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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. 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. Hello, everyone. I wish you all a very Happy New Year. Welcome to this earnings call of Infosys to discuss Q3 FY 2021 earnings release. This is Sandeep from the investor relations team in Bangalore. Joining us today on this call is CEO and MD, Mr. Salil Parekh; COO, Mr. Pravin Rao; CFO, Mr. Nilanjan Roy; along with other members of the senior management team. We'll start the call with some remarks on the performance of the company by Salil, Pravin, and Nilanjan before we open up the call for questions. Please note that anything that we say with respect to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risks that the company faces. A full 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 it on to Salil. Thanks, Sandeep. Good evening and good morning to all of you. I trust each of you has had a great start to the new year and continue to be safe and healthy. I'm delighted to share that we have had an exceptionally strong quarter across multiple dimensions. This was made possible by the enormous trust of our clients and the extreme focus we have built for digital and the enormous client relevance that has created and helped support digital and cloud transformation journeys for our clients. Let me share with you some of the highlights. We achieved the highest large deal wins in our history with a deal value of $7.1 billion. This includes the largest deal we signed in our history and what we believe is the largest in the IT services industry in India. This will continue to expand our strong presence in the continental European markets. Our overall deal value for the nine months of this financial year is over $12 billion, and the net new large deal value for nine months of this financial year is over $8 billion, positioning us very strongly for the quarters ahead. Revenues in constant currency grew at 6.6% year-on-year and 5.3% sequentially on the back of a very strong momentum we saw in H1 and large deal wins secured earlier, further establishing our market share gains. Digital revenue grew at 31.3% year-on-year in constant currency, and we have now crossed an important milestone in that digital is now over 50% of our revenues. We delivered operating margin of 25.4%, which is an expansion of 350 basis points year-on-year and flat sequentially. Our operating cash flow was robust at $829 million for the quarter. Our balance sheet remains solid with cash and investments at $4.5 billion, which is stable sequentially after the payout of our interim dividend. Recognizing continuing the performance of the company and contribution from our employees during these times, we are paying out variable pay for the quarter at 100%. As announced earlier, we are initiating salary increases for our employees, which will be effective January 1, 2021, and we are expanding our promotion cycle across all levels in this quarter. In Q3, we reached a significant milestone in our Environmental, Social, and Governance journey by becoming carbon neutral. This is 30 years ahead of the 2050 global target set by multinational agencies. We further reiterated our commitment to the causes of ESG by announcing our ESG 2030 Vision and ambitions. Looking ahead, we continue to see momentum in our business, strong market share gain, and increased speed digital transformation at our clients. Keeping that in mind, we increased our revenue growth guidance for the full year from 2%-3% to the new guidance at 4.5%-5% growth in constant currency. We increased our operating margin guidance for the full year from 23%-24% previously to 24%-24.5% for the full year. That concludes my update. Thank you for your time. Now let me request Pravin to give you an update on our operations. Over to you, Pravin. Thank you, Salil. Hello, everyone. Wish you a very happy, healthy, and safe New Year. While there is increasing optimism due to the commencement of COVID-19 vaccination, we have also seen a renewed surge of infection in various parts of the world. Consequently, majority of our delivery centers are operating in BCP mode, with 97% of our employees globally continuing to work from home. Growth acceleration continued with sequential revenue growth of 5.3% in constant currency, accelerating further from the momentum seen in the first half of the year. Year-on-year growth rate increased to 6.6% in constant currency for quarter three. Three business segments, Financial Services, Hi-T ech, and Life Sciences reported double-digit growth. We have seen several operating parameters improving during the quarter. Utilization was at 86.3%, which is all-time high level. Onshore effort mix was lowest ever at 25.2%. RPP declined slightly on a sequential basis due to seasonal factors like lower working days, furlough, et cetera, but increased on a year-on-year basis. SubCon cost increased up by 40 basis points on a sequential basis as growth picked up meaningfully. Let me talk about the large deal wins, which was key highlight of our quarter three performance. Large deal TCV crossed quarter two levels and marked a new all-time high at $ 7.13 billion. Share of new deals in quarter three was 73%. The net new deals we signed in quarter three is more than 1.5 x of what we signed in the entire fiscal 2020. As Salil said, in quarter three, we signed what is probably the largest deal signed in Indian IT services industry. Apart from this, we signed another deal of $ 500 million. Overall, we won 22 large deals in quarter three, 18 Financial Services, four deal feats in Manufacturing and Energy, Utilities, Resources & Services sector, three deals in Communication, and one deal each in Retail, Hi-T ech, and other segments. Region-wise, 13 were from Americas, seven were from Europe, and two were from rest of the world. With this, our large deal wins for nine months is over $ 12 billion, an increase of 63% over the comparable period in the last year. Net new large deal wins for