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. Thanks, Margaret. Hello, everyone, and welcome to Infosys earnings call to discuss Q3 FY 2022 results. I'm Sandeep from the investor relations team in Bangalore. Let me begin by wishing everyone a very happy new year. Joining us today on this earnings call is CEO and Managing Director, Mr. Salil Parekh, 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 and Nilanjan. After that, we'll open up the call for questions. Please note that anything which we say that refers to our outlook for the future is a forward-looking statement which might 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. It can be found on www.sec.gov. I'd now like to turn it over to Salil. Thanks, Sandeep. Good evening and good morning to everyone on the call. Wish you all a happy new year and trust you and your dear ones are well and safe. Thank you for making the time to join us today. I am delighted to share with you that we had an extremely strong quarter with 7% sequential growth and 21.5% year-on-year growth in constant currency terms. Our year-on-year growth was the fastest we have had in 11 years. The growth was broad-based across industries, service lines, and geographies, driven by our differentiated digital and cloud capabilities. A strong broad-based growth in a seasonally weak quarter is a clear testament to the enormous confidence clients have in us to help them accelerate their business transformation. This has been made possible by the relentless commitment from our employees through these challenging times. I'm extremely proud as well as grateful for their extraordinary efforts in delivering success for our clients. Our growth has been accompanied by resilient operating margins of 23.5%. We delivered these margins while keeping in the forefront our focus on our employees with increased compensation and benefits. Our digital business grew by 42.6% and is now 58.5% of our overall revenues. Within digital, our cloud work is growing faster, and our Cobalt cloud capabilities are resonating tremendously with our clients. Some of the highlights of our results are revenues at $4.25 billion, where the growth 21.5% year-on-year and 7% sequential in constant currency. Broad-based across all industries, service line, and geographies. All of our segments reported strong double-digit growth. Large deals at $2.5 billion. On-site mix at 23.8% and utilization at 88.5%. Operating margins strong at 23.5%. Free cash flow at $719 million. Attrition increased to 25.5%. Our quarterly annualized attrition was flattish on sequential basis. We had a net headcount increase of 12,450, attracting leading talent from the market. We've increased our annual college recruiting target to 55,000, and Nilanjan will comment more on this. We remain comfortable with our ability to support our clients in their digital transformation journey. Financial services grew at 15.5% in constant currency with broad-based growth across geography and steady deal wins. Various subsectors like lending, mortgage, cards, payments are seeing increasing demand, and clients are driving cloud transformation initiatives to build resilient and scalable platforms. The retail segment growth was 19.8% in constant currency. Across subverticals, we see increased client spend on digital transformation, including digital supply chain, omni-channel commerce, and large-scale cost takeout initiatives to improve business resilience. We signed six large deals in this sector, in this segment during the quarter. The communication segment grew at 22.2% constant currency. Segment performance continued to improve with ramp up of recently won deals. Client budgets are focused on digital and customer experience programs, increasing networking infrastructure, cloud adoption, and security, with emphasis on 5G rollout and innovation spend. Energy, utilities, resources, and services vertical continues its steady performance with 13.6% constant currency growth and five large deal wins. We have seen gradual improvement across various businesses as consumer spending continues to increase and clients focus on increasing technology transformation around areas like customer experience, cybersecurity, and workload migration to the cloud. Manufacturing segment growth accelerated to 48.4% in constant currency. With continued ramp up of the Daimler and steady momentum in new deal wins. We see across-the-board improvement within various subsectors and geographies and expect client focus to continue in areas like smart manufacturing, IoT, digital supply chain, and connected products. High-tech growth improved during the quarter to 18.9% in constant currency. Clients are seeing renewed momentum in terms of spending on digital transformation programs linked to customer, partner, and employee engagement. Life sciences segment performance also improved further to 29.2% growth. Adoption of digital health, tele health, and patient access programs are resulting in significant uptake of cloud, IoT, patient-facing applications, patient portals, and next generation CRM work. We had a very strong performance on our income tax program in India. Over 5.8 crore or 58 million tax returns were filed using the new system by the deadline of December 31, 2021. On the last day, over 46 lakh or 4.6 million tax returns were filed, and during the peak hour, over 5 lakh or 500,000 tax returns were filed. We are proud to be supporting the digital strategy for India and for the government and working on this program for future modules that will be developed. Across digital services in Q3, we have been ranked as leader in 12 digital service related capabilities from artificial intelligence and automation, cloud services, IoT, engineering, modernization, and big data and analytics. The strong overall