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Revenue growth and profit margins at IT services companies are shaped by different, connected forces. Demand, account expansion, and pricing can lift revenue; utilization, compensation, delivery location, contract economics, and execution determine how much of that revenue becomes profit. Infosys’s fiscal 2025 disclosures illustrate the mechanics, but its figures are company-specific—not industry averages.
How revenue growth differs from margin growth
Revenue rises when a provider wins more client work, expands services within existing accounts, realizes better pricing, or changes the mix of services and contracts it sells. The available company filing illustrates how pricing and large-deal economics can affect results, but it does not break down industry growth into universal demand, price, and volume contributions.
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Margin measures profitability relative to revenue, so it can move differently. A service mix that produces more revenue per employee may also carry higher costs and a lower gross-margin percentage. Growth in sales therefore does not, by itself, establish that profitability improved.
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Utilization and billable work
Utilization links the workforce available to a company with the time billed to client projects. Infosys defines IT-services utilization as billed person-months divided by available person-months for relevant professionals; sales, administrative, and support employees are excluded from that measure. Staffing depends on project requirements and schedules, while unexpected project termination or time spent in training can reduce utilization.
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For fiscal 2025, Infosys reported utilization of 83.4% including trainees and 85.5% excluding trainees. These are two company-reported measures for that year, not target rates or a benchmark for other providers. Comparisons are meaningful only when the calculation and trainee treatment match.
Compensation and delivery costs
Employee compensation is a major cost in a people-intensive business. A company can improve the contribution of its available workforce by keeping billable capacity aligned with project demand, but staffing ahead of work or losing utilization can weigh on profitability. The cost of third-party items purchased to deliver services also affects margins; revenue growth that depends on more purchased delivery inputs may not translate proportionally into profit.
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Why onsite and offshore mix changes the economics
Work performed at a client site and work delivered from a provider’s own facilities can generate different revenue and cost profiles. Infosys states that onsite services typically generate higher revenue per capita, but lower gross margins as a percentage of revenue than services performed at its own facilities in India. Onsite assignments may entail higher compensation and other expenses, so a shift toward onsite delivery can raise revenue per professional while lowering the gross-margin rate.
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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →In fiscal 2025, Infosys reported 52.3% of revenue from billable IT-services professionals onsite and 47.7% offshore. Those shares describe its own location mix for that period. The company notes that onsite/offshore proportions can vary over time and affect revenue, cost of sales, and gross profit.
How pricing, contract mix, and large deals affect margins
Pricing realization influences how much a provider earns for the work it delivers. Yet the economics of a deal depend on more than its headline price: the expected staffing plan, delivery locations, purchased inputs, scope, and execution all shape the eventual margin.
Infosys reported that approximately 54% of fiscal 2025 revenue came from fixed-price contracts. That share alone does not show whether those contracts were more or less profitable than other arrangements. Fixed-price work can expose a provider to the difference between planned and actual effort or cost, while the result still depends on the negotiated price and management of the engagement.
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Large deals can also have lower margins early in their term, according to Infosys. A new engagement may need to ramp up before its staffing and delivery model reach steady state. Consequently, a period with more large-deal activity can put pressure on margins even when it supports future revenue growth.
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Infosys reported that software and BPM services generated 95.3% of its fiscal 2025 revenue, while products and platforms generated 4.7%. These figures show the company’s revenue composition, not the relative profitability of those categories. Different service lines, segments, and delivery models can carry different prices and costs.
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In discussing fiscal 2025 segment profitability, Infosys cited pricing realization, onsite mix, third-party delivery costs, and large-deal ramp-up among the relevant factors. It also attributed improvements in some results to improved utilization and initiatives described as Value Based Selling, Lean & Automation. These company-reported examples show how both operating execution and service economics can affect margins; they do not establish that the same initiatives will have the same impact at every provider.
How to compare IT services companies fairly
A headline growth rate or utilization percentage can mislead if the underlying periods, definitions, and business mixes differ. A useful comparison checks:
- Revenue growth: Use comparable periods and note whether growth is reported in constant currency and whether acquisitions contribute.
- Pricing and engagement profile: Consider service mix, large-deal exposure, and whether those deals are early in their ramp-up.
- Delivery locations: Compare onsite, nearshore, and offshore shares, since location affects both revenue and delivery costs.
- Utilization: Check the population included, the calculation, and whether trainees are counted.
- Cost structure: Account for employee compensation, subcontractors, and third-party delivery items.
- Profit measure: Distinguish gross margin from operating margin and other measures, and compare like with like.
Infosys’s fiscal 2025 filing gives a company-level illustration of these factors, not a cross-company dataset. It cannot establish which factor matters most across the sector, a universal utilization target, or a general rule that offshore work or fixed-price contracts always improve margins.
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