nine months have increased by 244% year-on-year. While quarter three deal signings were very strong, a large value of these deal signings will start contributing to revenues in the second quarter of the next fiscal due to transition involved. Net employee addition during the quarter was more than 9,100, and share of women employees increased to 38.3%. Voluntary attrition for IT services eased up to 10%, although lower than our comfort band of 14%-15%. We will be implementing salary increase across all levels effective January 1st, 2021. Budget planning for calendar 2021 is progressing normally. We expect clients to continue to focus on their digital transformation agenda. Moving to business segments. Growth momentum accelerated in Financial Services with ramp-up of past deal wins, focus on accelerating the digital transformation agenda for many of our large clients, opening up new accounts across various sub-verticals like mortgages, regional banks, wealth and retirement services. We see multiple opportunities in cloud data services and creating new digital bank capabilities as things improve post-COVID-19. Finacle continues to grow steadily and has firmly established itself as one of the best banking platforms in the industry for digital transformation. Retail segment continued to improve with increased volumes in quarter three despite seasonal softness and year-on-year growth turning positive. The deal pipeline remains healthy, and we are seeing opportunities around vendor consolidation and captive monetization. Performance in Communication segment also improved sequentially, although media, entertainment, advertising, and OEM segments remain under pressure. We have won three deals in this segment in the last quarter and continue to have strong pipeline of deals. Parts of Energy, Utilities, Resources & Services vertical continue to face a difficult environment due to stress in segments like oil and gas, education, publishing, travel and hospitality, et cetera, while utilities remain relatively steady. Based on the recent deal wins and deal pipeline, we expect to see stable performance in the coming quarters. Manufacturing had a standout quarter, both in terms of deal signings and revenue momentum, which improved meaningfully despite continued disruptions across sub-segments. As deals ramp up over the coming quarters, we will see superior revenue momentum for this segment. We expect spend to grow in the newer areas of digital, data, cloud, and security and reduction in run-the-business areas. Infosys BPM has grown at double digits with strong pipeline of both traditional and digital deals. The digital portfolio also saw strong growth of 31.3% year-over-year in constant currency and crossed 50% share of overall revenues. In the last quarter, we have launched Infosys Modernization Suite, Infosys Live Enterprise Application Management platform. Both part of Infosys Cobalt and Infosys Applied AI. Three acquisitions completed in the last quarter. GuideVision, one of the largest ServiceNow Elite Partners in Europe. Blue Acorn iCi, Adobe Platinum Partner in the U.S. and Kaleidoscope Innovation will further enrich our capabilities and offerings in the digital space. We've also been rated as leader in 17 services related capabilities across the digital pentagon areas by industry analysts. The global pandemic has gone from threat to opportunity as clients have gained confidence in their own resilience and now embrace the opportunity to accelerate an often radical re-imagination of their own businesses. Infosys, with its strengthening capabilities and expanding array of offerings, is becoming the preferred choice for customers in that journey. With that, I will hand over to Nilanjan. Thanks, Pravin. Good evening. Good morning, everyone. I would like to wish you all and your families the season's greetings and a safe and healthy 2021. Q3 was another successive quarter marked by continued acceleration in revenue with the highest Q3 sequential revenue growth in the last eight years. Our unwavering execution over the past three years against our Navigating the Next strategy with client relevance at the core, supported by digital operational excellence, cost and cash management, is clearly the driver of this all-rounded performance and reflecting in our total shareholder return appreciation during this period. Revenue for the quarter stood at $ 3.52 billion, a growth of 5.3% sequentially in constant currency. This translates to 6.6% growth year-on-year and 3.5% growth for nine months in constant currency. Operating margin stood at 25.4%, were up by 3.5% year-on-year and stable sequentially. Sequential margin movement in Q3 comprised of 100 basis points improvement due to better operating parameters like utilization and on-site mix and other cost levers. 20 basis points benefit due to cross-currency movements, partly offset by rupee appreciation. These benefits were negated by a 50 basis points impact of transition and rebadging costs for recently won deals. A 20 basis points increase in costs relating to employee promotions and compensation corrections, and the balance 50 bps impact due to a combination of higher SubCon, one-offs, and others. Operating margin for nine months stood at 24.5%, which is 3.1% higher compared to the 21.4% margin for nine months in the last fiscal. As mentioned last quarter, we will see higher costs in Q4 as we implement the salary hike for our employees effective January. Q3 EPS grew by 12.5% in dollar terms and by 16.5% in INR on a year-on-year basis. Nine-month EPS grew by 10.6% in dollar terms and 16.9% in INR on a year-on-year basis. Return on equity increased further to 27.4%, an improvement of 130 basis points over the last year. DSO, measured on an LTM revenue basis, remains stable year-on-year while increasing four days quarter-on-quarter. Collection remains strong and helped in generating operational cash flow of $ 829 million. Coupled with lower CapEx of $57 million, FCF for quarter three increased to a record INR 772 million, a growth