Infosys Limited (NYSE:INFY) Q1 2020 Results Earnings Conference Call July 12, 2019 8:00 AM ET
Sandeep Mahindroo - Vice President, Financial Controller and Head, IR
Salil Parekh - Chief Executive Officer and MD
Pravin Rao - Chief Operating Officer
Nilanjan Roy - Chief Financial Officer
Ravi Kumar Singisetti - President and Deputy COO
Mohit Joshi - President
- Sandeep Mahindroo - IR副总裁，财务总监兼负责人
- Salil Parekh - 首席执行官兼医学博士
- Pravin Rao - 首席运营官
- Nilanjan Roy - 首席财务官
- Ravi Kumar Singisetti - 总裁兼副首席运营官
- Mohit Joshi - 总统
Edward Caso - Wells Fargo
Moshe Katri - Wedbush Securities
Ankur Rudra - CLSA
Sandeep Shah - CGS-CIMB
Jared Levine - Cowen
Ravi Menon - Elara Securities
Parag Gupta - Morgan Stanley
Diviya Nagarajan - UBS
Joseph Foresi - Cantor Fitzgerald
Ashish Chopra - Motilal Oswal Securities
Sandip Agarwal - Edelweiss
- 爱德华卡索 - 富国银行
- Moshe Katri - Wedbush证券
- Ankur Rudra - 里昂证券
- Sandeep Shah - CGS-CIMB
- 杰瑞德莱文 - 考恩
- Ravi Menon - Elara证券
- 帕拉格古普塔 - 摩根士丹利
- Diviya Nagarajan - UBS
- Joseph Foresi - Cantor Fitzgerald
- Ashish Chopra - Motilal Oswal证券
- Sandip Agarwal - 雪绒花
Ladies and gentlemen, good day, and welcome to the Infosys 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. [Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Mahindroo. Thank you and over to you, sir.
女士们，先生们，美好的一天，欢迎参加Infosys收益电话会议。 作为提醒，所有参与者行都将处于只听模式，并且在演示结束后您将有机会提问。 [操作说明]
请注意，此会议正在录制中。 我现在把会议交给Sandeep Mahindroo先生。 先生，谢谢你，谢谢你。
Thanks, Karuna. Hello, everyone. And welcome to Infosys earnings call to discuss Q1 FY’20 earnings release. I am Sandeep from the Investor Relations team in Bangalore. Joining us today on this call is CEO and MD, Salil Parekh; COO, Pravin Rao; CFO, Nilanjan Roy, along with other members of the senior management team.
We will start the call with some remarks on the performance of the company by Salil, followed by comments from Pravin and Nilanjan, subsequent to which we will open up the call for questions.
Please note that anything which we say which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risk that the company faces. A full statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov.
I now like to pass it on to Salil.
谢谢，Karuna。 大家好。 欢迎来到Infosys的财报电话会议，讨论2012财年第一季度的财报发布。 我是班加罗尔投资者关系团队的Sandeep。 今天与我们联系的是CEO和MD，Salil Parekh; 首席运营官，Pravin Rao; 首席财务官，Nilanjan Roy以及高级管理团队的其他成员。
Thank you, Sandeep. Good afternoon and good morning to everyone on the call. Thank you for joining us today. Infosys has delivered a strong quarter and I am pleased with our overall performance, as we continue to demonstrate our increasing relevance to clients.
A constant currency growth year-on-year for Q1 was 12.4%, which is the third consecutive quarter of double-digit growth. Our digital revenue growth was 41.9% and our digital revenue now accounts for 35.7% of our overall business. The large deal TCV was the highest ever at $2.7 billion. Our operating margin for Q1 was at 20.5%. We saw broad-based growth across our industry segments, service lines and geographies.
In constant currency year-on-year, our telco segment grew 22.6%, our North America geography 13.5%. We continue to benefit from building deeper capabilities across our digital portfolio especially in the areas of experience, data, analytics, cloud, SaaS, IoT, cyber security, AI and machine learning.
Our overall deal pipeline witnessed growth in Q1 and we can see that we are winning market share in this competitive environment. While there are many aspects of our strategy that came together to make these impressive first quarter results possible, I want to focus on how we are scaling our digital business with a few examples.
For a telecom major, we are helping to build a new digital customer experience for their clients, which bring together channels such as Alexa, mobile apps, Chatbots, online and contact centers in an omnichannel mode and provide improved customer engagement.
We work with a large automotive client to help them navigate the digital transformation journey delivering for them future ready scalable digital hybrid cloud platform that is supportive of the digital workspace.
We have been engaged to deliver cutting edge digital capabilities for a leading U.S. insurance company. We are partnering with them to build a digital policy administration services leveraging our Infosys McCamish platform.
We are enabling a large utility to build advance planning and engineering systems to forecast the dynamic nature of future electricity demand to help them plan and build their grids, and leverage green energy policies to make sure there are efficient distributed energy resources.
I am particularly pleased that we have opened another digital Experience Design & Innovation Studio, which was last month in Shoreditch in London, where we able to co-create digital experiences with our clients.
I am delighted to share that our employee reskilling program, Lex, our learning platform that covers near 100% of our employees globally, with employees already leveraging the Lex app each week to develop their skills.
Also want to touch upon some external recognition we have received. Infosys has been recognized as a leader in the SAP S/4HANA services by NelsonHall for global API strategy by the Forrester Wave and in the Public Cloud Infrastructure Managed Services area in the Gartner Magic Quadrant.
还想触及我们收到的一些外部认可。 Infosys已被NelsonHall公司评为SAP S / 4HANA服务的领导者，该公司负责Forrester Wave的全球API战略以及Gartner Magic Quadrant的公共云基础架构管理服务领域。
Now that we see our clients confidence in us increasing with increased market share gains, we are focusing as well on operational efficiency and cost discipline. We have now completed all our investments that we outlined last year when we started our strategic direction program.
All future investments will come from within our P&L and they are not specific as one-off investment that we did outlined last year. Over the coming quarters I am looking forward to see the benefits of these operational improvements reflect in our business.
Given the evolution of our business outlook we are now changing our revenue guidance. We move from 7.5%to 9% in constant currency to 8.5% to 10% in constant currency. We retain our margin guidance at 21% to 23% for the full year. Later on in the call, Nilanjan, will share with you our new capital return policy.
With that, let me hand it over to Pravin.
鉴于我们业务前景的演变，我们现在正在改变我们的收入指引。 我们以固定汇率从7.5％变为9％，以恒定汇率变为8.5％至10％。 我们保留全年的保证金指引为21％至23％。 在电话会议后期，Nilanjan将与您分享我们新的资本回报政策。
Thank you, Salil. Hello, everyone. In quarter one, we saw acceleration in year-on-year constant currency growth to 12.4%. This was supported by our highest ever large deal TCV. Five of our business segments, Financial Services, Communication, Energy Utilities and Services, Manufacturing and Hi-Tech, clocked double-digit year-on-year growth in constant currency. North America, Europe and Rest of the World also grew double-digits year-on-year in constant currency.