performance stems from four years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continuing reskilling of our people, and deep relationships of trust our clients have with us. With the strong momentum in the business and the robust pipeline, we are increasing our annual revenue growth guidance from 16.5%- 17.5%, moving up to 19.5%- 20% in constant currency. Our operating margin guidance remains at 22%-24%. With that, let me hand it over to Nilanjan for his update. Thanks, Salil. Hello, everyone, and thank you for joining the call. Let me start by wishing everyone a very happy and safe 2022. Q3 was another successive quarter of continued accelerating revenue at 7% constant currency Q-on-Q growth and 21.5% constant currency year-on-year growth, the highest year-on-year growth in the last 11 years. Despite the Q3 seasonality, we registered strong job-based growth across geos and verticals. Our largest geography, North America, grew at 21.4%, while growth in Europe accelerated to an impressive 27.2% year-on-year in constant currency terms. Retail, communication, manufacturing, and life sciences also saw 20% or higher year-on-year growth in constant currency. We won 25 large deals, and large deals being those with over $50 million PCV, totaling $2.5 billion of PCV. six in retail, five each in financial services, communication, and energy, utilities, resources, and services, two in manufacturing, and one each in high-tech and life sciences. Region-wide, 16 were from the Americas, seven were from Europe, and two from ROW. The share of new deals increased in Q3 to 44%, 44% within the large deal numbers. Client metrics improved further with 100 million client count increasing to 37, an increase of eight YoY. We added 111 new clients in the last quarter. Operating parameters remained robust. Utilization was 88.5%, slightly lower than the previous quarter, easing some of the supply side pressures. On-site efforts mix ticked up marginally to 23.8%. Q3 margins remained resilient at 23.5%, a marginal drop of 10 basis points versus previous quarter. The major components of the sequential margin movement were as below. 80 basis points impact due to comp hikes and promotions and other employee interventions. 46 basis points impact due to the utilization decline. These were offset by about 20 basis points benefit due to the rupee and other cross-currency movements. A 50 basis points benefit due to cost optimization and another 40 basis points benefit due to SG&A leverage and other one-offs included within. Q3 EPS grew by 11.2% in dollar terms and 13.1% in rupee terms on a year-on-year basis. Although DSO increased to 71 days due to higher seasonal billing, an increase of five days versus the last quarter, it is still a reduction of two days versus Q3 of prior year. Free cash flow for the quarter was healthy at $719 million. Free cash flow as a percentage of net profit was 93% for Q3 and 104% for the nine months to date. Yield on cash balances improved to 5.29% compared to 5.13% in Q2. Our balance sheet remains strong and debt-free. Consolidated cash and investments at the end of the quarter stood at $4.28 billion after paying over INR 850 million of interim dividend during the quarter. Return on equity increased further to 30.4%, an increase of 3% over Q3 of the prior year, driven by robust performance and consistent capital returns through share buyback and increased dividend payout. On the employee front, quarterly long-term, twelve-month attrition increased to 25.5%. As Salil commented, while LTM attrition continues to increase due to the tail effect, quarterly annualized attrition was flattish compared to Q2. We will continue to invest in all aspects of talent retention, including compensation, promotion, skill incentives, learning and career progression. We have also simultaneously increased the pace of hiring, talent reskilling and the usage of sub-con to prevent any impact on client commitments. We have added over 12,450 employees, talented employees on a net basis in the last quarter, which is the highest ever. Our global college graduate hiring program for this fiscal has been increased to over 55,000 versus the previous quarter number of 45,000. In India, over 92% of Infoscions have received at least one dose of the vaccine. Over 90% of our employees globally are presently working in remote environments due to the heightened precautions against the new variant. Driven by robust demand environment and our continued market share gains, we are further increasing our revenue guidance for FY 2022 to 19.5%-20% in constant currency terms from 16.5%-17.5% earlier. The margin guidance remains unchanged at 22%-24%. 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Anyone who would like to ask a question, please press star and one at this time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ankur Rudra from J.P. Morgan. Please go ahead. Thank you. Happy New Year to everybody. Excellent numbers for the quarter. Clearly, you know, very, very strong growth for the third quarter. Could you maybe start with elaborating where the incremental execution came from, versus the previous full year forecast? Why was the difference so sharp? Hi, Ankur, this is Salil. Sorry, you broke up a little bit. You said where was the incremental? Where the incremental surprise came from? The full year guidance has been increased very sharply given the performance of the quarter. Where did the surprise come from? Oh, yeah. Okay. There, I think what we are seeing in the quarter and then all through the year is the demand environment remains extremely strong and then more and more traction on the digital and the cloud programs. This is where we saw the most impact in the quarter in Q3, where we have this really strong growth of 7% and therefore the overall guidance