The Secrets Behind Infosys’ Success: A Closer Look at Its Constant Currency Revenue Growth


Salil Parekh’s Infosys delivered disappointing March quarter results, but it has consistently outperformed its larger rival Tata Consultancy Services (TCS) in terms of constant currency revenue growth over the last five years. During all these years, TCS was led by Rajesh Gopinathan, who is now its outgoing chief executive officer (CEO).

In the wake of TCS and Infosys’ commentary while announcing the March-quarter earnings, Gopinathan’s resignation comes at a critical time for the IT sector.

Gopinathan received a 5-year extension as TCS’ MD and CEO in 2022, which means his term was valid until 2027. So, what explains his sudden resignation?

There’s more to Gopinathan’s sudden resignation than meets the eye

The leadership change at India’s largest IT services company is not just about the uncertain future. There have been murmurs about Gopinathan bowing out because TCS underperformed Infosys under his leadership, and now numbers confirm this.

In FY21, which was marred by Covid-19, Infosys reported a 5% revenue growth (in cc terms), while TCS reported a 0.8% decline

According to Nuvama Institutional Equities analysts, Gopinathan’s resignation was a surprise as well. Additionally, though TCS said Gopinathan would remain with the company until September this year to assist with the leadership transition, Krithi Krithivasan will now take over three months earlier, in June.

Aside from revenue growth, TCS’ stock has also delivered a return of 84% over the last five years compared with Infosys’ return of 114% over the same period.

In the past five financial years, TCS has beaten Infosys in terms of operating margin, with an average of 25.1% against Infosys’ 22.52.

It’s going to be a tough year– Infosys

TCS will be led by Krithi Krithivasan, another company veteran who previously led its BFSI vertical (banking, financial services, and insurance). Although Krithivasan has maintained that there will not be any major changes to the company’s strategy, the banking sector crisis in the US and Europe will require him to be more agile going forward.

As a result of its Q4 shocker and comments on “unplanned deal ramp downs”, Infosys appears to be struggling as well.

According to the latest World Economic Outlook of the International Monetary Fund, GDP growth in the US and Europe is expected to be 1.6% and 0.8%, respectively in 2023. Due to the fact that Indian IT companies have the biggest markets in the US and Europe, managing economic uncertainty will require a wartime CEO.

Aside from navigating these tough waters, Krithivasan must also outperform rival Infosys on another front.

It remains to be seen if Infosys will be able to continue to outperform its much larger rival despite the highly volatile Covid-19 pandemic.

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Editorial Director
I'm Shruti Mishra, Editorial Director @Newsblare Media, growing up in the bustling city of New Delhi, I was always fascinated by the power of words. This love for words and storytelling led me to pursue a career in journalism. In this position, I oversee the editorial team and plan out content strategies for our digital news platform. I am constantly seeking new ways to engage readers with thought-provoking and impactful stories.

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