Infosys Q1 FY25 results: CEO Parekh says company will comply with new regulations as per Karnataka job quota bill

Infosys CEO Salil Parekh said on Thursday that the company would wait and see the final draft of the state reservation bill by the Karnataka government and said it would align with the new regulations as required.

"We are planning to work with all the regulations of the state and central governments. We will work on, we support whatever regulations and guidelines will come.

"We'll wait and see what they look like as time develops, but our approach in general is to make sure we are aligned to the new laws and regulations that come out," Infosys CEO Salil Parekh said.

The state government in Karnataka, under Chief Minister Siddaramaiah, had recently passed a significant bill, the Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024, regarding reservations for locals in the private sector.

Under the new bill, Kannadigas are now mandated to fill 50% of management positions and 75% of non-management positions within private companies operating in the state.

This decision garnered strong opposition from the industrial sector, with many expressing concerns and criticism towards the implications of such a mandate.

Announcing the decision, Chief Minister Siddaramaiah wrote on X that the state cabinet approved a bill on Monday to make the recruitment of 100 per cent Kannadigas mandatory for lower-grade (Group 'C and D') posts in all private industries in the state. However, the Chief Minister deleted the post amid the backlash."Will wait and see on reservation for locals in Karnataka and will make sure we align to new regulations," CEO Parekh said at the press conference after the results for the Q1 FY25 were declared.

CM Siddaramaiah and his cabinet ministers hailed the bill and called his government "pro-Kannada". However, the move was criticised by the IT industry, which complained that such a bill would hamper the growth of tech industry in Bengaluru and impact jobs.

Reacting to the development, Nasscom said: "Nasscom members are seriously concerned about the provisions of this bill and urge the state government to withdraw the bill. The bill's provisions threaten to reverse this progress, drive away companies, and stifle startups, especially when more global firms (GCCs) are looking to invest in the state."

"In today's highly competitive landscape, knowledge-led businesses will locate where talent is as attracting skilled workers is crucial for success... For states to become a key technology hub a dual strategy is key - magnet for best talent worldwide and focuses investment in building a strong talent pool within the state through formal and vocational channels," it added.

Kiran Mazumdar-Shaw, the Chairperson of Biocon, said that the policy should not affect the state’s leading position in technology and also called for exceptions for highly skilled recruitment.

“As a tech hub we need skilled talent and whilst the aim is to provide jobs for locals we must not affect our leading position in technology by this move. There must be caveats that exempt highly skilled recruitment from this policy,” she wrote on X, tagging Siddaramaiah, Shivakumar and state minister Priyank Kharge.

TV Mohandas Pai questioned the move and called upon the government to spend more money on skill development instead of mandating quotas for locals.

"If you want to promote Kannadigas for jobs, spend more money on higher education. Give training to them. Spend more money on skill development. Spend more money on internships, spend more money on apprenticeship programs. So they all become skilled. Not like this. What are you trying to achieve by this?," he responded.

Later on Wednesday, the Karnataka government said it has put the bill on hold and will have a relook at the bill before it is tabled in the state Assembly.

Infosys on Thursday reported a 7.1% year-on-year (YoY) rise in its Q1 profit for the ongoing FY25. Profit during the June 2024 quarter came at Rs 6,368 crore against Rs 5,945 crore in the year-ago period.

In Q1 FY25, revenue grew 3.6% YoY at Rs 39,315 crore compared with Rs 37,933 crore in the corresponding quarter of last year. The company also raised its revenue growth forecast for FY25.

On a sequential basis, the consolidated net profit declined by 20.1% from Rs 7,975 crore reported in Q4FY24.

Revenue increased by 3.7% quarter-on-quarter (QoQ) from Rs 37,923 crore reported in the January-March quarter. The company's filing indicated an expected operating margin of 20-22% for the current financial year.