Hello and welcome to this special conversation on Money Control. We are at the campus of Infosys in Bengaluru and joining me on this conversation is Salil Parekh, its CEO and MD. Now, Salil Parekh took charge on Jan 2nd, 2018. And he will be stepping down as CEO next year on March 31st, 2027. In fact, last week Infosys announced its new CEO, Ashish Dash, who is an Infosys veteran of 31 years. To talk about the decade that was and what's next for Salil. Thank you very much, Salil, for talking to us. Congratulations on a great run at Infosys. I still remember when you took charge, it was such a chaotic time for the company. A CEO went out, you came in. Nandan was very emphatic then, Nandan Nilekani, that he wanted to make Infosys a boring company again. And he mentioned in the press conference last week that you brought a lot of stability and calm into Infosys. So, take us through your tenure. How do you look back on your term as CEO?
So, first, thanks very much for doing this and being here on campus. It's always great. We are seeing so many employees back on campus and it's getting back to all of the vibrancy that we've always known. I think it's been quite an incredible journey. So, first, just being in this role in such an institution has been a huge privilege and honor and I'm deeply grateful for that. We've had a good outcome over the many years. I think our revenue went from 10 billion to 20 billion. Our employees have grown from about 200,000 to over 300,000 now. If you look on an organic basis, our growth rate over that time has been the fastest among some of our peers. So, extremely gratifying. And we started a digital transformation early on which was a big part of the first few years. We went from about 20% to over 60%. And now we've started an AI transformation, a similar approach but a different focus on technology. So, already since the time we did our investor day, we've gone from about 5% to 8% growing at double-digit quarter on quarter. So, going very well. And then one of the things we've done over the years, we put in our large deals capability which has worked extremely well. Over the course of those years, we've done something like a hundred billion dollars in large deals, which is an incredible number in terms of building the stability and the future of what we're driving. And now, one of the biggest things that has worked well is making sure that the culture within the company has stayed what it was from the start and in many ways strengthened as we've gone through the years. Today, the confidence of the leadership, the confidence of the company is very strong and we are well positioned for what the next few years will unfold.
Right. If you have to look back on your tenure, as you mentioned the revenue grew from 10 billion to 20 billion dollars. At the same time, the margins during this period came down from 24% to 21%. If I look at the stock market return over a decade, it's been 12%. But to be fair, some of your peers are at minus 43% and minus 42% in terms of stock market. So, what were the key hits for you and what do you think were the disappointments? Something that could have been better.
So, I think in terms of what's really worked in my mind is if you look at the people or the culture within the company. One of the things we put in place early on was essentially the leadership team which had been with Infosys for a long time and that has really transformed into one of the most powerful leadership teams in the industry. And we put in a concept which was one Infosys, which made a huge difference in bringing all of us together and driving that change. So, that was one of the more critical elements that helped us in driving all of these changes. And as you look ahead, that becomes the foundation. You look at what's going on in AI, we've put together a very strong approach centered on the six large areas of opportunity. And that's where we are seeing the growth. If you look at 8% of our revenue, it clearly shows that as you look into the longer term, the work we are doing with our clients for AI services is something that is part of their future and our future. So, from a long-term perspective, getting reestablished as a very strong part of our new focus, new growth areas.
Right. And even if I look at the revenue growth, Salil, not just you, but even for you in the last 3 years, it's been three consecutive years of low single digit. When do you see the mojo coming back into Infosys? Again, there have also been external factors in terms of the macro environment, geopolitics, the AI-led shift, but when do you see the mojo coming back, or is this the new normal that Infosys and the industry perhaps needs to get used to that this is not going to be a high-growth industry anymore?
So, there I think there have been multiple elements, as you pointed out, which are part of what's going on. One, AI services growing very fast, and that's a big part of where the future is. And then, you look at all the other elements globally, there have been a lot of changes in the macro environment. Those changes have resulted in many cases in the adoption of tech spending with our large enterprise clients. And that has led to an extreme focus on cost and making sure that cost elements are looked at. As those elements start to become more managed in the macro, we will start to see that part of the overall ecosystem growing. Tech is very much part of what large companies are doing. So, tech spending will remain important as we go through the next few years as well. But macro is an important factor in this. So, as AI services grows and as the macro becomes more manageable, we will start to see good growth overall. AI services growth will continue right away.
Right. In terms of large deals as you mentioned, setting up this large deal group and how the deal wins crossed 100 billion for you. Some of those star deals like Vanguard, Daimler, Mercedes, we have seen Infosys winning them in the last decade and also losing them either to competition or to insourcing. Is that a source of regret for you, or are these deals where you will walk away if the pricing doesn't make sense, if the profit margins don't make sense for you?
