What are the specifics of AI deals and the AI order book? What are the hiring plans for FY26? What is the overall demand environment?

Salil described broad AI projects across various functions and industries, with plans to share more details later. Jayesh confirmed 12,000+ freshers hired in H1, on track for 15,000-20,000 for FY26. Salil reiterated the uncertain but mixed demand environment, with strength in financial services and manufacturing. “We have hired in the first half, 12,000-plus freshers already. So we are well on our track to hire close to 20,000 this year.”

What drives Europe's strong performance? Update on Project Maximus impact. Have all offered freshers been onboarded?

Salil attributed Europe's success to investments and companies seeking transformation/cost efficiency. Jayesh stated Project Maximus continues to deliver, contributing 30 bps to sequential margin expansion this quarter. Jayesh confirmed 12,000+ freshers hired in H1 are being onboarded. “Project Maximus has delivered 30 basis points out of that, where pricing gave us a tailwind and that was offset by higher subcon and lower on-site utilization.”

Why is top client contribution reducing? What is the hiring outlook? Where is the deal pipeline strong? What are the margin levers for H2? How much did acquisitions contribute to guidance?

Salil noted marginal changes in client contribution. Pipeline is strong in cost optimization, consolidation, automation, and AI, with traction in financial services and manufacturing. Jayesh detailed Maximus, fresher onboarding, and pricing as margin tailwinds. Acquisitions contributed 20 bps to Q2 revenue growth, already baked into guidance. “This quarter, it's only 20 bps out of the 2.2% because 2 months -- we already had last quarter, 2 months baked in already.”

INFY

Infosys (INFY) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Sep 2025 (Q2 FY26)· Information Technology· Oct 16, 2025

Source: earnings call transcript

Executive summary

Infosys Q2 FY26 — Strong Performance and Tightened Full-Year Guidance

Infosys delivered a strong Q2 FY26 performance, driven by large deal wins and growth in financial services and manufacturing. The company tightened its full-year revenue guidance, reflecting increased confidence despite an uncertain macro environment. Strategic investments in AI and localization continue to be key focus areas, while the company navigates H-1B visa complexities and rising subcontracting costs.

Highlights

Revenue grew 2.2% sequentially and 2.9% year-on-year in constant currency.
Operating margin was strong at 21% for the quarter.
Large deal wins totaled $3.1 billion, with 67% being new work.
Announced a mega deal worth $1.6 billion with UK NHS post-quarter close.
Net employee additions of 8,000 during the quarter.

Concerns

Retail vertical continues to see constraints.
Overall demand environment remains uncertain despite increased guidance.
Voluntary attrition, while marginally down QoQ, increased year-on-year.
Subcontracting costs have gone up, impacting margins.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year FY26 revenue growth	2% to 3% in constant currency high materiality	FY26	High
Full-year FY26 operating margin	20% to 22% high materiality	FY26	High
Full-year FY26 fresher hiring	15,000 to 20,000 medium materiality	FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Company-wide Strong overall performance with sequential and year-on-year constant currency revenue growth.	—	2.9% in constant currency	2.2% sequentially	21% operating margin
Europe Has done extremely well due to investments and companies seeking transformation and cost efficiency. Continues to be a focus market for investment and acquisitions.	—	outperforming	—	—
Financial Services Client base is doing very well, seeing extremely good growth and good traction in the pipeline.	—	extremely good growth	—	—
Manufacturing Saw good growth this quarter and good traction in the pipeline.	—	good growth	—	—

Orderbook & backlog

Large deal wins $3.1 billion Q2 FY26 end

67% of this was new or net new work.

Mega deal $1.6 billion post Q2 FY26 close

Announced after the close of the quarter, with UK NHS for complete transformation, including AI elements.

Deals & partnerships

Versent Group Focused on digital, AI, and cloud capabilities.

Acquisition is undergoing regulatory approval. Infosys is looking at other acquisitions to fill capability gaps in industry, skill areas, or geographies.

UK NHS Complete transformation program, supporting with new technologies including AI. $1.6 billion

Announced after the close of Q2 FY26. A huge program where Infosys is working with many partners to deliver effectively.

Risks & headwinds

Uncertain macro environment Ongoing

Still uncertain, with mixed signals (growth in some markets, inflation/constrained job creation in others, cost constraints in some industries).

