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Revenue growth at an IT services company comes from winning and expanding client work, realizing prices, and selling a mix of services and contracts that generates more revenue. Margin depends on what it costs to deliver that work and how efficiently the company deploys its people. The two measures can move in different directions: onsite projects, for example, can generate more revenue per employee while producing a lower gross margin percentage.
Revenue growth and margin measure different things
Revenue growth measures the change in sales over time. A company may grow by adding clients, expanding work for existing clients, increasing project volume, improving pricing realization, or changing its service mix. Margin measures the share of revenue left after specified costs. Gross margin, operating margin, and other margin measures use different cost definitions, so they should not be treated as interchangeable.
The available company filing illustrates drivers, not a universal industry formula. Infosys’s fiscal 2025 Form 20-F attributes changes in profitability across segments to factors including pricing realization, third-party delivery costs, onsite mix, and large-deal ramp-up. It does not assign sector-wide weights to demand, price, or volume. Infosys fiscal 2025 Form 20-F
What can increase revenue?
More work from new or existing clients
Revenue can rise when a provider wins new engagements or expands the services it performs for current clients. The amount and timing depend on client demand and project requirements. A large contract may add substantial work, but the revenue contribution depends on how and when the engagement is delivered.
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Pricing realization and service mix
Pricing realization affects the revenue earned for services delivered. A shift in the kinds of services sold can also change revenue, even if the underlying amount of client work does not change in the same way. Infosys reported that 95.3% of its fiscal 2025 revenue came from software and BPM services, and 4.7% from products and platforms; those figures describe Infosys, not a typical provider. Infosys fiscal 2025 Form 20-F
What determines margins?
Utilization: how much capacity is billed
Utilization connects employees’ available time with billable client work. Infosys defines utilization for relevant IT-services professionals as billed person-months divided by available person-months; sales, administrative, and support employees are outside that measure. Project needs and schedules shape staffing, while an unexpected project termination or time spent in training can reduce utilization. When available capacity is not assigned to billable work, the company may still bear employee costs without corresponding billable revenue.
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Infosys reported fiscal 2025 utilization of 83.4% including trainees and 85.5% excluding trainees. These are company-specific rates for the stated period and definitions, not universal targets or directly comparable rates unless another provider uses the same methodology. Infosys fiscal 2025 Form 20-F
Employee compensation and delivery location
Labor compensation is a cost of providing services, and staffing location changes the cost and revenue profile. 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. Its fiscal 2025 revenue from billable IT-services professionals was 52.3% onsite and 47.7% offshore. The filing says changes in those proportions affect revenue, cost of sales, and gross profit; the percentages are Infosys’s reported mix, not an industry benchmark. Infosys fiscal 2025 Form 20-F
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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteThis tradeoff helps explain why higher revenue per employee does not necessarily translate into a higher margin percentage. The expense base associated with onsite work can also be higher.
Contract economics and large-deal ramp-up
Contract structure by itself does not establish profitability. Infosys reported that approximately 54% of its fiscal 2025 revenue came from fixed-price contracts, but that figure does not show that fixed-price work is inherently more or less profitable than other arrangements. Outcomes depend on contract pricing, cost assumptions, and how the work is executed.
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Large deals can also have lower margins early in their life, according to Infosys. During ramp-up, the delivery plan and costs may not yet reflect the economics of a more established engagement. As a result, a contract can contribute to revenue before it reaches its later margin profile. Infosys fiscal 2025 Form 20-F
Third-party delivery costs and productivity
Some services require items or services purchased from third parties. Those costs affect the economics of delivery alongside compensation and other operating expenses. Infosys also cites improved utilization and its Value Based Selling, Lean & Automation efforts among factors affecting profitability. These are company-reported influences in its segment discussion, not a guarantee that a particular program will produce the same outcome at another provider. Infosys fiscal 2025 Form 20-F
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Foreign exchange and segment mix
Foreign-currency translation can affect reported segment results, while different business segments may have different pricing, delivery costs, or service mixes. A change in consolidated margin can therefore reflect a shift in the relative contribution of segments as well as changes within a segment.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare IT services companies fairly
A comparison is meaningful only when periods, definitions, and business mix are aligned. Check:
- Revenue growth: Compare the same period and note whether growth is reported in constant currency, includes acquisitions, or is described as organic.
- Margin definition: Distinguish gross margin from operating margin and other measures; their cost bases differ.
- Delivery mix: Compare onsite, nearshore, and offshore exposure rather than assuming a location mix has the same economics at every firm.
- Utilization: Check the denominator and whether trainees are included before comparing reported rates.
- Engagement economics: Consider pricing, contract structure, large-deal stage, and third-party costs.
- Business mix: Account for differences in segments and services sold.
Infosys’s filing provides a concrete example of these factors, but it is not a multi-company dataset. Its reported utilization, location mix, contract mix, and service mix should not be used to rank providers or infer an industry average.
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