Utilization excluding trainees during the quarter improved to 83.1%. Client metrics remain strong. Number of $100 million clients increased by two to 27. We completed the first leg of compensation increases in quarter one. Rest of the employees, barring leadership will receive their comp increases effective July 1st.
While overall attrition increased, this was largely due to seasonality, since employees leave us to pursue higher studies in quarter one. We continue to focus on strengthening the employee engagement, accelerated career path for top performers, greater learning opportunities and performance-based differentiation.
Large deal win momentum continued in quarter one. We won 13 large deals, with a TCV of $2.7 billion, including the recently closed Stater deal with ABN AMRO. Three deals each were in Financial Services and Retail verticals, two deals each in Communication, another Utility Resources and Services and Manufacturing vertical, while one deal was in Life Sciences.
Geography wise, eight were from America, four were from Europe and one from Rest of the World. The share of new deal since overall large deal TCV was about 55%. We have reached our localization target in the USA and have recruited more than 10,000 local employees.
Let me come to the business segments. Financial Services vertical continued its growth acceleration aided by recent Stater acquisition. We have seen some challenges due to ongoing merger and acquisition situation in some U.S. banks and also in capital market business in Europe and U.S.
However, there are also growth opportunities in consumer, corporate and commercial banking, costs and payments and wealth management, driven by digital transformation and technology modernization.
We remain reasonably optimistic about growth prospects in FS due to increase in win rates and increase in our large deal pipeline. Stater deal will help in strengthening our mortgage servicing capabilities through digital platforms and enhance our presence in Europe.
Growth in retail is driven by large deal wins, opening new logos and differentiation on digital deals. There is acceleration in spending towards digital, IT simplification and modernization to improve customer experience. CPG industry is seeing more consolidation and clients are asking for integrated BPO and technology services.
Growth in Communication segment remains strong due to ramp ups of deal wins in earlier quarter. We continue to win large deals within the segment. With the 5G race picking up, the wireless telcos are under pressure to invest and maintain leadership. In 5G underlying technologies such as cognitive radio, small cells and smart antennas are becoming prominent. We are already working with our customers in advanced IoT used cases.
Energy, Utility, Resources and Services maintained the strong growth momentum and we expect broad based growth to continue in this fiscal on the back of continued momentum in top accounts and new account openings. Utilities is spending towards customer experience and digital transformation. Resources is spending towards BPO, IT and ERP upgrades.
Manufacturing vertical we are seeing some impact from global trade wars especially in Europe with cost cutting initiative being in place in multiple clients. Customers are looking towards digitalization of end-to-end processes with a strong focus on leading mobile, IoT and backend system simultaneously to provide a superior customer experience.
In Healthcare, well, we have won some important deals, M&A in the sector and spending cut backs will impact growth.
Life Sciences segment also is impacted due to cost cutting initiative like clients due to revenue pressure.
Our digital narrative in the market continues to amplify based on the foundation of five pillar, experience, insight, innovate, accelerate and assure and the five accelerator proximity plus, agile plus, automation plus, learning plus and define plus.
We are seeing good success in our digital business in terms of revenue momentum and order book. There’s continued demand in data and analytics, cloud, SaaS, user experience, security and IoT. In the last quarter Infosys was selected as leader in six of the digital services related capabilities including in modernization, IoT, experience and security.
With that, I will hand over to Nilanjan.
Thanks, Pravin. [Technical Difficulty] FY’20 earnings call. Our revenues in quarter one were $3.1 billion, growing by 12.4% year-on-year in constant currency terms. This was our third consecutive quarter of double-digit constant currency growth. The sequential revenue growth in constant currency was 2.8% including 60 bps from Stater acquisition.
Operating margin in quarter one was 20.5%, compared to 21.5% in quarter four. During the quarter the rupee appreciated by 1.1% against the USD, while USD strengthened against other major global currencies, which impacted the operating margin by 40 basis points.
In addition margins were impacted by 60 basis points due to compensation increase, 80 basis points due to expenses on new visas largely for H-1B and 20 basis points due to Stater acquisition.
These increases were partially neutralized by increases in utilization which help margins by 70 basis points, increase in realization and other cost efficiencies by 20 basis points and the minor impact of IFRS 16 adoption of 10 basis points. This led to a 1% drop in operating margins compared to quarter four.
Operating cash flows in quarter one were $630 million and free cash flow was $485 million, off the CapEx of $145 million. The increase in CapEx is in line with our previously announced plans of creating new capacities in SEZs and overseas locations.
DSO for the quarter increased by two days to 68 days largely due to the hyper Stater deals. We had similar benefits and creditors in line with the hyper business model.
Rupee appreciation continued in quarter one. However, effective hedging program in short, but we had the 16th consecutive quarter of games in non-operating income, our hedge book of $2.5 billion at the end of the quarter.
Yield on other income improved to 20.1% from 7.91% in quarter four. Effective tax rate for the quarter was 26.4% versus 26.8% for the financial year 2019. EPS increased by 3.2% year-on-year.
We have made further progress on executing our capital allocation program announced in the April 2018, out of the maximum buyback size of INR8,260 crores. We have completed over 70% of the buyback at INR5,934 crores so far.
We plan to finish the balance in quarter two, notwithstanding, the recent imposition of taxes and buybacks. During quarter one, we also completed payout of final dividend of INR10.50 per share for FY’19.
Cash and cash equivalents declined to $3,570 million due to payout of final dividends and buyback in quarter one of $1,337 million. ROE has increased to 25.8% in quarter one compared to 22.7% in quarter four, an increase of over 3%.
As we look to a more diverse company, we have now started including metrics of our gender ratios, which now stands at 37%. Consistent with our previously articulated objectives of enhancing returns for our investors, I am happy to announce that the company has revised its capital allocation policy.
As part of the same effective financial year 2020, the company expects to return approximately 85% of the free cash flows to relatively over five year period to a combination of semiannual dividends and our share buybacks, and a special dividend subject to applicable laws and requisite approvals if any. We believe this progressive policy will further improve shareholder returns and provide more predictable cash flow for our shareholders.
谢谢Pravin。 [技术难度] FY'20财报电话会议。我们第一季度的收入为31亿美元，按固定货币计算同比增长12.4％。这是我们连续第三个季度实现两位数的恒定货币增长。按固定汇率计算的连续收入增长为2.8％，其中包括Stater收购的60个基点。
We have revised our FY’20 revenue growth guidance to 8.5% to 10% in constant currency terms. We are maintaining the operating margin band at 21% to 23%, despite the rupee appreciation.
We expect operating margins for the remaining year to improve versus quarter one, subject to a stable currency environment. This margin improvement will be driven by continuous deployment of our operational efficiencies like utilization, rationalizing the payment on-site to offshore mix, automation and other overhead efficiency measures.
With that, we can open up the floor for questions.
Thank you very much sir. [Operator Instructions] The first question is from the line of Edward Caso from Wells Fargo. Please go ahead.
先生非常感谢您。 [操作员说明]第一个问题来自富国银行的Edward Caso。 请继续。
Hi. Thank you for taking my call and congrats on the quarter. Could you provide some color on why you are having such success with the large deal wins and how much of it is price and how much of it is positioning? And maybe split the two, split the wins between legacy and digital? Thank you.