So, overall if you look at our large deals, we have an incredible track record of, as you said, entering new areas of growing and scaling up. And equally, in a lot of these instances, making sure we have ongoing and continuing relationships. Without looking at specific deals, there are instances, especially in the last year, where we've been very focused on making sure that the economics of the deal match what we are doing. And in one or two instances, being quite careful with that. But, overall, we are very much in the mix. As you look at what has gone on with our margin, we have maintained our margin at a very strong level. Where we've seen across the industry different outcomes for different people. And equally, we've managed all of that by keeping all of our internal focus on things which are leading to efficiency without really compromising on our culture or our values and making sure the economic profile is good.
Right. Before generative AI, the changes in the industry were more incremental in terms of the kind of technology shifts. But you're one of the rare IT CEOs who has seen tectonic change in real time as you were running a large enterprise. What will this mean for the future of IT, for the future of jobs? Are we seeing structural changes for IT companies?
So, there again, my sense is we are seeing that to make AI work in large enterprises, you need a services company like Infosys that understands the context of the client. You need people who understand how the foundation models work, and then make them work to build agents, do modernization, deploy coding tools within large companies. So, today, there are about 80,000 employees within Infosys who are already using different coding tools and working for clients, doing some internal projects. Last year, we recruited 20,000 college graduates. This year, we have a similar plan. 20,000 college graduates first quarter, already more than 4,000. So, we will continue to recruit people. That will continue to be a way we work with our clients to make AI more relevant. Now, there is much more efficiency. So, what can be done with those tools, the engineers are working at a much better, higher level in terms of efficiency and impact. So, that's the big change we're seeing with respect to what we're doing with clients. Our clients are large enterprises where the complexity of what they're doing requires an understanding of the AI tool and of the context which our own knowledge brings to bear. So, we see a good path for this growing over time. Again, as we discussed earlier, as the macro changes, the overall growing, but at this stage, the AI service is growing.
Do you think Infosys underinvested or read the AI trend late, or were you on track?
So, there as you've seen, we were very early to start to talk about AI and building Topaz fabric. Even very early there, but even recently in the last few years, and then we did maybe we were the earliest company to do an investor day outlining the opportunity with AI, being very specific on what are the areas in which we will invest, scale, and grow. So, today if you look at what we've built with Topaz fabric, it has the ability to work with 15 different foundation models. It allows a large company to work with different models for different activities, so your token cost usage is optimized. These are things which were not something others were looking at or even talking about, and we are building all of this into the mix, and those are the things that really scale. That's why we're seeing this nice percentage of AI services and a nice growth in AI services.
Right. Talking about open weight and closed, where do you stand in this whole global debate? It's Anthropic on the one hand and increasingly in the last week we've seen Google, Nvidia, even OpenAI lean towards open weight models, and people are talking about the efficacy of Chinese models both from a usage perspective and from a cost perspective. What will this mean for IT companies? Driving employee productivity using open models which are much cheaper than closed models.
So, my sense is I think innovation in all its forms is good and we will see a lot of innovation. For example, there are good models coming out of Europe which we are working with. There are good open weight models coming out of some of the US labs and tech companies. In general, the discussion has now moved not so much on those points where of course a lot of people have opinions, but on a large enterprise, how will its token usage be efficient? How will they make sure that they keep within themselves not just the data, but the knowledge of that company and that business to themselves. And so, those are the discussions, and any model or any technology or any innovation that will support that will have a benefit in the future.
Right. The appointment of Ashish Dash as the next CEO came as a surprise to many people. And he has been with Infosys for 31 years. And Nandan Nilekani mentioned that you will be mentoring him, taking him on as a mentee from October. So, what are you going to tell him about what his goal posts should be, what the key areas to tackle are?
So, first, Dash is a very good friend, is a great leader. I've worked with him for so many years. Since I started, we put him in this role and he's done a very good job. He's great with people, he's great with clients, and he's built a nice portfolio of the business both in terms of growth and the way the economics work. Really meaning we'll be working jointly more so that he gets a view across the company because there are many things which are outside of the industries he works with. So, we'll be working jointly to make sure that he gets a sense of it, but in my mind he is a fantastic leader.
Do you expect any top-level exits because there were obviously three, four, multiple contenders in the fray for the top job across verticals. So, is that a concern in terms of holding on to talent? Because typically CEO transitions, some kind of talent churn follows.
So, my sense there again is first we have an incredible leadership team who worked well together for so many years and who are really long-term Infosys leaders. So, my sense is we are in a good position. Dash is a very collaborative person working with all of the different leaders in the segments, in the industries, on the delivery teams, across all the functions. So, I feel pretty good with how the next phase will evolve with all of the leadership team in there.
Was he the unanimous choice by the NRC?
The board had complete support and unanimous view in selecting Dash for this role, yeah.
Salil, you've also had the opportunity to work very closely with Nandan Nilekani in the last decade. What will you take away from that? One or two learnings or insights on his working style, on his thinking style that you can share with us.