jumping up by 3%. In terms of verticals, as I was sharing earlier, it's really broad-based. Of course, we have very strong momentum in manufacturing. That was something that we were looking forward to. There's also good momentum that we are seeing in financial services given it's our largest vertical and in life sciences that I described before. Retail is starting to come back nicely as well. As Nilanjan mentioned, Europe again was standout. Those are some of the elements that gave us a good outcome in Q3 and then the support for expanding the margin for the full year. Sorry, the guidance for the full year. Thank you, Salil. Salil, the growth trajectory has continued on a YoY basis for the last six quarters. Sorry to interrupt you, Mr. Rudra. Your voice again, it was breaking. Apologies. Let me try again if you can hear this time. Growth trajectory. I'm afraid, sir, your voice is not clear. I would just request you to please check your phone line and rejoin the queue. In the meanwhile, we'll move to the next question, which is from the line of Moshe Katri from Wedbush. Please go ahead. Thanks. Happy New Year, and congrats on very strong results. I know this is, we just reported Q3, but are you ready to talk a bit about the entire calendar year down the road, 2022? You know, what's changed in terms of visibility? Maybe, I guess the biggest question is gonna be if this is sustainable down the road, and what can you talk about in terms of color to give us that comfort? Then on top of that, maybe you can talk a bit about some of the cushion and margins and what sort of levers that you have in the model, especially, as some of the bench continues to benefit from the off-campus recruiting that's been pretty robust. Thanks a lot. Thanks, Moshe. This is Salil. I'll start off with the first part, and then Nilanjan will comment on the margin levers. Of course, as you reference, we have guidance through March 31. March 31 of this year. The color for this calendar year, broadly we see the demand environment remaining strong. The client budgets are looking good. Our overall pipeline is the largest we've had in a very long time. The number of large deals that we were able to close in the large deal share are 25 large deals, each over $50 million for a total of $2.5 billion and 44% of these are net new. All of those things are giving us good confidence for what we see going ahead. Of course, we will have our guidance for our financial year in April. Nilanjan, over to you, please. Yeah. Thanks, Salil. Hi, Moshe. On the margins, like I mentioned earlier, they were quite resilient for the quarter. I think a couple of things I just want to call out, of course, you know, in Q4 we pulled the cost levers, you know, whether it's the on-site ops or mix, it's the pyramid, whether it's automation. Of course, these are something which we continuously deploying. Going ahead, of course, subcon cost for us has really ramped up, and that's some areas we will continue to look ahead. The other thing is, of course pricing and it's important to talk about that as, you know, the higher cost start from now feeding into our new deals, et cetera. I think that should hopefully have a benefit. Of course, as digital talents start getting pricing, we are able to show, you know, value to our clients in terms of the business transformation. Now, again, this is something we have started recently. It will take time to kick in, and we talked about it in the last quarter as well. Really that is the focus, if we can start getting into both our cost side and also making sure that we are not leaving any, you know, free cents and dollars on the table, as part of our pricing negotiations. Thanks, guys. Good luck. Thanks.[crosstalk] Thank you. The next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead. Hi. Good evening, everyone, and thank you for taking my question. Congratulations on great set of numbers. My first question, Salil, was around going into this calendar year. So the one of the largest peers so far have indicated a very strong growth to continue through this year. So looking at our portfolio of capabilities and offerings, do you see that we are well aligned to meet or beat their growth numbers? Or do you see that we need some intervention to build up our own capability to continue this strong growth going ahead? Thanks for that question. I think, in terms of our capability set, we have a strong portfolio across digital and cloud. Our Cobalt set of capabilities is resonating extremely well with our clients. We see the growth in digital really a reflection of the focus we've had on making these choices over the past four years and positioning the portfolio to where the client is looking for work. We also see the cloud capability faster growing than our digital capability. Yes, we are well-positioned to benefit from this. In addition to that, we have a strong set of capabilities in automation, in modernization. We're even seeing across services, which is now stable this quarter in terms of growth. It's not shrinking. Our view is that our set of capabilities and portfolio are reflecting what our clients' expectations and demands are. We have the ability to meet all of those from the capability perspective. We also have the capacity with the expanding recruiting at the college level and our ongoing recruiting ability to attract talent, which is helping us to deliver on our projects on a regular basis. We feel quite good about how we're positioned as we go ahead into the next year as well. Thanks for that, Salil. My next question was around the margin guidance band, which we have 22%-24%, and currently we are trending towards the upper end of that. How should we see that? What is it an indication of? Is it that you want to keep a flexibility with yourselves in anticipation