你好。 感谢您接听我的电话，并祝贺本季度。 你能否提供一些颜色，说明为什么你在大获胜中取得如此成功，以及价格多少以及定位多少？ 也许将两者分开，将传统和数字之间的胜利分开？ 谢谢。
This is Salil to answer the question, Ed. I think, part of what we see in terms of large deals is some of the investments we have made in our digital capabilities, they come together as part of a collective, where clients are looking to modernize their tech landscape and us being large incumbent players with longstanding relationships, puts us in a place of advantage with these new capabilities combined with some of the areas that are longstanding projects and contracts for us.
In addition to that, the way we have looked at segmenting which sectors we go after and in part segmenting, which potential competitors that we should look at differentiating versus those are techniques that have helped us, and overall, we see an increased engagement and intensity with our clients and that is helping us.
However, as you know well, large deals are by design lumpy. We have been fortunate in Q3, Q4 and Q1 to have very strong large deal numbers. These numbers for the year we are very confident about, but each quarter as you know could be up and down.
My other question is on, you still have close to $4 billion in cash on your balance sheet. I assume that’s more than you need. You raised your sort of deployment of ongoing free cash flow, but what are the thoughts of potentially deploying some of the unnecessary cash on your balance sheet? Thank you.
我的另一个问题是，您的资产负债表上仍有接近40亿美元的现金。 我认为这比你需要的更多。 您提出了持续自由现金流的部署，但是有什么想法可能会在资产负债表上部署一些不必要的现金？ 谢谢。
Thanks. So, the ongoing we have -- as you rightly point out, we have made the change on the -- what we have on the balance sheet, as you know we have some part of our buyback that is still to be completed. So that will be used in this current buyback.
We have plans overtime to make sure that our balance sheet is efficient. As we look around, we will look to see if that means doing more within the laws and regulations buybacks for that or looking at other uses if we find small appropriate acquisitions that we can look at.
谢谢。 因此，我们正在进行 - 正如您正确指出的那样，我们已经对资产负债表上的内容进行了更改，因为您知道我们的部分回购仍有待完成。 因此，这将用于当前的回购。
Thank you. The next question is from the line of Moshe Katri from Wedbush Securities. Please go ahead.
谢谢。 接下来的问题来自Wedbush Securities的Moshe Katri。 请继续。
Hey. Thanks. Congrats on the very strong TCV numbers. Just going back to some of the metrics that are related to the quarter, we are getting a lot of questions about organic growth, specifically the ABN Amro contribution? And then how much did that actually add to -- if the guidance raise for the fiscal year. And then our final point here you have sustained your margin targets but then what’s embedded there in terms of FX moves in terms of the Indian rupee versus some of the other currencies, and obviously, given the fact that we have seen a reversal there in the past few weeks. Thank you.
嘿。 谢谢。 祝贺TCV号码非常强大。 回到一些与本季度相关的指标，我们对有机增长问题有很多疑问，特别是ABN Amro的贡献？ 然后实际增加了多少 - 如果指导会在本财年增加。 然后我们的最后一点是你已经维持了你的保证金目标，但是就印度卢比与其他一些货币的外汇变动而言，其中包含了什么，显然，鉴于我们已经看到了其中的逆转。 过去几周。 谢谢。
So for the ABN Stater acquisition this was already built into our guidance at the beginning of the year when we announced that -- it takes into account all future acquisitions. So our guidance is only got to do with more organic confidence of what we are seeing in the market. The impact of -- as in my call I said the impact of the acquisition was 60 basis points on a sequential basis versus the -- in the 2.8%, so that’s embedded in that.
The question on, what was the question? On the margin. Yeah. So we have -- see we had given our guidance at the start of the year of 21% to 23% and that was -- and dollar was closer to $69.50 versus the rupee. We have absorbed 40 basis points at this quarter, but we are still at $68.50, remain confident that we will be able to hit our 21% to 23%. Of course, this is predicated on the dollar remaining where it is now.
Like I said we have multiple levers and operational efficiencies, you already seen that kicking in this quarter. Our utilizations up nearly 78 basis point, which had fallen, and of course, we have the automation benefits of how we can make our fixed price projects more productive. We have the whole onsite pyramid. So the number of lever we continuously deploy and that’s giving us the confidence that the rest of the year margins of 21%, 23%, we will be able to hit that.
因此，对于ABN Stater的收购，我们在今年年初宣布的时候已将其纳入我们的指导中 - 它考虑了所有未来的收购。因此，我们的指导只与我们在市场上看到的更有机的信心有关。影响 - 正如我所说的那样，我说收购的影响是连续的60个基点而不是 - 2.8％，因此嵌入其中。
问题是，问题是什么？在边缘。是啊。所以我们有 - 看看我们在今年年初给出了21％到23％的指导，那是 - 和卢比相比，美元接近69.50美元。我们在本季度吸收了40个基点，但我们仍处于68.50美元，仍然相信我们能够达到21％至23％。当然，这取决于美元现在的位置。
Thank you. Appreciate the color.
Thank you. The next question is from the line of Ankur Rudra from CLSA. Please go ahead.
谢谢。 接下来的问题来自里昂证券（CLSA）的安库尔鲁德拉（Ankur Rudra）。 请继续。
Thank you. Congratulations and appreciate the increase in payout ratios. To start with, maybe you could comment a bit on what drove the increase in guidance, was this the better than expected deal wins in the quarter or any change in perception of weakness in verticals you are going into the year specifically in Financial Services or Manufacturing? Also relatedly is there any reason to narrow the band -- the margin, sorry, the guidance band on revenues so early in the year?
谢谢。 恭喜并欣赏支付率的增加。 首先，也许你可以对推动指引增长的因素作出一点评论，这是本季度优于预期的交易获胜，还是您在金融服务或制造业中进入年度的垂直市场疲软感的任何变化？ 还有相关的是有任何理由缩小乐队 - 保证金，对不起，年初收入的指导乐队？
On the guidance itself the main reason was with this strength of growth in Q1, which was 12.4% year-on-year and then that on the back of two other quarters Q4 and Q3 of last year being double-digit. And what we see in our pipeline, so a large deal pipeline has improved from April 1 through now, that improvement, and of course, some of the things in the quarter. All of those things put together give us a level of comfort to raise this guidance from 7.5%, 9.5% now to 8.5% to 10%.
In terms of specific segments, I think, you heard when Pravin shared the view on segments. Those are we see what we see across different segments. And the narrowing of the band, our thought was given we have one quarter into the year as we change the -- increase the guidance, we felt it was perhaps more appropriate at this stage to narrowing the band given what we were seeing.
