On Thursday, Infosys (INFY.NS) lowered the upper end of its annual revenue prediction, raising questions about the need for the $245 billion Indian information technology sector’s services shortly.
In contrast to an earlier forecast of 1%-3.5%, the No. 2 exporter of software services from India said it now expects full-year revenue growth of 1%-2.5%, excluding foreign currency volatility.
The company leader in the sector, Tata Consultancy Services TCS.NS has previously warned that clients were still cautious about spending on discretionary projects due to inflationary pressures and rising loan rates.
On Thursday, Salil Parekh, Infosys’s chief executive officer, stated that “decision-making is slow and digital transformation programs and discretionary spends are low.” Project ramp-ups are being postponed till the year’s end, according to Parekh. In premarket trading, the U.S.-listed shares of Infosys decreased 3.3%. Before the report, its Mumbai-listed shares finished 1.9% down.
“We continue to observe substantial market hesitation leading to postponed revenue. The uncertainty surrounding the economic cycle and the growing assumption that a recession is imminent in 2024 are the driving forces behind this, according to Peter Bendor-Samuel, CEO of the research company Everest Group.
He noted that a considerable acceleration in the sector is unlikely to occur until the second half of 2019.
According to Infosys Chief Financial Officer Nilanjan Roy, the company did not visit campuses for recruiting “at the moment” despite having offered positions to almost 51,000 new graduates in fiscal 2023.
In the quarter that ended on September 30, its consolidated net profit increased from 60.21 billion rupees a year earlier to 62.12 billion rupees ($746.46 million). According to LSEG IBES statistics, analysts had predicted a profit of 62.95 billion rupees. Large contract signing for Infosys increased to $7.7 billion in the quarter, nearly double last year’s corresponding time.
Despite reporting a dip for the quarter to 21.2% from 21.5% a year earlier, the business kept its operating margin projection for the entire year at 20%-22%.