of 15.1% year-on-year and a growth of 40% on YTD basis. Free cash flow conversion remains strong at 109% of net profit and 113% for the nine months. We continue to maintain a strong debt-free and liquid balance sheet. Cash and investments at the end of quarter three were $ 4.5 billion, in line with the previous quarter, despite paying $ 687 million of half yearly dividend during this period. Yield on cash balances continued to decline due to moderating interest regime in India. The yield was approximately 6% in quarter three. Quarter three also marked the 22nd consecutive quarter of positive Forex income despite significant currency volatility across the globe. Driven by strong deal wins and revenue performance in the first nine months, we are again increasing revenue guidance for FY 2021 to 4.5%-5% in constant currency terms from 2%-3% guided earlier. We expect operating margins for the full year to be in the range of 24%-24.5%, compared to the previous guidance of 23%-24%. Amidst these numbers, it would be remiss of me not to mention the landmark achievement in quarter three of attaining carbon neutrality as a company 30 years ahead of the Paris Agreement. This was a journey we embarked in 2010, and we are extremely proud of the commitment shown in achieving this goal. In the last quarter, as Salil mentioned, we also announced our first ESG Vision 2030, a holistic approach of integrating our business model with the extended stakeholders impacting environment and climate, communities and societies, employees and shareholders. We believe our robust and measurable targets towards the pillars of environment, social, and governance will help us setting new standards in this area. With that, we can open the call for questions. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets for asking a question. Ladies and gentlemen, we will wait for a moment for the question queue assembles. The first question is from the line of Ankur Rudra from JPMorgan. Please go ahead. Thank you. Exceptional quarter yet again. Just starting with the question on budgets perhaps, Salil, a large part of your exceptional strong deal win momentum appears to be catalyzed, perhaps with cost takeouts and consolidation you had alluded to at the beginning of this year. I was wondering if this implies that enterprise tech budgets might actually shrink or stay flat as opposed to going up in C2021. Also, whatever is freed up by these cost takeouts, how do you see yourself participating in those sort of freed-up tech budgets? Thank you. Thanks, Ankur. The way we are seeing it today is there is definitely some element of cost takeout. If you look at the wins that we have seen this past quarter and for this financial year and the three quarters, we see those are both cost takeout, but also what you described in the second part, as large enterprises looking to invest that amount into their own digital infrastructure and landscape for their growth with their end customers. The overall budgets are always difficult to estimate, as you know, and we have a number of other agencies we all depend on for those sorts of estimates. Those are all positive estimates at this stage for calendar year 2021. The key is, one, to have the capabilities for digital and cloud and the transformation that these enterprises are driving, so those investment monies can be spent with us, and two, have the automation capability and the efficiency capability for the cost takeout which we have. It's a dual approach, and we feel we are playing quite on both sides of that. Thank you for that. Just to follow up on revenue conversion, clearly very strong momentum here. I was wondering if you've seen an acceleration of the conversion from signing to recognition in the last few quarters perhaps due to virtual onboarding, and would you expect those trends to go on for the large deals you won right now? There we've not seen anything different in the way deals are converting. There are some deals which convert faster, some have a slower sort of transition. Pravin shared in his comments that some of the transition from what we see in Q3 will start to show up a bit later in Q2 of next year. That pattern has not changed. Some deals do have a faster conversion and some are more slower. Nothing changed because of the virtual onboarding and so on. Okay. Thanks for the color. Just lastly on margins, should we expect a significant impact perhaps in FY 2022 as these large deals come through like you've seen in the current quarter? Thank you. On margins, I'll request Nilanjan to step in. Go ahead, please. Yeah. Ankur, as you know, we run with a portfolio. We have large deals, we have small deals, we have new deals coming into the pipeline. Also, we have maturing large deals. We run with a portfolio, and if you actually see our history over the last three years, even as we've accelerated the large deal pipeline and the revenues, our margins also have gone up. That's a couple of reasons. One is, of course, the strategic cost levers we continuously deploy each year, and we talked about that in our analyst day around the onsite-offshore mix, the pyramid automation, and this is something we relentlessly focus on. When we pick up large deals, we also start seeing the life cycle of the deals, and of course, initially, these have higher costs in terms because they would not have enough automation or process improvement. They may not be enough in terms of the onsite-offshore mix. Therefore, when we look at the portfolio entirely, we also realize there are deals which will be maturing and hitting near portfolio margins, and new deals will enter the portfolio at lower margins initially. That's the way we manage our overall portfolio. Every quarter you could have a plus or minus, and in fact, this time we've had this mention in the margin, a one-off on a rebadge deal. I think the flow of the green, I think we are quite comfortable with our overall performance as we are. As we look into next year, of course, we will have the quarter full impact of the wage hikes