在指导本身，主要原因是第一季度的增长强度为12.4％，而去年第四季度和第三季度的两个季度则为两位数。 而我们在管道中看到的是，从4月1日到现在，大量的管道已经有所改善，这一改进，当然还有本季度的一些改进。 综合所有这些因素，我们可以将这一指导从现在的7.5％，现在的9.5％提高到8.5％提高到10％。
就具体细分而言，我认为，当Pravin分享关于细分的观点时，您会听到。 那些是我们看到我们在不同部分看到的东西。 随着乐队的缩小，我们的想法是，当我们改变时，我们有四分之一的时间 - 增加指导，我们觉得在现阶段根据我们看到的情况缩小乐队可能更合适。
Okay. Just a question on your U.S. or local graduate program globally, it’s probably been almost three years now you said you achieved your initial targets. Given that you probably have a lot of learnings about this program now, could you share what’s been the experience here in terms of scalability of this type of supply, the kind of pricing, utilization attrition, kind of parameters you get and also client acceptance, specifically compared to your traditional model on-site?
好的。 关于您在美国或当地的全球研究生课程的问题，现在可能已经差不多三年了，您说您已达到初步目标。 鉴于您现在可能对此计划有很多了解，您是否可以分享这类供应的可扩展性，定价类型，利用率损耗，您获得的参数类型以及客户接受度方面的经验， 特别是与您现场的传统型号相比？
Ravi Kumar Singisetti
Hi. This is Ravi her. There have been quite a bit of learnings on how to hire, how to stop on programs, and of course, how to retain. And how do we create a trajectory into building a sustainable model for the future. Our partnerships with colleges to set the training up, going beyond stem, we actually went to Liberal Arts Schools and Design Schools, which is very new to us all across the world.
And then we have started experimenting with community colleges as well, which is again pretty new to us and pretty new to the industry. So it’s a pretty exhaustive list of learnings and how we can sharpen this model and continue to sustain it on a long term.
你好。 这是她的拉维。 关于如何雇用，如何停止计划，当然还有如何保留，已经有了相当多的学习知识。 我们如何创建一条轨道，为未来建立可持续发展的模型。 我们与大学建立了合作伙伴关系以进行培训，超越了干，我们实际上去了文理学院和设计学院，这对我们来说是全世界都很新的。
Specifically, could you add some color, Ravi, in terms of how do you -- how scalable do you think this is going forward and what -- where does the pricing and utilization and attrition sit versus your traditional onsite and offshore supply models?
具体来说，您可以根据自己的方式添加一些颜色Ravi - 您认为这是多么可扩展，以及 - 与您的传统现场和离岸供应模型相比，定价，利用和消耗在哪里？
Ravi Kumar Singisetti
Yeah. So, the -- it is a scalable model. A percentage of our workforce can fit into a pyramid onsite and that’s the learning. If we have to sustain and scale it further, we have to move works to our hubs, so that the work actually moves from a two-tier onsite offshore to an onsite nearshore offshore model. As you are aware, we are also setting up our own training facility, which will help us to sustain this momentum on a long run.
The key is to -- the ability for us to retain and actually create a career path for them to continue with us on a long run. So that’s broadly where it is. We do like eight weeks to 12 weeks of training as we hire from schools. That can be optimized and we could further backward integrated the curriculum of the colleges we are hiring from. What we are doing with Design Schools is again a new track which we are learning on.
So effectively I don’t want to put a number on it, but what I can actually say that, the mix that the pyramid has to be onsite offshore and we kind of think now you could have a pyramid inside which is only onsite and you could have school graduates who are closer -- in close proximity to clients especially when you have agile work coming away. So that’s what I can kind of tell you at a high level.
关键是 - 我们能够保留并实际创造一条职业发展道路，让他们从长远来看继续我们。这就是广泛的地方。我们确实喜欢从学校招聘八周到十二周的培训。这可以进行优化，我们可以进一步向后整合我们正在招聘的大学课程。我们与设计学院的合作再次成为我们正在学习的新轨道。
所以实际上我不想在它上面写一个数字，但实际上我可以说，金字塔必须在现场离岸的混合物，我们现在认为你可以有一个金字塔，里面只有现场和你可以让更接近客户的学校毕业生 - 特别是当你有灵活的工作离开时。这就是我可以在高层告诉你的。
Thank you. Appreciate the color. Best of luck.
谢谢。 欣赏颜色。 祝你好运。
Thank you. And the next question is from the line of Sandeep Shah from CGS-CIMB. Please go ahead.
谢谢。 接下来的问题来自CGS-CIMB的Sandeep Shah。 请继续。
Yeah. Thanks for the opportunity and congrats on a good set of numbers. Just if I look at last three quarters Y-o-Y pricing increase on a blended basis, it has been positive and despite no change in the onsite, actually onsite has gone down. So is it -- you believe is it a mix lead or Salil you believe that this is with improving contribution of digital this could be a new tailwind, which to some extent Nilanjan has also not mentioned in one of his positive levers?
是啊。 感谢有机会，并祝贺一组好的数字。 如果我看看过去三个季度的Y-o-Y定价在混合的基础上增加，它一直是积极的，尽管现场没有变化，但实际现场已经下降。 所以它是 - 你认为它是混合线索或Salil你认为这是在改善数字贡献这可能是一个新的顺风，在某种程度上，Nilanjan在他的一个积极的杠杆中也没有提到？
I think -- sorry go ahead. You have something else?
我想 - 抱歉继续吧。 你有别的吗？
I think from my perspective we see that as a very critical parameter. It’s something that we think is a function of both of the factors that you mentioned, the mix and the capability, and it’s something that we are working on actively. We think it’s something in the medium-term, not immediately every quarter, but in the medium-term, we think that can be something that can help us to sustain and potentially even expand our margin outlook.
我认为从我的角度来看，我们认为这是一个非常关键的参数。 我们认为这是你提到的两个因素，混合和能力的函数，而且是我们正在积极努力的事情。 我们认为这是中期的，而不是每个季度，但从中期来看，我们认为这可以帮助我们维持甚至可能扩大我们的利润率前景。
So this -- just a follow-up in terms of order book, is it possible to breakdown the contribution from the Stater deal, as well as, Salil, in the order book, do you believe the recent increase in the global tariff or any impending Brexit is leading to any kind of a scenario where you believe the order book traction may not may slow down in the coming quarters or you believe now that decision making has not getting impacted because of this? And some comments on the pipeline if you can give some color on quantitative how Q-on-Q and Y-o-Y in percentage term it has improved?
所以这 - 只是订单的后续跟进，是否有可能细分Stater交易的贡献，以及Salil，在订单簿中，您是否相信最近全球关税的增加或任何 即将脱欧导致任何一种情况，你认为订单簿的牵引力可能不会在未来几个季度放缓，或者你认为现在决策没有受到影响？ 如果你可以给定量Q-on-Q和Y-o-Y在百分比方面有所改进，那么对管道有一些评论？
On the Stater, we have not stated externally that decoupling of the order book. But Nilanjan shared with you in terms of the quarter, the revenue and the year-on-year revenue impact that we have talked about.
In terms of Brexit, we have seen today there are business in the U.K. has remain reasonably in good shape. We don’t see any particular change in our business mix today. We think once all of these Brexit discussions settle down, if anything, we will start to see some acceleration. But we don’t see any change or at least it’s not something we have decoupled to make it something of a concern within our pipeline.