of any large deal or any cost headwinds potentially coming from that? Or is there an indication that you're looking at some major cost trends which are going to come in coming quarters and hence you are maintaining this margin guidance band? Yeah. I think the margin guidance for us is really a comfort range within which we operate. We really don't, you know, fine-tune that as the year progresses. This is a band which we are happy to be in. It was 21%-23%, you know, just before COVID. Now we are 22%-24%. That's more like a, you know, a rail for us rather than anything else. I think, looking ahead, we continue with cost focus. We know there are cost headwinds, which potentially in terms of employees, et cetera, could be travel into the next year. Like I said, we have a very robust cost optimization and a few levers which we continue to deploy. We feel quite confident on this. Okay. More of a reflection of flexibility that you want to keep with yourselves. Got it. Thanks a lot for those answers. I'll fall back. Thank you. The next question is from the line of Keith Bachman from BMO Capital Markets. Please go ahead. Yes. Thank you. I wanna pick up on that line of questioning. If you could just talk about the puts and takes, as you see margins over the course of the next three, four, five quarters, really calendar year 2022. I wanted to see if you could address what you think the impact would be for a few things. For instance. One of the headwinds this quarter was utilization. How should we be thinking about utilization trends during calendar year 2022? Number two, could you speak to I think you said attrition was flat sequentially. How do you think about attrition trends over the course of calendar year 2022? Do you think that they can move lower or is the market such that demand's so strong that attrition will probably remain elevated? Then number three would be, you just brought up travel or any other issues that we should be thinking about that may impact calendar year 2022 margins and any other issues you wanna bring up. That's it, Nilanjan. Thank you. Yes. I think that we don't give out the margin guidance for the next year. Now having said that, looking at the headwinds, which we actually face pretty much every year, you have your compensation hikes, you have clients coming back for discounts on renewals. Some of that you offset with the cost optimization program which we run. I mentioned that a bit earlier in terms of whether it's a pyramid, whether it's subcon, whether it's automation. New lever which we're looking at is pricing. That's something which we are continuously working on and remain quite confident. Of course, travel is one thing which is quite unknown at this moment in terms of when does it come back. Even if it comes back, does it come back to pre-COVID levels or, you know, with favor, with a slightly lower level? We'll have to work out for that, really. In terms of attrition, I think it's a larger industry issue. It's not peculiar to us. Fundamentally, I think it's largely stemming from that, the volume increase for this industry fundamentally has to come from freshers, right? Otherwise, it's a zero-sum game in terms of, somebody else's attrition is my lateral and my attrition is somebody else's lateral. As long as our fresher intake starts increasing, because first they have to come into training, then they go into production after three or four months. That will take time for this industry to start absorbing. I think that's something which will help with the attrition in the medium term. Like I said, we have seen attrition flattening sequentially on a quarterly annualized basis. Looking ahead, we are seeing some positive signs, but it's too early to say whether it will dramatically come down. Like I said, as freshers feed into the system, we should see the overall environment in terms of attrition in the market really worsen. Okay. Any comment specifically on utilization, you think a help or a hurt or neutral, just broadly? And as part of that- Yeah. I notice your offshore% of labor increased YoY. Is that also a trend that you think continues given the dynamics in front of you? I will cede the floor thereafter. Yeah. In terms of utilization, of course, this is higher than what we would normally like to be. You know, we'd rather operate at, you know, sort of 85%-86%. Having said that, even if we bring this down in the future, in terms of cost, it's largely offshoring, which because all the effort is, you know, 75% of our effort is sitting there. Utilization doesn't as directly link to the margin because of the way the offshore costs operate. That's one factor. I think there was a second question on onsite offshore. Onsite. I think in the long run. Yes. I think, yeah, the long run, if you see, I think COVID, while it had this huge impact on demand, I think the entire ability for this supply side to be delivered in a remote environment really, I believe, will shine out. Because really that has opened up the eyes of many of our clients that really every sort of work doesn't have to be done nearshore. It can be done, you know, I mean, onsite, it can be done in nearshore locations, it can be done offshore. I think the beauty of that is secularly we believe this will help the industry in much more larger offshoring at an overall level. Of course, part of that benefit will be more shifting work to offshore locations. I think this is a good sign. I think there can be short-term impacts like we see this quarter, you know, 10, 20 basis points here and there, but the secular trend we think will continue to see that the you know the large labor markets available in India will open up a lot more offshore opportunities. Terrific. Many thanks. Congratulations. Thank you. The next question is from the line of Diviya Nagarajan