across. Some of the costs may come back in next year in terms of travel and all, but that may be a bit further away. Like I said again, the cost optimization which we have, and as we approach this, we're quite confident. Thank you. Best of luck for the year. Thank you. The next question is from the line of James Friedman from Susquehanna. Please go ahead. Hi. Congratulations on the extraordinary results. Pravin, in your prepared remarks, and I know you reflected this in the previous response, Salil, you are suggesting that the large deal wins that were currently addressed start to bill in the Q2. I realize that that can vary. Can we think about those boardings linearly, or would that be a mistake in terms of our future modeling exercise? Yeah. As I said, all these large deal wins will involve a period of transition, and revenue will start kicking in only in the second quarter of next fiscal. The trajectory of revenue also will vary on the nature of the deal. In some large deals, it's primarily initially taking over providing services to the client and then maybe over a period of time modernizing. In some other cases, it could be taking over, but at the same time, in parallel, doing the transformation. The nature of the deals actually varies. I don't think we can have a common optic to say how revenue will pan out. Pravin, you also mentioned, quote, "A good pipeline of deals." I think you were talking about the Communications vertical. You said despite weak media, you see a good pipeline in that vertical overall. Could you give us some context for that? Is the opportunity in that vertical equivalent to the, say, strength that you're seeing in Manufacturing deals? When you say good pipeline about that vertical, what's that about? Some context would be helpful. I think a number of opportunities in the Communication segment, as I said, is fairly good, decent, and it's primarily in the telecom space. When you look at Communication, it's not only about telecom, it's also media, entertainment, OEM. We do find softness in media, entertainment, and OEM, but we are seeing a lot more traction from the telecom segment. We have already won three deals in this segment in this quarter, and the pipeline, as I said, it continues to be healthy. Given the pandemic, we have seen a lot of volumes implement in telco. It has so far not really translated into impact on their own revenues, but we expect this to probably change going forward. At least on the telecom side, we remain optimistic given the deal wins as well as the pipeline. Great. Thank you so much for the color. I'll drop back in the queue. Thank you. The next question is from the line of Kawaljeet Saluja from Kotak. Please go ahead. Hey, guys. Fantastic quarter. A couple of questions. First is that there was a very healthy conversion of pipeline into TCV in this quarter, and actually in the last two quarters. Has this conversion left the pipeline a little bit lighter, or does it continue to be as robust as it was earlier? That's the first question. Thanks, Kawal. This is Salil. Yes, the conversion at that instance, it comes out of the pipeline, as you rightly point out. The overall health of the pipeline is extremely robust. Of course, with this level of large deals seen in Q3, we will have that impact in the immediate outlook. However, we see across the different industries still significant opportunities and the pipeline overall seeing that level of health and robustness. We are still feeling quite good about the pipeline. Thank you, Salil. The second question I had is on profitability, and it's the same question I asked in the previous quarter to Nilanjan. Nilanjan, your margin band in the last every year has changed. This year it has been a good thing that it has increased. What's the real sustainable level of band of operating margin, taking into consideration the large deals, a possibility of two rounds of wage increases, and possibly cost normalization as well? How should one really think about your profitability dynamics as we move into FY 2022 or even beyond that? Thanks, Kawal. I'm not sure you'll get a separate answer each quarter. On a serious note, I think where we are today at 24.5% on a nine-month basis. I think in last time we were at 21.4%. We have seen about a 310 basis points improvement on a year-on-year basis for nine months. I think this is a combination, like we said, of some of the discretionary cuts which we have done, which is largely the impact of the compensation hikes, and that will come back in Q4. Also, if you look at the temporary cuts which we've done, which some of them were on travel or the brand side, et cetera. Some may open up, but that's yet to be seen how fast the post-vaccine world normalizes. I think we are very confident and you continue to see very strong metrics on our cost optimization, right? The on-site offshore mix improvements in the last one year has been something which took three years in the past. These will open up a lot of opportunities as clients see and are open to more offshoring. With 98%, 97% of our teams working from home literally over the last year, I think the confidence of clients as well to offshore will increase, and that could be a lever we will step on. Our localization and local hiring in the U.S. had a pyramid, something very unique to Infosys, creating the six digital hubs, recruiting from universities and community colleges. Historically, you know the IT industry has had a very steep pyramid on-site, and 75% of employee cost actually is on-site, whereas only 25% of your headcount sits there. Therefore, if you don't address the on-site pyramid, you really have a battle up your hands. I think what we've been doing over the years with our localization drive, putting in our hubs and hiring freshers is helping us negate some of this. Without giving any numbers into next year, I think we are entering with some levers up our sleeves. Yes, there may be some impact of compensation, but we'll see as next year comes and our guidance, we announce. Thank you so