The overall pipeline we won’t share the stat externally, I stated to give some color earlier that from April 1 through now, we have seen a good growth in the large deals pipeline that we have and as part of the reason where we see some potentially increased traction in the coming quarters.
就英国退欧而言，我们今天看到英国的业务仍然合理地保持良好状态。 我们今天的业务组合没有任何特别的变化。 我们认为，一旦所有这些英国脱欧讨论得以解决，如果有的话，我们将开始看到一些加速。 但是我们没有看到任何变化，或者至少它不是我们已经脱钩的东西，使它成为我们管道中的一个问题。
Okay. Okay. Thanks and all the best.
好的。 好的。 谢谢，一切顺利。
Thank you. The next question is from Bryan Bergin from Cowen. Please go ahead.
谢谢。 接下来的问题来自Cowen的Bryan Bergin。 请继续。
Hi. This is actually Jared Levine on for Bryan. Can you talk about, I know you discussed prior the sequential drivers to the decline in margins, but could you talk about the year-on-year bucketing of the decline in operating margins please?
你好。 这实际上是贾里德莱文对布莱恩的看法。 你能谈谈吗，我知道你之前已经讨论过顺序驱动因素导致利润率下降的问题，但是你能否谈谈经营利润率下降的同比负担？
I think the big ones which we have continued to mention, which we said in our last call. I think first is the increase in the compared related costs over the year, which was about 200-odd basis points and there’s a combination of investments we have made both in our sales force and that’s something we have ramp up.
The other one is the impact of the high subcon cost, which we have seen over the last year, progressing that’s about 50 bps. The offset of that has been the rupee benefit about 40 basis points.
We have got another benefit of the IPP, the rate question prior to that which was about 50 basis points. And of course, the special quarter one impact, which was 80 basis point and the higher visa cost, because we did not have that many visas last year, so that’s about 80-basis-point. So that gives us the overall 320 bps.
I think if you see the quarter-on-quarter, I think that’s the more situation, which is to understand where we came from, how we ended last year and what is our growth plan in terms of improving our margins to hit our guidance of ‘21, ‘23.
Got it. Thank you. And then just one more quick follow-up, in terms of the digital deals you are winning, are there any kind that digital projects in particular like IoT or cloud deployment, particularly winning, taking a great here or kind of the projects currently?
得到它了。 谢谢。 然后就你正在赢得的数字交易而言，还有一个更快的跟进，是否有任何类型的数字项目，特别是物联网或云部署，特别是获胜，目前在这里采取了很好的项目或类型的项目？
Sorry, I didn’t follow that. What was the question about the digital?
Yeah. I would say in digital, are there certain particular projects that are accounting for great share of the wins like IoT or cloud deployment? What’s kind of making up the mix of digital wins currently?
是啊。 我想在数字化方面，是否有某些特定的项目占据了物联网或云部署等大部分成果？ 目前正在构成数字化胜利的组合是什么？
So, to share with you, we have five broad areas within digital that we have outlined over the last year or so. Two of those areas we believe are going to start to become very large businesses and we see a lot of traction in those areas.
One of them is the area of cloud. This is both cloud services, which are through strategic partnerships with AWS, Azure and Google Cloud or with some of the SaaS leaders such as Salesforce or ServiceNow and another very strong area for us is the area of data and analytics.
Having said that, we also have strength in the other areas, for example, in the Digital Designs and Experience, in the area of cyber security and in the area of IoT, each of these are seeing good traction. So there’s no one that stands out, but the first two, I mentioned, I think, we start to see good scale benefit from that as well.
其中之一是云的领域。 这是云服务，通过与AWS，Azure和Google Cloud的战略合作伙伴关系，或与Salesforce或ServiceNow等一些SaaS领导者合作，另一个非常强大的领域是数据和分析领域。
Perfect. Thank you.
Thank you. The next question is from the line of Ravi Menon from Elara Securities. Please go ahead.
谢谢。 接下来的问题来自Elara Securities的Ravi Menon。 请继续。
Hi. Thank you. So, if you just back out what we think would be a five-year kind of contribution from state. It looks like your TCV is about $1.6 billion or so. And then, if you assume that there are no other kind of refinancing deals in there, surely that should help margins going forward. Would that be concurrent with your view?
你好。 谢谢。 所以，如果你只是退出我们认为来自州的五年捐款。 看起来你的TCV约为16亿美元左右。 然后，如果你认为那里没有其他类型的再融资交易，那肯定应该有助于未来的利润率。 那会与你的观点同时发生吗？
So we decoupled large deals in the stats we have shared outside. We do see that a lot of what we are selling in the large deals that Pravin shared a stat earlier are net new and in that sense we feel good about how the margin profile of those deals will evolve.
All right. And Nilanjan said in his comments earlier that, that you are looking at the margins improving gradually over this year, so that’s why I asked this. Secondly, are you worried at all about the attrition being a little high here this quarter, so year-on-year too its up slightly. So given your utilization is also inching up. What -- where do you think you will be comfortable if the utilization given the current levels of attrition?
行。 Nilanjan在早些时候的评论中说，你正在考虑今年的利润率逐渐提高，这就是我问这个问题的原因。 其次，你是否担心这个季度的消耗会有点高，所以同比也略有上升。 所以鉴于你的利用率也在上升。 什么 - 如果根据当前的消耗水平使用，您认为您会感到舒适吗？
The attrition is something there is an area of extreme attention for us. We want to make sure that we take all the actions that we need to take to make sure this is within a level that is comfortable for our business going forward.
Having said that, in Q1, as Pravin had said, we have taken a very strong measures and some of the attrition that’s in areas what we call involuntary attrition and some of the attrition in the stat is also for individuals who will leave to go for graduate school or higher education and that is somewhat seasonal.
If you look at and our attrition stat takes all of our businesses into account is not just the IT services attrition. And so, if you look at the attrition we are focused on, we have a lot of measures we have put in place to start to address that, in addition to making sure that there is all the hygiene factors.
We are also focused on really joining the opportunity set for our employees to a broader base and that improves the value connection that employees will have with us and we think over the next -- in the medium term over the next few quarters that should start to see some impact.
我们还专注于真正将我们的员工机会设置到更广泛的基础，并改善员工与我们之间的价值联系，并在下一个阶段进行思考 - 在接下来的几个季度中应该开始看到一些影响。
Sir, one last if I may, you have spoken about how Stater will actually help you kind of approach in Europe. Given the uncertainties with Brexit up here, this is something that do you see while the mortgage market has still being attractive. I know you are seeing some interest and potentially some please come through already?
先生，如果可能的话，最后一个，你已经谈过Stater将如何帮助你在欧洲采取行动。 考虑到英国退欧的不确定性，你可以看到这一点，而抵押贷款市场依然具有吸引力。 我知道你看到了一些兴趣，可能有些人已经通过了吗？
Yeah. Hi. This is Mohit Joshi here. I think I should point out that Stater is primarily focused on the Dutch market and the Northern European market, right. So not so much on the U.K. market. So to that extent, I don’t see Brexit is having an impact on-site itself.
