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July 10, 2009

Improved earnings for Infosys as revenues slip

Expansion and headcount plans slowed

By CBR Staff Writer

Infosys has managed to improve earnings on revenues that slipped slightly against last year, according to numbers posted for its latest June quarter. 

Revenues declined by 2.9% year on year for the Indian outsourcing services company during the first 3 months of its fiscal year, but earnings grew by 1.9%. First financial quarter profits jumped 17.2% from a year earlier.

The company has concentrated on operational efficiency, slowed its planned hiring programme and delayed some expansion investments, BG Srinivas, Head of Europe, Infosys told us today.

He said the current climate was still challenging, with various surveys and client interactions suggesting that the sentiment remains muted across all industries. “In many cases the focus is the same, with businesses on a drive to reduce costs and consolidate vendors.” Financial services and manufacturing have been hit hardest, Srinivas confirmed.

Announcing its results for the quarter ending June 31st , S Gopalakrishnan, CEO said “We believe that in the short term the global economic environment will continue to be challenging. We are working closely with our clients to help them navigate the downturn. We continue to invest in the future to take advantage of the growth opportunities in the medium to long term.”

Srinivas said that the company had taken on around 3,500 extra staff in the first quarter, and that by the end of the year expects that as many as 8,000 to 10,000 new heads in total will have been added to the headcount of 18,000. 

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Srinivas said that energy sectors and companies in the pharmaceuticals sectors where performing better than others across Europe, and noted an increased demand from the retail sector, particularly around the areas of customer analytics and development of multi-channel commerce channels.

The forward pipeline is being impacted by slow decision-making processes, and the company said business outlook for the quarter ending September 30 would be revenues in the range of $ 1,110 million and $ 1,130 million. 

This stands as a year-on-year decline of between 8.7% and 7.1%, though Srinivas noted that in constant currency terms it would translate to revenues that were more or less flat compared with last time.

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