much. Just a final question. It's one of the largest ever deals that you have won. Is it just a typical large deals like the ones you have signed with Vanguard or maybe others? Or is there something unique, which you want to call out, maybe in the form of a higher pass-through element or anything of that sort? Any color on this deal would be very, very helpful. Thank you so much. That's my last question. Let me try that, Kawal. It's Salil. In terms of the large deals, I think your question was on a specific deal. The way I would characterize it is, it's a deal which relates to cloud, and a really huge movement to both public cloud, private cloud, inside the service, and bringing together an ecosystem to make all of that happen. The primary driver for parts of it is what we built in Infosys Cobalt, which is all of our cloud assets. Of course, we are working very strongly with ecosystem of partners are together shaping what this cloud environment will look like. Thank you so much, and have a great year ahead. Bye. Thank you. The next question is from the line of Yogesh Aggarwal from HSBC. Please go ahead. Hi. Good evening, everyone, and Happy New Year to the team as well, and a good quarter. Just two questions from me. Firstly, on large deal wins, which have been so impressive. Salil, from a execution perspective, are the execution risks different than a normal deal or they are almost similar? In that context, do you need to make any SLA or milestone-related contingencies since these are a lot more complicated deals? Secondly, from a guidance perspective, the fourth quarter guidance is much weaker compared to what you achieved in the third quarter. Was there some kind of a budget flush in third quarter or any specific weakness which is leading to slower growth in fourth quarter? I have a follow-up after that on margins too. Okay. On the first two points, I think, the delivery risk profile across our large deal portfolio, if I look at the last nine months or last quarter, it's not any different from delivery risk of those types of deals in the past. We are doing larger deals in this last year or last two years. With that, the complexity increases. However, there is no provisioning in our books with regard to specific situations on SLAs as we start out the delivery of the deal. In that sense, this is something where we've built out capabilities, and we are now putting together the approach to deliver on the various large deals that we've talked about. The second point, sorry. Can you just repeat that, please? Sorry. Was trying to understand the guidance for fourth quarter, which looks- Right. -much weak. Yeah. Yeah. On the guidance, as you probably know, historically, Q3 and Q4 financial year are always softer quarters for the industry and for Infosys, there is nothing different. In fact, this particular Q3 has been extremely robust. We had a phenomenal growth in terms of the revenue, constant currency growth that we've shared. There is nothing unusual in that to point to any weakness in Q4. However, seasonally, Q3 and Q4 have always been softer across the industry and for Infosys over the years. Okay. Thanks. Just another question on margins. Nilanjan. Most of your operating metrics have improved quite smartly. As you said, utilization, offshore mix, et cetera. The employee cost is still up around 5%-6% sequentially. We have seen with other companies, despite the wage hike, it's been largely flattish. What is leading to the employee cost increase, if I may? Like I mentioned in the margin walk, sequentially, we have this 50 basis point impact of transition and rebadging of a recently won large deal. That's something clearly we called out. The balance we had talked about a combination of higher SubCon one-off and others, which was explaining about 100 basis points of the cost drags versus the 100 basis point improvement in operational metrics like utilization and onsite mix. Great. Thank you so much. Thank you. The next question is from the line of Keith Bachman from Bank of Montreal. Please go ahead. Keith Bachman, your line is in the talk mode. You are requested to go ahead with your question. Yes. Thank you very much. I had two questions as well. The first, your cash flow was also very impressive this quarter. Was there anything that you wanted to call out that might have been unusual or one-time in nature? Anything that you wanted to call out on the cash flow, that we should be thinking about over the next couple of quarters, but certainly next quarter in particular. Thanks. I think as we’ve been showing for the entire year, quarter after quarter, we have had very strong collections because I think that was our first concern when COVID struck, is the ability of our clients. Of course, the reality is our clients, our Fortune 500 clients, and very strong balance sheets as well. Across the three quarters, we have not seen any impact at all in terms of our collection ability, and that remains strong. Of course, one reason for the cash flows improving is of course, the lower CapEx. As everybody is now working from home, I think that automatically has come down, and in fact, we repurposed some of our CapEx spend towards technology, so that people can be enabled to work from home with laptops rather than desktops. Nothing really to call out on a cash flow basis. Yes, here and there we have received some deferrals of some indirect taxes, but nothing material really. I think just on a line basis, we are still above 100% of net profits. Yes. Okay. The second question, I wanted to go back to the deal signings. Again, impressive deal signings, particularly 73% being net new. A, if you took out the one large deal that you said was the largest in history, any growth rates that you can provide just to give some dimensions? B, I'm just curious of the distribution. Is there any dimensions you could give around what was in the digital versus legacy of the signings this quarter? Or if you wanted to say over the last few quarters, but I'm just curious at the signings, the distribution