I think the second thing is we see a huge opportunity globally, not just in Europe, in the entire mortgage servicing market, but also the mortgage origination market. If you look at Europe for instance and Germany, 98% of all mortgages are currently being serviced by the banks themselves. We think that this number overtime we will use to what we see in the U.S.
The majority of the servicing is done third parties. Stater is the strongest and largest mortgage servicer in Europe. The Stater is also building up very significant front office. There is origination capability and middle office, underwriting capability.
So, we think it will be a powerful proposition for us within Europe. And the capabilities that we have, even if it’s not the platform, the capabilities are applicable globally. Yeah, so that’s my perspective on the opportunities that we have.
大多数服务是由第三方完成的。 Stater是欧洲最强大，最大的抵押贷款服务商。 Stater也在建立非常重要的前台。有创业能力和中台办公，承保能力。
Great. Thank you. Best of luck.
非常好。 谢谢。 祝你好运。
Thank you. The next question is from the line of Parag Gupta from Morgan Stanley. Please go ahead.
谢谢。 接下来的问题来自摩根士丹利的Parag Gupta。 请继续。
Hi. Good evening and congratulations on a strong quarter. I have two questions. Firstly, Salil, maybe if you could just talk about the localization efforts in the U.S. and you have done a commendable job in achieving your targets. Just wanted to understand, now that you have got to a reasonable level that your attention is set out for, do you think that that is good enough incrementally to start taking away some of the efforts involved from a subcontracting perspective or do you think that the skill sets are still very different and the subcontractors would still be required to meet the demand that you have won over the last few quarters?
你好。 晚上好，祝贺一个强大的季度。 我有两个问题。 首先，Salil，也许你可以谈谈美国的本地化工作，你在实现目标方面做了值得称道的工作。 只是想明白，既然你已经达到了一个合理的水平，你的注意力已经达到了，你是否认为这已经很好地逐步开始从分包合同的角度去掉一些相关的努力，或者你认为 技能组合仍然非常不同，分包商仍然需要满足你在过去几个季度赢得的需求？
So the localization work has indeed been positive and we are delighted with the progress it’s made. However, it’s the first step of a very long journey and we have plans in the medium-term on how we think our business model will evolve.
In terms of subcons, here I think it’s not so much and/or it’s much more that both will exist. The skill sets that we see in the market today for which we are winning work, we have tremendous capacity of those skill set. But there’s always some demand which comes in where the fulfillment needs to be done on a relatively quick basis.
We, however, have some operational levers that we are putting in place including localization as one of them that will help us to adjust to the subcon usage, for example, looking at aging of subcontractors that can give us benefits again in the medium-term into a margin.
就子网而言，在这里我认为它并不是那么多和/或它们将存在更多。 我们在今天的市场中看到的技能，我们正在赢得工作，我们拥有这些技能的巨大能力。 但总有一些需求需要在相对快速的基础上完成。
Okay. Got it. My other question was, my understanding for your margin guidance of 21% to 23% for this year was premised on the usual wage hike cycle that you have already set out on. But given that your attrition rates are running high, is it a risk to your margin guidance if you have to go out for out of turn wage hikes, promotions or other incentives?
好的。 得到它了。 我的另一个问题是，我对你今年21％到23％的保证金指引的理解是以你已经提出的通常的加薪周期为前提的。 但鉴于您的流失率很高，如果您不得不外出工资上涨，促销或其他奖励措施，那么您的保证金指引会有风险吗？
We are fully committed to our margin guidance. There will be lot of business situations plus and minus, but we will deliver our margin guidance.
Great. Thank you.
Thank you. The next question is from the line of the Diviya Nagarajan from UBS. Please go ahead.
谢谢。 接下来的问题来自瑞银的Diviya Nagarajan。 请继续。
Thanks. Congrats on the quarter and other wins you may had. Two questions from my end. If I strip out the Stater contribution, banking seems to have been a little soft, how do you -- you spoke about deal wins being strong, but before that in the last quarter as well, from a reported basis, how should we see the banking as a new organically trend in the year? That’s question number one. And two, what are the pre-concussions do you think that really this year has been sitting down from a more manageable number according to you?
谢谢。 祝贺你可能拥有的季度和其他胜利。 我最后的两个问题。 如果我剥离Stater的贡献，银行似乎有点软，你怎么样 - 你谈到交易胜利很强，但在此之前的最后一个季度，从报道的基础上，我们应该如何看待 银行业是一年中新的有机趋势？ 这是第一个问题。 还有两个，你认为今年真正的脑震荡是根据你的情况从一个更容易管理的数字坐下来的吗？
Sorry, I didn’t catch the second question. This is Mohit. Let me address the first question on banking. I think that is not true that banking was soft even after excluding Stater, and obviously, we haven’t broken out the Stater number for this quarter.
But if you see the trend in Q1 of last year, year-on-year growth was 3%, this climb to 8.3% in Q4 and even excluding Stater, it continued to climb in Q1, and obviously with Stater it was significant double-digit growth, so that is not true that we had weakness in the quarter even excluding Stater. And could you repeat your second question?
对不起，我没有抓到第二个问题。 这是莫希特。 让我谈谈关于银行业务的第一个问题。 我认为，即使在排除Stater之后，银行业也不是很软，显然，我们还没有打破本季度的Stater数量。
但如果你看到去年第一季度的趋势，同比增长率为3％，第四季度上升至8.3％，甚至不包括Stater，它在第一季度继续攀升，而且明显与Stater相比，它显着增长了一倍 数字增长，因此即使不包括Stater，我们在本季度仍有弱势。 你能重复第二个问题吗？
First question I was actually talking from a sequential basis, if that has been…
… exclude. Yeah, and…
No. Even sequentially. Even sequentially, while we haven’t broken out the number I can confirm that we had growth even excluding Stater.
不。 甚至顺序。 即使是顺序，虽然我们没有打破数字，但我可以确认即使不包括Stater我们也有增长。
Okay. And on the attrition what are the preconditions under which you think your attrition will come under control. What do we need to see in terms of organizational metrics for you to come to -- what does get you there to a more manageable number in your view?
好的。 在磨损方面，您认为自己的流失将受到控制的先决条件是什么。 我们需要在组织指标方面看到什么 - 您可以在视图中找到更易于管理的数字？
See in historically -- this is Praveen here. Historically, attrition, we have been comfortable with the attrition in the range of 13% to 15%. These are normal -- and these are during normal times when there are less disruptions. But today we are living in an environment where there is a lot of disruption, technology disruptions happening. There is a increasing adoption of newer technology, there is shortage of skills. So to that extent there -- we are seeing a higher degree of attrition given the shortage of talent.
So as Salil had said earlier and as I had also said earlier in my press conference, there are many things we are doing to bring it down. Significant part of the attrition is at lower levels, so during the current con, we have hopefully addressed some of it.
There are lot of efforts we are doing in terms of increasing the engagement, increasing rewards, looking at higher performers, creating more opportunities, many initiatives are underway and we are hopeful that over a period of time it should come down.
