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April 15, 2009

Infosys signals start of sales challenges

Downbeat forecasts for fiscal 2010

By CBR Staff Writer

Indian outsourcing number two Infosys did little to change expectations that the next couple of years will be anything but tough, with the company confirming that it expected revenue to grow by no greater than 5% in the current fiscal year.

“In the current extremely challenging climate this still represents pretty good growth, but we are looking forward to a challenging fiscal year,” BG Srinivas, senior VP at the company told us. 

Announcing its results for the quarter ending March 31st which showed a 29% rise in fourth quarter profits, the software and services supplier said it expects revenue for the year ending March 2010 to fall as much as 6.7%, to between $4.35 billion and $4.52 billion. 

In real terms its forecast stands as the company’s first annual drop in dollar sales.

Guidance for the first quarter of its new fiscal year is in the range of $1.06 billion and $1.08 billion, Srinivas said.

Net income climbed from a year earlier to 16.1 billion rupees ($325 million) in the three months ended March 31, and sales for the period climbed 24% to 56.4 billion rupees ($1.13 billion).

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Srinivas said that the forward pipeline was healthy and gave good visibility of around 60% of future revenue streams, but confirmed that decision-making processes had slowed which makes it increasingly difficult to make calls on guidance.

He noted that the company can draw on a good mix of services from business consulting to BPO services, which is expected to show above average growth in the coming couple of years. 

He said that energy and utilities verticals remain relatively resistant to the current downturn, whereas the telco sector was giving out some mixed signals. “Finance and retail continue to challenge,” Srinivas said.

Currently the Indian services house draws up to 60% of its revenue stream from the US, and more efforts would be made this year to develop business activity in Australasia, Japan and China according to the VP.

At present the company has almost 105,000 employees, but it has said that it will stop fresh hiring and peg wages this year.

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