from UBS. Please go ahead. Thanks for taking my question, and congratulations on a very impressive quarter to the team. My question is on pricing. Salil, we've seen now several quarters of strong demand, and it looks like we are looking at another year, looking at the run rate that you're exiting the calendar with, of pretty strong demand as well. You just discussed supply in the last few comments that you made. How do you see pricing really trend in the next 12-18 months? Is there an opportunity for this to go up on a like-to-like basis? Hi, Diviya. Thanks for that question. This is Salil. I think on pricing first, we've seen some level of stability in what we saw in the specific deal that we closed in Q3, versus Q2. On the longer term, Nilanjan has shared in the past, we've placed a very focused effort on communicating the value that we are helping create with our clients through the digital programs. We're also seeing, as we've shared, wage increases. We've done three of them in the last 12 months. Broadly, we are seeing Large enterprises for the first time in a very long time are seeing inflation in their daily environment, and so are more open to having these discussions. With these factors in mind, we feel we will see some more value that we can bring in through communicating and demonstrating our digital impact that we're creating through those programs. That, while it will not be immediate, but over the next several quarters, in my view, will help us to build out more resilience in the margin profile. Got it. You earlier enumerated your, you know, skills and capabilities, but if you were to kind of think of any future investment that you're going to make, in which direction would you kind of direct those that investment to in terms of your skills and capabilities? Today, the biggest drive within our clients is really cloud. Our Cobalt capabilities are very strong and we are constantly enhancing it. Whether we look at the public cloud partnerships, we have also a very strong ecosystem of private cloud partnerships, and we have a good ecosystem with the SaaS players, extremely strong cloud-native, cloud-first development. Those will be really the first area where we are already leading, but we will continue to grow. We have the areas which focus on cybersecurity, which focus on data and analytics, which focus on IoT. Those are the areas which we are seeing this incredible traction with our clients, where we have a very strong innovative organization and automation are leveraging artificial intelligence and machine learning. We'll continue to build that out. Our approach is going to be to drive all of these through our current margin profile. That's what we'll drive through as opposed to adding new plays for Fair enough. One last bookkeeping question. Your other segment had a big swing this quarter. Is there anything particular that we should be looking at here? Anyone else, or is it something, if not, what drove that expense base? Yeah. I'll take that. That's coming from India. We have some seasonality with some of our clients towards the quarter end, and that you'll see also in the geography sector of India. Got it. Thank you, and wish you all the best for 2022. Thank you. The next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead. Thanks for the opportunity and congrats on good set of Sorry to interrupt you, Mr. Mehta. I would request you to come closer to the phone. Sorry, can you hear me better? Yes, this is better. Please go ahead. Yeah, I had one question on the third party bought out items for service delivery. That item seems to have gone up by almost $71 million this quarter, almost 1.8% of revenues. Just wanna check, what does this pertain to? And is it possibly related to the data center takeovers that we would have been done in some of our large deals? Salil, you wanna take that? Yeah. You go ahead. Yeah. I think, as we're looking at many digital end-to-end transformations, whether it's, you know, IT as a service, full stack transformations, these involve infrastructure, SaaS, you know, data. It's a full stack transformation, and in many cases these involve infrastructure and software as well. These are bundled deals, which are, you know, end-to-end transformations, and we think they're very, very important as well going ahead when we look at these digital transformations. I think, as part of our overall deal profile, we continue to see these deals giving us, you know, increased, you know, visibility into the organization IT infrastructure and allowing us future deals ahead once we are pretty much front and center in the IT landscape. That's what these are. Okay. Fair enough. Just one last question in terms of our margin outlook over the near term. Do you think with the attrition starting to on a quarterly annualized basis normalizing, the interventions that are required possibly go down in the near term so that we can possibly make a higher exit at the end of this year, so that we can maintain margins in next year as well? Yeah. Like I said, we haven't seen a decline as yet. These are flattening, and this probably will start inching up. We will continue to do what it takes to invest behind our employees, because we know this is more than the comfort range which we'll be happy in. I think it's premature to say when this will really come off, but as of now we are focused on doing all these interventions. This quarter itself, like we mentioned, 80 basis points of our margin was behind these informed interventions. Okay. Thanks a lot. Congrats again and all the best. Thank you. The next question from the line of Sandip Agarwal from Edelweiss. Please go ahead. Yeah, hi. Good evening to the management team. Happy New Year, and thanks for taking my question. First of all, congratulations on a very good set of