Infosys delivered impressive large deal momentum in the December quarter, achieving its highest total contract value in over two years despite facing margin pressures from regulatory changes. The IT services giant's performance reflects the broader industry trend of sustained order bookings and improving client adoption of AI technologies.

Strong Deal Pipeline Drives Growth

The company's large deal wins reached a nine-quarter high, demonstrating robust client demand and successful business development efforts.

This significant improvement in deal wins represents a substantial jump from the $2.4 billion to $2.8 billion range maintained over the past five quarters. The momentum was particularly driven by new deals, which formed 57% of the total contract value, indicating strong market expansion rather than just renewals.

Financial Performance Exceeds Expectations

Despite seasonal headwinds, Infosys managed to outperform analyst expectations on the revenue front while facing margin challenges from regulatory changes.

Revenue growth of 0.5% sequentially, while modest, exceeded analyst expectations and represented the company's ability to navigate seasonal weakness typically experienced during the December quarter due to holidays.

Labour Code Impact and Margin Analysis

The implementation of Indian labour code changes created a significant one-time impact on profitability, though underlying operational performance remained strong.

Excluding the labour code impact, operating margins actually expanded by 20 basis points from the previous quarter's 21%, indicating healthy underlying business performance. Management expects the ongoing annual impact to be around 15 basis points, which the company aims to offset through operational efficiencies.

Workforce Trends Show Positive Momentum

The company demonstrated strong talent retention and growth metrics, reflecting improved market conditions and organizational stability.

• Headcount Growth: Increased by 13,656 employees year-on-year to nearly 340,000
• Attrition Improvement: Decreased to 12.3% from 13.75% a year ago
• Industry Trend: Consistent with other top-tier IT companies showing workforce expansion

Raised Guidance Reflects Confidence

Infosys upgraded its FY26 constant currency revenue guidance to 3-3.5% growth from the previous 2-3% target, demonstrating increased confidence in business prospects. This represents a gradual improvement in outlook since the beginning of the fiscal year when the company had set a modest 0-3% growth guidance.

The performance aligns with broader industry trends, as peers including Tata Consultancy Services and HCL Tech also reported sustained order bookings and results that exceeded expectations, driven by improving client adoption of AI technologies.

Infosys CEO and Managing Director Salil Parekh has categorically dismissed viral social media reports alleging that a company employee was detained or deported by US Immigration and Customs Enforcement (ICE). Speaking during the company's earnings conference on Wednesday, Parekh provided clarification on the incident that sparked widespread concern across social media platforms.

CEO's Official Statement

Parekh clarified that while an employee was denied entry into the United States and subsequently returned to India, there was no detention or deportation involved in the process. The CEO stated that the reports circulating online were inaccurate, directly contradicting the viral claims that had gained significant traction on social media.

Viral Social Media Claims

The controversy originated from a viral post on X (formerly Twitter) on January 13, which made several serious allegations about the treatment of an Infosys employee:

Challenges for Indian IT Companies

The incident occurs amid increasing difficulties faced by Indian IT companies operating in the United States due to stricter H-1B visa regulations. These companies are encountering multiple operational challenges that affect their cross-border service delivery capabilities.

Key regulatory changes impacting operations include:

• $100,000 fee for new H-1B visa applications
• Enhanced social media vetting of visa applicants
• Unpredictable processing times for visa applications
• Increased complexity in on-site project deployments

These measures have significantly disrupted the traditional model of deploying Indian IT professionals to client locations in the United States.

ICE Enforcement Under Scrutiny

The controversy emerges during a period of heightened scrutiny of ICE's enforcement tactics and detention practices. The agency has faced criticism following several serious incidents, including the fatal shooting of protester Renee Nicole Good in Minneapolis on January 7.

Detention Center Conditions and Fatalities

ICE detention facilities have come under increased criticism for unsafe conditions and rising fatality rates:

The 2025 death toll represents the highest annual number of fatalities in ICE detention since the agency's establishment, raising serious questions about detention conditions and enforcement practices.

Industry Impact

The incident highlights the broader challenges facing the Indian IT services sector in maintaining seamless operations across international borders. As visa regulations continue to tighten and enforcement measures intensify, companies like Infosys must navigate an increasingly complex regulatory environment while ensuring accurate communication about employee welfare and safety.