between the legacy and the digital side. Thank you. Let me start. This is Salil. Then Pravin might be able to add a bit more color on the distribution. In terms of what we did in Q3, we don't have a view to give a specific number for the one deal. What I would say is, even outside of that, we were running at an extremely robust pace overall, in terms of the sort of averages we have had over the last several quarters for large deal signings. While it was a large specific deal, that was not the only one. As Pravin also mentioned, there were 22 deals also referencing the one, another deal which was at $ 500 million, just to give some color. Pravin, over to you for anything else. I think there is an element of digital in every large deal. Because end of the day, large deal is not only about taking over and delivering the services, but it's also transforming over a period of time. In that sense, it's a combination of digital plus legacy, and we don't really give a breakup of that. The nature of these deals also varies. There are some deals around infra modernization, cloud, and Infrastructure as a Service. There are some deals around ops transformation. There are some deals where we have taken over the whole IT and delivering it back as IT as a service. There are deals which are purely ADM, where we are providing next gen ADM services. There are deals which is platform-led, where we have taken over some products, not only maintaining but also go to market with those products. There have been some captive forwards as well. Engineering also a strong element in many of these large deals. Of course, BPM is also part and parcel of most of these large deals. The nature of these deals vary, but there's always an element of digital in it. As I said earlier, we don't really call out how much is digital and how much is non-digital. Okay. Well, congratulations on the signings. Many thanks. Cheers. Thank you. Thank you. The next question is from the line of Diviya Nagarajan from UBS. Please go ahead. Thanks for taking my question. Quite a few of my questions have been discussed already. To kind of go back to this large deal that you talked about, could you just explain how a deal like this at this scale is typically structured and anything that you would like to call out on how we should model some of these ramp-ups in these deals? Second part to that is that, for a contract like this, and I think we've also seen some dilution that came in because of the large deal ramp-up in Q3. Nilanjan, you spoke about a portfolio approach. When you think about this portfolio, what kind of a timeline do you typically price in? For these deals to mature and then for margins to start coming up the curve, so to speak. Let me start with the first part. Salil here. We're not given anything more specific beyond what Pravin shared earlier in terms of sort of broadly on deal ramp-ups from the Q3 bookings. What I can say is the way this has been put together, where we have a lot of the work that relates to data centers and the workplace transformation, and all of that underlying with the cloud transformation to private cloud. We see that once this is gotten into a steady state, it's really the foundation of many things that we can do, which run through on a steady basis over a number of years. But the timing of that, we've not given anything more specific, which can give you a sense today of when specifically, the revenue will come up beyond the comment that Pravin made on Q2. Let me now pass it to Nilanjan for the margin profile on these large deals. Like I mentioned earlier, we have various kinds of large deals. Some of them come initially with margins which can bind with portfolio or a tad below portfolio. Some may be initially ones which require dramatic transformation because they are 100% on-site. There's no automation which has been done. Client expects savings from day one. Once we go in, we are very, very clear over the deal cycle. Typically, these are five, seven-year deals that we model literally on a quarter basis, what is going to be done in terms of an intervention of moving work on-site, offshore, putting automation inside, the pyramid side of it. I think we look at that very, very holistically and as part of the bid process so that we are very clear that there is a trajectory in the margins as well. That's an ongoing process. Like I mentioned, we've been winning large deals over the last three years, accelerating them quite sharply. Yet we've seen an improvement in margins because the way we've talked about it is these elements start kicking in. At the same time, new deals come in at lower margins whereas the existing deals start maturing and giving portfolio margins. It doesn't mean that every deal will exactly be in line with what your operating margin of the company is. There are deals above the operating margin profile of the company, and there are deals which are below that. It's a portfolio which we continuously look through and focus on the cost side. Got it. You spoke about potential margin levers, where one of it was the offshore mix. Pravin earlier alluded to how it's one of the lowest offshore mixes that we've seen in a while. What is the room here that we have for further offshore mix shift? Sorry, lower on-site mix so far. What's the potential there? Secondly, on utilization, has anything structurally changed in how we look at utilization as a result of remote working and better employee allocations over various locations? My question here is this, can these mid-80s utilizations structurally move up from where they are? I think on the on-site offshore mix, yes, there has been some firstly temporary benefits, because of curtailed travel, and therefore people have not been able to travel overseas as well. Having said that, I think the bigger strategic opportunity is that with work-from-home clients are now seeing over the last year SLAs have been delivered on par. There's been no impact on whether signing deals or delivering. Therefore, the confidence of clients in