numbers. Salil, I have a very simple question. We see now, you know, our core, which is 41%-42% of the business, is stabilizing on a YoY basis. It is probably stagnant. Little growth is there, but digital continues to be at 40%+ growth. If this trend continues next year, maybe, you know, our core will become 32%-33% of the overall pie. What is your sense from a long-term perspective? Where do you see this core stabilizing? Or you think it will be very unfair to, you know, see them separately and in next two, three years you think everything will converge together? Any idea, anything which you can share on that front would be very helpful. Yeah. Thanks for that question. This is Salil. First, as you pointed out, the digital growth is very strong at over 40% or 42%, and that shows the resilience, the demand profile and a portfolio which is overlapping. The key for the core, instead of looking at the percentage of the business, the key for us is really that core is now stable with a very small growth. We didn't see the decline that we had for some quarters. This makes it extremely strong for us. We have probably the best capability in automation and modernization across the industry. With this, while everyone else's core is still shrinking, ours will be stable or possibly even have a small uptick. That means we'll be the most competitive in this area. I'm really looking at this as a very positive step. We of course have to maintain this, and we have to keep building out our automation capabilities. If we succeed in that, I think that has a very good outlook for us in the quarters ahead. Yes, thanks. That's very helpful. Best of luck for the current quarter. Thank you. Thank you. The next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah. Hi, good evening, everyone, and thanks for the opportunity. I had two questions. The first is on the employee side of things. I think over the past, if you look at the employee cost under cost of revenue, it's consistently been, as a percentage of revenue, it's actually below what it used to be pre-COVID. A lot of the growth has actually been added on the subcon side of things. Even if you look at the numbers, it looks like most of the additions are all freshers. Keeping this dynamic in mind, just wanted to understand as we go forward and maybe attrition sort of normalizes, how do you see this subcon sort of evolving from an operational perspective? Do you think you'll have to hire these subcontractors directly onto your roles or... Would that involve, you know, slightly higher costs? How should one think of this dynamic overall? Was the first question. The second question was around the digital proportion of the business has meaningfully gone up. If you look into the next year, I'm sure it'll be even higher. From that perspective, does that mean that our ability to sort of garner price increases will be far higher going into next year than what we see today? Thank you. I'll take the first question on subcon. As Salil said, the demand environment is so strong that we don't want to leave anything on the table. Therefore, whether it's through subcon, whether it's through lateral or freshers, we will first intend to fulfill that demand. Of course, over a period of time we will optimize that entire structure. Whether it is programmed to rehire some of the subcon, some of them will, of course, lapse, and we will get new lateral hires, some we will promote from within. That dynamic will play itself out over the next year. At the moment, it's critical that we don't leave any demand on the table. Of course, this will remain a optimization lever for us. We were one of the lowest in the industry at about 6.9% pre-COVID, and we are at above 11% now. This is a lever we will have over the medium term to optimize. Salil? On the pricing, as the digital work will increase, what we have been putting in place, which is demonstrating to our clients the value creation through digital, will give us a larger opportunity for that because the revenue will be larger. I think your assumption is absolutely valid. We will have an additional ability to do that, as long as we execute on that value. Perfect. Thanks for that. Just a clarification on the first answer. On the first one, considering fresher additions are so strong this year and subcon is so strong, does it mean that next year our ability to add as many freshers will be a little more inhibited in the sense that we need to focus a little more on laterals next year? Is that a way to think about it? No, I don't think so. I think we will continue our very robust fresher program. It's always been there. We have a strong internal rotation program, so people will, based on the skills they're taking through our, you know, reskilling program, we will move them to new projects, promotion. In that sense, we think it will be a combination of both laterals and freshers as well. I don't think we see any change in that. Fair enough. Thank you so much, and all the very best. Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Yeah. Thanks for the opportunity, and congratulations on a solid execution both on revenue and margins. The first question is, CY 2021 or FY 2022 had a benefit of mega deals wins, especially from Vanguard as well as Daimler, as well as some amount of pent-up demand for you as well as the industry. The question is, entering into next year, do you believe that these elements, one has to take care in terms of tapering off any growth in the next year? Or do you believe the digital adoption journey, cloud adoption journey has a low penetration, which does not make us upset in looking in the next year in terms of the growth momentum as a group? Thanks for the question. First, the guidance increase, as I'm sure you've seen a stronger year-ending March of this year. We are not yet commenting in terms of quantitative guidance for next year. What is clear nonetheless is the demand environment remains strong. Our portfolio of services and capabilities, especially on cloud and digital, are resonating well with clients, and we see a good pipeline for that. Our large deals in this quarter are also very strong. We continue to see a good large deal pipeline. We've seen a steady expansion of our clients over $50 million, $100 million, $200 million, and so on. We see that expansion within clients is working very well as well. Our new client wins, new accounts are working well. Overall, we have the various elements of continuing the demand environment strongly. We don't have a specific guidance yet for April 1, 2022 or year starting in April 1, 2022. Fair enough. Just last two bookkeeping question. The way I look at is Daimler deal has two legs to ramp up, one being the rebadging and employee-related ramp up, and second being the passthrough data center-related ramp up. Is it fair to say that most of these two legs ramp up is largely behind or may continue in Q4 as well as one Q of next financial year? Second, in terms of FY 2022 wage hike, is it largely over or something is due in the fourth quarter as well? On the Daimler, we don't have any more specifics. I can understand what you're looking for, but we have not gone into those specifics now with Q3 and Q4. The overall guidance increase of the revenue covers all of that, including Daimler and many other clients, and especially with Q4 in the seasonality of that quarter. In terms of salary and compensation increases, we have done three of them for this year. There is nothing specific that is planned for Q4. We will start to look at what we will do in the next financial year that is coming up, but nothing specific is being planned in Q4. Okay. Thanks and all the best. Thank you. The next question is from the line of Manik Taneja from JM Financial. Please go ahead. Hi. Thank you for the opportunity. Just wanted to understand, we've seen a significant increase in offshore mix of revenues over the last 18 months, and this quarter saw a slight aberration. What caused that, and how do you see this metric going forward? Thank you. We can tell you the mix has changed over the last 18 months with a lot of the remote working that was put in place, work from home, allowing the work to be delivered from a different location with tremendous ease and efficiency. What we saw in the last quarter was a little bit, things have opened up in terms of traveling. We've also been extremely optimal in what we have done in the previous quarters. This is something that has given us more ability to drive connects with clients and growth. We see in the medium term a tremendous opportunity for an efficient mix because clients have also seen that once the work is done remotely or work from home that more opportunities this kind of work could be done from a location further away. In general, as a medium-term trend, we see that as a positive trend. We will have, of course, each quarter some movements up and down. As a longer-term trend, we see that as a positive. Thank you, Salil. I had one more additional question. Just wanted to get your thoughts around what we are seeing from a revenue productivity metric standpoint or revenue per person standpoint. While there is a significant amount of offshore shift over the last 18 months, we've seen utilization go up. What's causing the increase in revenue productivity despite the significant offshore shift that we've seen over the last 18 months? If you could talk about some of the factors that are driving that. Thank you. On the revenue productivity, there are a number of things that are going on. We see some of the mix of our work, which is also changing more to digital, and there we see much more revenue productivity coming in. As you pointed out, utilization has also gone up. We're also seeing some of our work, for example, on the consulting side, the data and analytics side growing really well, and that's giving us some level of a boost. There is also some impact, which we've not quantified externally, on leveraging some amount of automation and platforms that gives us this benefit. There's several factors within work despite the mix, onshore-offshore mix changing. Sure. Thank you and all the best for the future. Thank you. The next question is from the line of Ruchi Burde from BOB Capital Markets. Please go ahead. Ruchi Burde, your line has been unmuted. All right, we lost her line, so we'll move to the next question, which is from the line of Rahul Jain from Dolat Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. Congratulations on strong numbers. I have a question regarding the core revenue, which has seen a stabilization in this year. I think you've addressed this point partly, but wanted to understand what could be the prospect for this side of the revenue in the coming years, especially when we talk about so much shift to digitalization. What should be the prospect out here? This is the question number one. There, we have no individual guidance for digital or for the core in that sense, which is even for Q4 or for the next financial year. Structurally, what is clear is, we are being successful in driving automation and modernization, well to make sure that we are probably the most competitive large player in the market working with large enterprises. We've set in examples of contribution at last form. We continue to execute on the level and ongoing with automation is what I'd say for us. If we keep continuing executing that, mind you, we will earn the trust again, and that has its own benefits in the medium term. Right. Appreciate the color. One more thing, on the taxation part. Our tax rate, you know, steadily has been