WFH, H1-B visa suspension dominate Infy's virtual AGM

The annual meet also saw some shareholders of the country’s second largest IT services company raising concerns over falling operating margins. But many congratulated the management for delivering good FY20 performance despite the tough economic conditions. 

Questions related to work from home (WFH), temporary suspension of H-1B visa and impact of the India-China border dispute dominated the proceedings at Infosys’ annual general meeting (AGM) on Saturday. 

The 39th AGM, which was held virtually for the first time, was attended by 1,771 shareholders through video conferencing. However, it lacked the usual hustle-and-bustle of past years. 

Poor audio and video connections, many a times from the shareholders’ side, also interrupted the proceedings with ‘can you hear me’ and ‘please go ahead’ emerging as the frequent phrases used throughout the AGM. 

The annual meet also saw some shareholders of the country’s second largest IT services company raising concerns over falling operating margins. But many congratulated the management for delivering good FY20 performance despite the tough economic conditions. 

Most investors were curious to know whether WFH would be a permanent operating model in the post Covid-19 world. Many shareholders even wanted to know what was the expense ratio of Infosys on lease rentals with respect to net profit. Also, how it would change in terms of savings in case WFH is adopted in a big way. 

“What is the impact of productivity (of employees) due to WFH and what has the company done to secure data in this period as we have seen more cyberattacks,” asked Anish Hegde, a shareholder. 

To this, Infosys chief operating officer (COO) UB Pravin Rao said that the future of work would be a hybrid model comprising both working from office and home. 

The anxiety related to the border skirmishes with China also reflected in the AGM as many shareholders had queries on how was it going to affect Infosys’s operations in the neighbouring country. 

Infosys CEO and MD Salil Parekh said clients in China are being served mostly by local hires and it has not seen any business disruption so far. 

On Trump administration’s decision to suspend non-immigrant visas till December, the management of Infosys said the impact would be minimal as the IT firm’s dependence on H-1B visa has come down drastically over the years. 

“We have more than 60 per cent of workers who are not dependent on visas in the US. Infosys is well prepared due to the strong localisation strategy as we have significantly reduced our dependence on visa,” Pravin Rao said. 

In the close to two and half hour proceedings, the management sent the message to shareholders that the IT firm is well placed to weather the storm despite near-term challenges like dip in operating margin. 

“In the near term, some slowing in closure of deals is seen due to the pandemic. But, we have not seen any largescale cancellations. In the near-term, our operating margin may see some headwinds due to falling utilisation. However, we will try to offset it with less travel cost and other optimisation moves,” said Parekh. 

Terming a second wave of Covid-19 as key risk factor, Parekh added that sectors like retail, manufacturing and travel & hospitality have been mostly affected due to Covid. 

“For Infosys, travel and hospitality is a small segment. So, we don’t expect any material impact due to this,” Parekh said. He, however, said verticals like communications and hi-tech are witnessing a positive push due to the pandemic with companies accelerating digital adoption. 

Infosys chairman and co-founder Nandan Nilekani said the robust balance sheet, steady growth momentum and strong executive team put the company in good stead to overcome the crisis. 

Answering shareholders’ queries, the chairman said, “We can confidently say that the matter is closed with regard to whistleblower allegations.” He added that the IT firm would look at tuck-in acquisitions in digital capabilities apart from captives as opportunities in acquisition.