But eventually, I mean, once things stabilizes and once the talent gap actually minimizes then I think we will probably go back to 13% to 15%, but in the short-term, it will be slightly on the higher side.
从历史上看 - 这是Praveen。从历史上看，我们已经消耗了13％到15％的磨损率。这些是正常的 - 这些是在正常情况下，当中断较少时。但是今天我们生活在一个充满中断，技术中断的环境中。新技术的采用越来越多，技能也不足。所以在那种程度上 - 鉴于人才短缺，我们看到更高程度的消耗。
Sorry, a quick follow-up to that, with acquisition being where it is and your first quarter margins outside the guidance range. Could you give us a sense on which half of the guidance span you would be more comfortable with at this point in time from a margin perspective?
On the guidance, our guidance is 21% to 23%. So at this stage we are not further narrowing or segmenting that guidance.
Fair enough. Thanks and all the best for the rest of the year.
Thank you. The next question is from the line of Joseph Foresi from Cantor Fitzgerald. Please go ahead.
谢谢。 接下来的问题来自Cantor Fitzgerald的Joseph Foresi。 请继续。
Hi. My first question is just around some of the market share shifts. I know you have talked about this a little bit at the beginning of the call. But maybe you could talk about any changes in your approach. What piece of your customers businesses are leaving some of your competitors and going to you and what you have strengthened to kind of strengthen your position in the end market?
你好。 我的第一个问题是围绕一些市场份额变化。 我知道你在电话会议开始时已经谈过这个问题了。 但也许你可以谈谈你的方法的任何变化。 您的客户企业中有哪些企业会离开您的竞争对手并转向您，以及您加强了哪些以加强您在终端市场中的地位？
So here it’s more with respect to the traction, the comment I have made, there was a with respect to the traction we are seeing for our digital business. To give you one example with Microsoft we have been named as the number one partner globally for this year. It’s a shift where our capabilities on all of their products had, so from Azure to Office365 to all other workplace toolkit.
Our approach to driving that into enterprise space is something that’s gaining traction. So it’s not so much taking away from another competitor we think, we are gaining market share in a space that’s growing, but our growth is higher than what the overall growth for that space is and we see similar type of traction in other elements of the five-year as the Pentagon of our digital focus.
For example, we see that with some of the SaaS players. We see that in a lot of agile development work that we are doing on different toolkits. We see that even for the work we are doing for S/4HANA. So there are different places where we start to see more and more growth through those investments or capabilities that we are building have built over the past.
例如，我们看到了一些SaaS播放器。我们在很多敏捷开发工作中看到了我们在不同的工具包上所做的工作。我们看到即使是我们为S / 4HANA所做的工作。因此，在不同的地方，我们开始通过我们正在建设的投资或能力在过去建立起来看到越来越多的增长。
Got it. Okay. And then going back to financial services, we have seen a couple of different players, have troubles with some of the banking budgets that they are dealing with at the big banks and then we have seen a lot of news about what’s going on in Europe and the banking system there yet to put up some really good numbers. So maybe you could talk about your positioning in Financial Services and comment a little bit about some of those shaky budgets that we have seen at those big banks?
得到它了。 好的。 然后回到金融服务，我们看到了几个不同的参与者，他们在大银行处理的一些银行预算遇到了麻烦，然后我们看到了很多有关欧洲发生的事情的消息。 银行系统尚未提供一些非常好的数字。 那么也许您可以谈谈您在金融服务领域的定位，并对我们在这些大银行看到的那些不稳定的预算进行一些评论？
I think look it’s been a mixed bag. You have seen some weaknesses obviously in the capital market space both on the buy side and the sell side, and you have seen some challenges obviously in Europe. For us through this quarter, we will continue to do quite well in Europe.
But on the flip side, some other side of the business like the consumer banking space, the commercial banking space, corporate banking and mortgages, I think these businesses are seeing good traction.
I think, as Salil mentioned, look for us, it’s a mix, right. We are obviously seeing significant traction in the cloud space in the entire digital transformation journey for banking. Obviously, the new centers that we are building out, like the studio and shortage are really helping us engage with banks from a branch transformation perspective, from a digital user experience perspective.
On the data space obviously there’s a huge focus on data monetization, data mining, banks are starting to move to the cloud and there obviously is a significant revenue opportunity for us. So I’d say it’s a mixed bag, right.
You have certain areas of the sector, where you have some weaknesses, actually including the Life and Health Insurance business, but other sides of the business the traditional consumer businesses, the traditional corporate banking and transaction businesses are seeing a lot of investment.
Finally, from our perspective, I think, there are two other pieces that are helping us from a growth in a mind share perspective. The first is that we have a very powerful product business in Finacle and Finacle is obviously gaining significant traction globally.
We had a great quarter in terms of TCV bookings, expansion in North America and expansion in the European markets. So that is one unique differentiator for us given the strength of the product and the renewed interest in digital engagement, the reduced -- the renewed interest in omnichannel hubs.
And the second piece I will point out is the new Stater acquisition. And as I previously mentioned in response to another question, we are really building out sub-sectoral capability in a fairly significant way, and specifically for the mortgages space, and mortgages really are the largest revenue line for our banking clients. The fact that we are building out significant mortgage front to back capability, I think, is another example of a unique differentiator.
Got it. And sorry, I am going to trying to sneak one more in because it builds on what you are saying. Are you taking market share in the U.S. from companies like FIS and Fiserv, how are you getting traction there. And with the lower margin profile, do you feel like you are more competitive in the pricing environment? Thanks.
得到它了。 对不起，我打算再试一次，因为它建立在你所说的基础之上。 你是从FIS和Fiserv这样的公司在美国占有市场份额，你是如何在那里获得牵引力的？ 在利润率较低的情况下，您是否觉得自己在定价环境中更具竞争力？ 谢谢。
So look I think you know if you look at the U.S. space, more broadly speaking, absolutely. I think growth in the U.S. in Financial Services has been very strong for us. Most of the time, FIIs and us, we don’t really compete in the same spaces and so, I don’t think that they are a significant source of market chugging for us.
所以，看看我想你是否知道，如果你看一下美国的空间，更广泛地说，绝对是这样。 我认为美国金融服务业的增长对我们来说非常强劲。 大多数时候，FII和我们，我们并没有真正在相同的空间竞争，因此，我不认为它们是我们市场的重要来源。
Thank you. The next question is from the line of Ashish Chopra from Motilal Oswal Securities. Please go ahead.
谢谢。 接下来的问题来自Motilal Oswal Securities的Ashish Chopra。 请继续。
Yeah. Hi. Thanks for the opportunity and congratulations on a good quarter. Firstly, maybe Nilanjan if you could take this on the wage hikes impacts in this quarter. The impact was I think close to 60 bps is what you said. And in the media comment, you also mentioned that there was deferral of wage hikes for certain, I think, bottom of the pyramid employees as well into the next quarter. But typically we have seen second quarter’s wage hike impact being lower, but is it expected to be on similar lines or different this time around?
