Infosys Cuts Revenue Growth Forecast to 1%-2%, Faces US Probe Over H-1B Visas

Key Facts

Infosys cut its revenue growth forecast for FY2027 to 1%-2% in constant currency, from a previous range of 1.5%-3%, after reporting its second-quarter results on October 23, 2026. The company kept its full-year operating margin forecast at 20%-22%. The new guidance came as the US Department of Justice continues an investigation into the classification of some H-1B visa holders in immigration documents submitted to US government agencies. Infosys said it is discussing the matter with the department and conducting an internal investigation. It added that it is "unable to predict the outcome of this matter" or determine whether its impact on the company's business and results would be material.

Revenue for the second quarter, which ended September 30, was $5.145 billion, up 1.5% year on year and 1.2% quarter on quarter in constant currency. Revenue growth in the first quarter of FY2027 was 2.4% year on year in constant currency, making the second-quarter reading slower on that measure. For the first half, the company said revenue rose 1.9% year on year in constant currency. Meanwhile, the operating margin was steady at 21.0% in the second quarter, compared with 21.1% in the first quarter. The chief financial officer said cost controls and operational efficiency helped stabilize the margin amid heightened volatility.

Large deals signaled continued demand from some clients: their total value was $5.2 billion in the quarter, with 62% representing net new work. Chief Executive Salil Parekh said revenue from AI services accounted for 10.5% of revenue and grew 29% quarter on quarter. But these indicators came alongside a cut to the annual growth forecast and do not change the guidance range the company announced for FY2027. Free cash flow was $928 million in the second quarter, down 15.7% year on year. The company also announced an interim dividend of 26 rupees per share, up 13% from the previous year.

In its annual filing with the US Securities and Exchange Commission, Infosys said the Justice Department investigation concerns how certain employees who are H-1B visa beneficiaries were classified in immigration documents submitted to US government agencies. The company said it cannot currently estimate the outcome of the investigation or its potential impact on its business and results. This investigation is separate from the US Department of Labor's suspension of new and pending PERM applications at some companies, including Infosys. In a statement on the suspension of PERM applications, the company said it did not expect its announcement to have a material impact on the organization. The PERM process relates to applications linked to permanent residency, while the investigation disclosed by the company focuses on the classification of some H-1B employees in immigration documents.

In the market, Infosys' US depositary receipt closed at $12.43 on October 26. Its India-listed shares fell 2.7% that day, after trading down 1.5% at 1,136 rupees at 10:53 a.m. local time, according to Reuters. An analyst at LKP Securities said the share move reflected, in his view, the better position of competitors, adding that Infosys had underperformed the market since its FY2026 fourth-quarter results. The Reuters report cited pressures including AI competition, clients expanding their in-house technology capabilities, and weak spending in the retail and advanced technology sectors. These factors were cited in the context of explaining pressures on the company, while Infosys did not specify the impact of the ongoing investigation on its results.

Infosys announced its second-quarter results on October 23 and held a press conference at 4:30 p.m. and an earnings call at 6:00 p.m. India time that day. The company's calendar sets January 13, 2027, for the announcement of its FY2027 third-quarter results, followed by April 22, 2027, for its fourth-quarter results. The next results will be the first scheduled update after the annual forecast was cut to 1%-2% in constant currency. The company kept its expected operating margin at 20%-22% in the same guidance. As for the outcome of the Justice Department investigation, the company said it cannot predict it at this stage.