terms of offshoring has also started improving. In fact, we are also now solutioning ourselves so that we can give a nearshore facility. Canada is a nearshore base for the U.S. We have Mexico, both have seen dramatic growth in this time as well, Mexico being a low-cost location. It's a combination of remote working in our hubs where we can create a pyramid, that's one lever, then move on to nearshore and then finally onto offshore. I think these are three things which we can continuously press on. I think this opens up large opportunities. Of course, if travel comes back, there could be some temporary lull, but secularly, I think the downward decline is quite clear. On the- On the utilization piece. Let me add on the utilization, Pravin here. I think utilization, as I said, is at a record high. This is not where we want to be. In the past few quarters, I think we have had comfort in operating between 83%-85%, and that's where we want to be. We will look at much more aggressive hiring over the next few quarters and try to bring down the utilization to manageable levels. Thanks for taking my questions. Congrats on a good quarter, and all the best for the rest of 2021. Thank you. Thank you. The next question is from the line of Moshe Katri from Wedbush Securities. Please go ahead. Hey, thanks for taking my question, and congrats on very strong results. I have two follow-up questions. One is confirmation regarding margins. Pravin, I think during the last call, you indicated that some of the margin gains that you've seen in FY 2021 will not be sustainable into FY 2022. Given some of the commentary that you made today, is that still the case? It seems that you're talking about some margin leverage. You're talking about some encouraging signals of an accelerating the offshore trend, and one of your former executives suggested in a call that we hosted last week that he hasn't seen this acceleration into offshoring in about 10 years. The second question is more about the sustainability of what we're seeing right now in terms of the demand trends, the pipeline, and et cetera. Maybe you can give some color on both of these. Thank you. I'll take the first question, Moshe. Like I said, we are at, in the first nine months, at 24.5%, and we have the wage hikes coming up in quarter four, that clearly will have an impact. As we look into next year, there could be some easing off of travel, et cetera, which will have some cost pressures. Now, having said that, we said we also parallelly will work on our cost optimization levers, which is something we continuously work on. We are not at this stage saying that there's a margin guidance out there for FY 2022, just the color of what's coming ahead. We will have these cost pressures; we would also work on the cost optimization in parallel. On the second question regarding, at this point, what you're seeing, in terms of sustainability, some of the trends that you're seeing, in terms of pipeline strength, and maybe you can elaborate on what percentage of the mix in terms of the bookings came in from new logos versus renewals. Thank you. Let me take a crack at- Pravin Mix. Go ahead. Okay. Let me start on the sustainability trends, and then on the mix study, you can go ahead. I think the way we see the pipeline and the movement of the deals, we still see a good demand environment across all the industry segments, as we had referenced at the start of the call. There are some where the strength is quite exceptional, but overall, all of the industry segments are moving in a positive direction. On the mix, I think, to your point on the offshore mix, there, we've seen good movement this year. Of course, with some of the travel restrictions coming off, we will see some more movements from offshore to onsite. Our recruitment engine onsite is very strong as well. We wait and watch how that plays out. We don't see that it's immediately going to change because fundamentally, clients are seeing that delivering remotely from whichever location is more feasible for a broader set of functions. We feel quite comfortable that over a period of time, that will work to our benefit in terms of the mix and therefore in terms of margin. Pravin, over to you on the mix. On the mix, again, we normally call out only what is net new and what is renewals, in this quarter it's 73% net new. If you look at for the nine months of the year, when the total TCV is $12 billion, the net new is $9 billion of that. From that perspective, I think in the past nine months we have seen a significant percentage of revenues coming from net new, which gives us good comfort on the growth momentum in the coming few quarters. Obviously, there is also a mix of new logo that's come as part of this mix. Like for instance, last quarter we had Vanguard, which was one of the large deals we announced, this was a new logo. We particularly don't call that out. I mean, we normally look at what is net new and that gives us a sense of deal flow and the growth momentum for forthcoming quarters. Thanks for the color. Thank you. The next question is from the line of Pankaj Kapoor from CLSA. Please go ahead. Yeah. Hi, thanks for the opportunity. Nilanjan, I had two questions to you. First is on these very large transactions that you are now signing. Are the commercial terms of these deals any different from the regular deals that we do? What I'm trying to basically understand is that, how is the cost of treatment done? Sorry to interrupt you, Mr. Kapoor. Your audio is not very clear, sir. Mr. Pankaj Kapoor, your audio is not very clear. Yeah. May we request you to check? Sure. Is it better now? Yes, it is. Thank you. Okay. My question was for Nilanjan. What I was trying to basically understand is the commercial structure of these very large transactions at a generic level. Are costs in such deals typically flow through the P&L, or do we have like we do it typically in a regular deal, or can some of these be capitalized also? That is one thing which I'm trying to understand. My second question is on