understood with all the foundation models.
So it’s more of that sort of common note. We don’t see that as being a sort of trend of some sort. Thank you so much. All the best.
Operator
Thank you. Next question is from Keith Bachman from BMO Capital. Please go ahead.
Ankur Rudra
Hi, thank you very much. I have two questions. The first question is related to pricing and I wanted to understand the context of how pricing competitiveness has changed. And you started the answer on the last question. A, is it more competitive today than it has been over the last couple years? But B, the spirit of the question is my understanding when some of your competitors are getting more aggressive on pricing, they’re interrogating cost curves associated with the deployment of AI that may have more uncertainty surrounding those cost curves because this is new technology and I think everybody’s trying to figure out what it can and can’t do at the current level.
So does that introduce incremental risk in how you’re philosophically thinking about pricing? If you could just talk a little bit about pricing dynamics with the introduction of AI and I do have a follow up,
Salil Parekh
I’ll start on that pricing sort of point. The way we are seeing it is the point you made about competitive intensity. We do see there is increased intensity. If you look at last financial year, we had a growth, some other players had negative revenue. So one can sort of imagine some of that sort of a scenario in pricing. It’s actually Jayesh will talk a little bit about it. I think overall realization is better in the year than we have seen before. So maybe the execution is better in the portfolio we feel is less risky in that sense.
So I don’t think we have what if I understood well what you were describing.
Ankur Rudra
If
Salil Parekh
I can just add to what Salim was saying. If you look at elevated level despite the softer volume through the year, most of our growth came from the realization that reflects in what we have been able to get on the back of AI. That reflects in the value that we are creating for our clients. And to some extent that also reflects the contribution from Project Maximus through the lean automation, value based selling and all of those tracks that is given. If you look at despite the competitiveness in the market, despite all of that, we have been able to maintain our margins for the year we invested in back in the business 50 basis points or 40 odd basis points in sales and marketing.
The AI talent that we are building, the AI capabilities that we are building, all other AI related investments, all of that has been absorbed in the margin while keeping margin constant.
Ankur Rudra
Okay, okay, let me ask my second follow up question and it also speaks to or questions to the growth algorithm. And I’m trying to understand how the growth algorithm may change from a volume perspective given the AI efficiency gains on the supply side. And the way I think about it, and we’ve had this conversation with some of your competitors, if you’re trying to grow at 3% in the past years, you might have to grow volumes by 5 or 6% to get to 3% growth. And one of your competitors suggested that volume variance may need to double because the efficiency gains will get to the same revenue growth trajectory.
And I just wanted to see if you could think about how is the growth algorithm on a volume basis different today because of those AI efficiency gains as you look out over the next 12 months versus what it’s been over the last couple years.
Salil Parekh
The reality is we do see, as Sari was saying earlier, we do see some deflation from our existing services. Right. And largely part of that is getting offset by the new services and new AI driven services overall at this point in time. The volume for the last year has remained flattish. And as we go forward we continue to see volumes to remain flatter or marginally positive as we what we baked in in the guidance at this point in time, which is reflected in the lower end and the upper end. As I said earlier, we have expected better macro environment which should reflect in better volumes.
Ankur Rudra
Okay, all right, Many thanks. Good luck.
Salil Parekh
Thank you.
Operator
Thank you. Next question is from the line of Apurva Prasad from Franklin Templeton. Please go ahead.
Ankur Rudra
Hey. Hi. Any comments on the direction of the on site mix? I’m trying to understand if the AI compression or you know, just AI embedded in services and contract structures, is that impacting the delivery mix.
Salil Parekh
I think it’s a multiple factors. Little bit of the environment, little bit of, you know, the visa situations in some of the countries, little bit of our own initiative to deliver, you know, deliver more from offshore. So I think it’s a combination of all of that. So there’s a pigback. Correct. Just to add, the discretionary kind has also come down which generally needs higher on site.
Ankur Rudra
Okay. And for FY27 the on site exit should be similar and third party cross setting you said will be similar next year.
Salil Parekh
Third party cost. I did say that earlier. We expect it to be in the same similar range. FY27 exit is difficult to project at this point in time. As I say, the FY26 exit itself gives us approximately 40, 50 basis points of lower on site mix and we think this trend will continue to some extent. It’s very difficult to predict what will be FY27 exit. Sure. Thank you. Thank you.
Operator
Thank you very much ladies and gentlemen. We’ll take that as a last question. I’ll now hand the conference over to the management for closing comments.
Salil Parekh
Thank you. First, thanks everyone for joining. Just want to share a quick summary. We had a strong FY26 3.1% growth, 21% margin. Very good last deals close to 15 billion. We have a growth guidance for the coming year. We have a mix of growth drivers and compression overall growth guidance and adjusting for some of the one off technical factors, larger growth like for like basis. The AI services approach and strategy I think we’ve laid out is resonating with our clients very well. We see all of the six areas in our pipeline.
Very good partnerships with the AI foundation, model companies and other tool companies. With all of that we look ahead to a strong successful year in this coming year and look forward to seeing all of you catching up with all of you in the next quarterly call. Thank you. Take care.
Operator
Thank you very much members of management, ladies and gentlemen, on behalf of Infosys Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.