Mitigation:Diversified industry portfolio, focus on cost efficiency and automation for clients.

Constraints in retail vertical Coming quarters

Retail sector continues to see constraints.

Mitigation:Good pipeline in retail, monitoring how it plays out.

H-1B visa restrictions and costs Ongoing

Stricter H-1B norms; company not sharing specific numbers on H-1B usage but states majority of US employees do not require Infosys immigration support.

Mitigation:Localization strategy, building nearshore centers, local hiring in geographies (US, Canada, Mexico, Latin America, Europe), ensuring service continuity for clients.

Rising subcontracting costs Q2 FY26

Subcontracting cost has gone up.

Mitigation:Costs fluctuate based on demand and talent requirements; potentially includes new age skills like AI.

Voluntary attrition Q2 FY26

Marginally dropped QoQ but increased YoY.

Mitigation:Not explicitly stated, but implies ongoing management of talent.

Legal liabilities in AI partnerships Ongoing

Legal aspects of liabilities in AI are not fully clarified.

Mitigation:Infosys takes responsibility for what it controls, careful in discussions with clients and partners.

What to watch in Q3 FY26

Retail vertical recovery

Coming quarters

Current Still sees constraints

Target Conversion of good pipeline into revenue

Why it matters

Retail is a significant vertical, and its recovery would signal broader demand improvement.

We still see constraints in retail. We do see a good pipeline there, and we will see how that plays out in the coming quarters.

Find out whether INFY delivers this. Inve re-checks your case every morning.

Q&A highlights

Why was guidance only tightened and not raised more significantly? What is the impact of H-1B changes? When will AI revenue be quantified? What is Versent's revenue contribution?

Salil explained the guidance tightening reflects confidence despite uncertainty, with the second half typically being slower. He reiterated the company's localization strategy for H-1B. AI revenue is tracked internally but not yet externalized. Versent's contribution will be shared post-close, but prior year numbers are public.

“The previous guidance was 1% to 3% and now it's 2% to 3%. So in a sense, we have much more confidence with the lower end being increased in what we see into the outlook for the year.”

asked by Ritu Singh · answered by Salil Parekh

2 min read 5 chapters

Detailed narrative

AI Strategy and Monetization

Infosys is significantly scaling its AI capabilities, deploying forward-deployed engineers, and engaging in a broad range of enterprise AI projects. These initiatives aim to drive both growth, such as in sales and marketing functions, and cost efficiency through process optimization and code development.

While the company tracks AI revenue internally and sees substantial opportunity, it is not yet quantifying its AI-specific revenue externally, choosing instead to share its strategic approach and partnerships with major tech companies.

H-1B Visa and Localization Strategy

The company addressed concerns regarding H-1B visas, emphasizing that a minority of its U.S. workforce requires Infosys sponsorship for immigration. Infosys has proactively built numerous centers and hubs in the U.S. and other nearshore locations, focusing on local hiring and training. This localization strategy is designed to ensure uninterrupted service continuity for clients, especially in light of evolving and stricter H-1B visa norms.

Demand Environment and Pipeline Strength

The overall demand environment remains characterized by uncertainty, with mixed signals across global geographies and industries. Despite this, Infosys reports a strong large deal pipeline, primarily driven by client demand for cost optimization, consolidation, automation, and the application of AI for efficiency. Financial services and manufacturing sectors show strong traction, while the retail vertical continues to face constraints, though a promising pipeline exists.

Project Maximus and Margin Expansion

Project Maximus, the company's internal efficiency program, continues to be a key driver of margin expansion. It contributed 30 basis points to sequential margin improvement this quarter. Management anticipates further tailwinds in the second half of the fiscal year from ongoing Maximus initiatives, favorable pricing, lean operations, automation, and the positive impact of a optimized talent pyramid as newly onboarded freshers are deployed on projects.

These factors are expected to offset seasonal headwinds like fewer working days and furloughs.

Capital Allocation and Share Buyback

Infosys adheres to a consistent capital return policy, aiming to return 85% of its free cash flow to shareholders over a five-year period. Following a period of strong cash flow, including a significant tax refund in the previous year, the company announced a share buyback program of INR 18,000 crores at a price of INR 1,800 per share.

This buyback, currently awaiting shareholder approval, is part of the company's broader strategy to return additional capital to shareholders.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.