the next year's wage revision. I mean, one of your peers, of course, is talking about FY 2022 be a normal year. Are you also expecting that the wage hike for next year will follow the regular pattern of being in April or sometime mid-year? These are the two questions I had. Thank you. Yeah. On the first question, I think all deals, and even Pravin mentioned they're all different. Some of them may have rebadging elements, some of them may have a comprehensive infrastructure with software. It depends on deal to deal. I think there's no standard answer or a generic way we can answer that question. Some of them may have a pass-through, and some of them may not. It depends, service elements versus entire transformation elements. That's quite different across deals. I don't think there's anything specific we can say more than that at this stage. On the second one, let me address that with respect to the wage hike. We've announced the salary increase effective January 1 of this year. We've not made any comments with respect to the next year situation. We will come to that once we conclude this and start the next year. At that stage, we will share with you what the approach is. Salil, I just wanted to also call out. Yeah. I wanted to make a correction to my last response to Moshe, I think. I said total TCV of large deal wins for nine months of $7 billion, which is correct. The total net new out of it is $8 billion. I think I said $9 billion. It's not $9 billion, it's $8 billion. I just wanted to clarify that. Understood. Thank you, and wish you all the best for the year. Thank you. The next question is from the line of Sudheer Guntupalli from ICICI Securities. Please go ahead. Yeah. Good evening, gentlemen. Congrats on a good quarter, and thanks for giving me the opportunity. Salil, regarding the large deal, for a deal of this size, we assume almost all the Tier 1 vendors might have aggressively competed. Some of them might be native European companies, some of them might have a larger revenue base in Europe or in the infrastructure kind of service offerings. Can you help us understand what are the, let's say, three, four variables that have given Infosys that extra edge to win this deal over the competition? There, you're right. This is an extremely competitive situation with several European, U.S., and Indian companies competing for this work. One of the elements that really stood out that I could see, and we could see, was what we understood from the client to be the technical strength of our solution. This is a solution which is built on something we've shared before, the Infosys Cobalt in the cloud. The approach that we put together to give the client a solution which was both flexible, scalable, and secure while globally spread-out operations of theirs could enable it was really valued by them. We also benefited, I think, from the way that we made sure that all the different elements of their business objectives in how they wanted to focus on their business and how they wanted to perform the cloud journey, we incorporated quite fully into the solution. This is really extreme win in that sense from the technical capability perspective. That's why we are extremely delighted because it opens up a new area for us, something in which we were previously doing well, and now we can do further better as we go ahead. Sure, Salil. Second question is on the gross client addition during the quarter, which seemed to be significantly higher than the typical run rate in the previous quarter. I think we are at around 139 odd clients. Can you please throw some more color on what has driven this strong addition, nature of these clients, their potential scalability, and if this has to do with the entry into new sub-segments that Pravin has spoken about in his opening remarks? Let me request Pravin first to address it, and if there's anything else, I'll come back. Salil, I missed the question. Can you repeat it? Sure, sir. Basically, the gross client addition during the quarter, it seemed to be significantly higher than the typical run rate in the previous quarters. My question is, if you can throw some more color on what has driven this strong addition and the nature of these clients' potential scalability, and if this has to do with the entry into some new sub-segments you spoke about in your press meet and in your opening remarks as well. I think we had seen strong new account openings and new logo openings across sub-segments. I don't think there's any secular trend. We are seeing good openings across many of our segments, and this has been consistent over the past few quarters as well. I don't see any pattern in this or any specific thing. Again, the opportunities also vary. In many of them, we are opening the doors with transformational opportunities. A few of them are opening with large deals. It's a combination of things. There is no specific pattern or anything specific to a particular sub-segment. Yeah. Just to add to Pravin's, I think there's also some client additions we've had due to the new acquisitions we made. Sure, sir. Thanks. That's very helpful, and all the best for the future. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Salil, do you want to give some closing comments, please? Yeah. Thanks, Sandeep. First, thank you everyone for joining us for this session. As you can see, we are extremely delighted with the performance for this quarter. Stand out being exceptional large deals win, a phenomenal growth at 6.6% year-on-year, and a strong operating margin performance backed up by extremely robust cash collection and conversion that was noted. We feel confident to revise the guidance upward as we shared on both revenue and margin, and we have a strong outlook as we go into the next financial year, which will start for us in April. Overall, extremely delighted with this, and thank you again, everyone, for joining us. Thank you very much, members of the management. Ladies and gentlemen, on behalf of Infosys, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.