upwards of 27% on an average. This looks a little higher, given the kind of, you know, country that where most of our earnings belongs to. Any flavor you can share in terms of what should be the ideal tax rate on a sustainable basis and in near term? Yeah. I think our tax rate has always been in this 27%-28% range. I don't think you'll see much movement going against it because in any case, as you know, the India-only rate, because it is India-only plus countries which are India, that's a 25% India-only. I think in the long run you will be around this range itself. Also, which region profitability is or tax rate are much higher than the 25% rate also for taking this number higher than the average for India itself? Yeah. We can't give that individually, but there are some jurisdictions and also in some jurisdictions where those tax cannot be set off here as well. It's a combination of both. Okay. If we are not able to set that off, that is, that result in double taxation in two jurisdictions. That is also a reason. Okay. Got it. Thank you so much. Thank you. The next question is from the line of James Friedman from Susquehanna. Please go ahead. Hi. Let me echo the congratulations. It's James at Susquehanna. I just had one simple question, perhaps for Nilanjan. Can you remind us what the capital allocation strategy is? I remember you had put it out, I think, at the Analyst Meet in November 2020, but where is share repurchase in the prioritization? Thank you. Yeah. What we had announced in FY 2020 basically was that we had taken capital allocation to 85%. It was 70%. We said that we will pay this out over a period of five years through a combination of progressive growth-oriented dividend policy, plus either share buyback or one-off special dividend. In the first two years, as we announced, we have actually paid back 83% through higher increased normal dividends and also through this share buyback, which we announced last year. We've already paid back 83%, and we remain quite committed to our overall 85% five-year number. Got it. Thank you so much. Thank you. The next question is from the line of Vimal Gohil from Union AMC. Please go ahead. Yeah, thank you for the opportunity, and, congratulations on a great quarter. My question is on your employee cost, which partially has been addressed. How should we think about the core employee cost growth, which comes under the cost of revenue, which has been around 4% QTD over the last Q1 of FY 2021 versus a 6% revenue growth. This has been in light of a very sharp increase in attrition, and of course, further supply challenges and et cetera. If you could just highlight, I mean, how has the company sort of are our wage hikes in line with the industry or have they been much higher than the industry? How should we think about this historically? If you could give some kind of an outlook over there as well. Thanks. Yeah. You have to see both employee cost and subcon together. The cost of people is a combination of both. You can't see one in isolation. That's number one. Number two, just from an overall cost perspective, we of course are very focused on attrition and being competitive in the market, as well as being a, you know, employer of choice for many of our employees. Going ahead, we look at, you know, the interventions with on the compensation side. Like Salil said, in Q1, Q2, we did across the board. In January, we did across the board. In July, we've done across the board. In Q3, as well, we have done very segmented and targeted on talent, and we'll continue doing that into Q4, et cetera, and looking at, you know, high points of attrition and doing it much more tactically, to see where we are seeing, you know, demand being high for in the market for those skills and target those employees really. So I think it is very nuanced, and like I said, horses for courses, and we will continue doing that. Sir, how should we think about? Basically, if I were to look at your guidance versus your implied guidance implies 0%-2% sort of revenue growth in Q4. Considering the fact that there was some furloughs in Q3, your revenue growth would be, could be higher than what you've reported in Q3. Is your guidance conservative at this point in time? How should we think about that? In terms of the guidance, it's a very strong guidance, which is 19.5%-20%. There is no further color in saying whether it's conservative, aggressive or sort of stable. We see a very good demand outlook. We see good large deals and good fits broadly. But the guidance, you know, is, I think, a very big move up from where we were in the last quarter. Fair enough, sir. Thank you so much, and, all the very best. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Thank you, everyone. This is Salil. Just to close from our side. First, thank you all for making the time. We feel extremely good about the quarter. 7% growth QOQ, 21% year-on-year. Very strong digital, 42%. Very good on large deals, $2.5 billion. Overall, really excellent market demand. We're seeing market share gains, which is a very good sign for us, primarily which are coming from a well-positioned portfolio and a good execution from all of our teams. Our revenue guidance, of course, has gone up 19.5%-20%. Our operating margin remains at a good level at 23.5%. We have very good strong trust and confidence of our clients. Overall a strong outlook and positive about what we see in the future for our digital and cloud transformation programs. With that, thank you all. Wish you a Happy New Year and look forward to catching up in April. Thanks, Salil, for the closing comments, and thanks everyone for joining us on this call. Look forward to talking to you again during the year. Thank you. 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, and you may now disconnect your lines.