是啊。你好。 感谢有机会和祝贺好季度。 首先，也许是Nilanjan，如果你可以在本季度对工资上涨的影响。 影响是我认为接近60个基点是你所说的。 在媒体评论中，你还提到，对于金字塔员工以及下一季度的某些人来说，我确实推迟了工资上涨。 但通常情况下，我们已经看到第二季度的工资上涨影响较小，但这次预计会出现类似线路或不同的情况吗？
So like Pravin had also said, I think we always have a staggered impact of wage hikes. Some portion of the wage hikes was deferred, but like I said that’s built into what we are seeing as our projections for the rest of the year. So I don’t think there’s anything unusual or aberration in that.
就像普拉文所说的那样，我认为我们总是会对工资上涨产生交错影响。 工资上涨的一部分被推迟，但就像我说的那样，我们所看到的是我们对今年剩余时间的预测。 因此，我认为没有任何异常或失常。
Okay. And secondly, Pravin, as far as the net new share is concerned, I would be assuming that Stater would be entirely in the net new and the percentages would be different if we were to exclude for Stater?
Yeah. Stater would be entirely net new.
Okay. And just lastly from my side, I think, towards the end of the quarter, you would announced a partnership with Pan-American Life Insurance Group, a sort of I think on the policy administration site. So just difficult to throw some light on the nature of that deal and we have seen your peer announce a lot of deals with on the insurance platform of much larger size in the nature. So just wanted to know if this would actually compare into similar space or would be completely different?
好的。 最后，我想，在本季度结束时，你会宣布与泛美人寿保险集团建立合作伙伴关系，我认为这是政策管理网站上的一种。 所以很难对这笔交易的性质有所了解，我们已经看到你的同行在大自然中规模更大的保险平台上宣布了很多交易。 所以只是想知道这是否真的比较类似的空间或完全不同？
So, look, I think, we are seeing a huge interest and this is true for our peer group as well. As you look at the Life Insurance and Annuity business, there is a significant amount of interest in using third-party processors in making sure that the closed book at least is being done by more efficient producer.
In reality, what has historically been more of a processing business, now there’s a lot of interest and also a better user experience more of a front-end transmission base. And we feel that this is an area which will see significant growth. We are fairly optimistic about the McCamish platform that we have.
We have also modernized it very significantly and there are significant deals that we are seeing in the pipeline, which will allow us to really -- which will really allow us to build on the growth that is being seen in the marketplace.
实际上，历史上更多的是处理业务，现在有很多兴趣，而且更好的用户体验更多的是前端传输基础。 我们认为这是一个将会出现显着增长的领域。 我们对我们拥有的McCamish平台相当乐观。
我们也对它进行了非常显着的现代化改造，我们正在进行大量交易，这将使我们真正做到 - 这将真正使我们能够在市场上看到的增长基础上继续发展。
Thanks for taking my questions and all the best.
Thank you. The next question is from the line of Sandip Agarwal from Edelweiss. Please go ahead.
谢谢。 接下来的问题来自Edelweiss的Sandip Agarwal。 请继续。
Yeah. Hi. Thanks for taking my question and congratulations to the management team for an excellent quarter. So, couple of questions, Salil and Pravin from my side. First on the digital side, we are growing at 40%, 42% and our proportion is continuously rising. And I understand that the business has changed and it is not fair to keep apart the growth rates and understand, but just wanted a little bit of clarification on this side. The way we are growing and the way our order book clearly titled towards the newer technologies, are we going to see a phase where you know the leakage from the non-digital piece will come to us, halt and that will lead us -- lead to a much higher growth than what we are seeing structurally going forward, although size obviously is a concern. And I am not asking for a specific guidance, but I am just trying to understand whether the growing proportion of digital will lead to a structurally better growth going forward?
And second question, when you meet your client what is your sense. How much they have penetrated in terms of spending on the digital. Is it a very, very early stage or it is a little bit in the medium -- middle phase or how do you foresee that?
And another question which I had was on the attrition side. We have generally seen that, when you have two, three, four quarters, good quarters then the attrition rate just should come off and I have seen that in last four or five quarters tremendous amount of effort has been made both on hike side and the promotion side and also to some extent, I think, the stock option side, and still we are not seeing any kind of control on the attrition number, in fact they are worsening. And so my concern is that, is there a substantial portion of involuntary piece in this or you think the voluntary piece is still the high end, I am not asking specifically for this quarter, because if this continues then our dependence on external resource will not come down and subcon cost may remain elevated, which may not allow us to beat top end of our margin anytime soon? Thank you.
是啊。你好。感谢您向管理团队提出我的问题并祝贺他们的出色表现。所以，有几个问题，Salil和Pravin来自我这边。首先是数字方面，我们的增长率为40％，42％，我们的比例在不断提高。而且我知道业务发生了变化，将增长率和理解分开是不公平的，但只是想在这方面做一点澄清。我们的发展方式以及我们的订单明确标注新技术的方式，我们将看到一个阶段，您知道非数字产品的泄漏将会发生在我们身上，停止并将导致我们 - 领先比我们在结构上看到的更高的增长，尽管规模显然是一个问题。我并不是要求具体的指导，但我只是想了解数字化的增长比例是否会导致未来结构性更好的增长？
第二个问题，当你遇到你的客户时，你有什么感觉。他们在数字方面的支出有多少渗透。这是一个非常非常早期的阶段，还是处于中 - 中期阶段，或者您如何预见到这一点？
Okay. So there are several points that that you share, starting with the structural piece. We have view on the digital addressable market and the growths rate, we will update it in the coming quarters when we have another session for our Analysts Day. If you recall we have shared, it’s about $160 billion market growing at 15%. So that’s the piece that we are investing in and we see some traction.
On what you talk about and what we have defined as costs services, we have not declared the growth rates. But I think the market view is available if you look at what’s with third-party agencies who have a lot of data like Gartner and others, and it’s fair to say that that market has more challenged growth environment today.
In that context is how we have developed a strategic approach and that’s what we are executing too, we have a view on where this might go medium term, but we have not actually shared any of that externally. We think the way that we are driving this, for example, the 12.4% growth in Q1, that’s a good indication of what other sorts of things possible when many things come together in the fortuitous way for us in the quarter.
In terms of the attrition, there is -- we have talked about operational efficiency and we have now more and more intense focused on involuntary attrition as well. There has been some element of what is still on the seasonal because of higher education and when you start to strip that out we see the attrition numbers while not improving they are stable and so we still have work to do to make sure they start to trend down.
Thanks. That’s all from my side.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for their closing comments. Over to you.
谢谢。 女士们，先生们，这是今天的最后一个问题。 我现在将会议交给管理层，以便他们结束评论。 给你。
We would like to thank everyone for joining us today on this call. We look forward to talking to you again. Have a good weekend ahead.
我们要感谢大家今天加入我们的电话会议。 我们期待再次与您交谈。 祝你周末愉快。
Thank you very much, sir. Ladies and gentlemen, on behalf of Infosys, that concludes this conference call. Thank you for joining us and you many now disconnect your lines.
先生非常感谢您。 女士们，先生们，代表Infosys，结束了本次电话会议。 感谢您加入我们，现在很多人都断开了您的界限。
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