Infosys Chief Operating Officer U.B. Pravin Rao on Wednesday denied media reports about the IT industry witnessing steep pricing cuts. “I just want to clarify that we are not seeing any unusual pricing pressure,” he said.
Mr. Rao, who was speaking at the Morgan Stanley 19th Annual India Summit in Mumbai, said Infosys was not facing any pricing pressure.
However, he said there were “cost take-out efforts” by clients toward reducing their program investments in the ‘run’ side of the business.“If you look at the overall landscape with all the transformation happening, clients are looking at taking cost out and reinvesting them in newer areas,” Mr. Rao said.
“The rates have remained the same and we have not seen any change in the rate cards. In some cases, we have seen rate increases at well.” He added that despite the cost take-out, Infosys’s margins remained stable for the last two years. For the current year too, also Infosys had projected operating margins to be in the range of 23- 25%.
“Our revenue guidance for the full year is between 6.5-8.5% on a constant currency basis. We remain committed to that and absolutely no change.” he said.
Meanwhile, Infosys also issued a statement clarifying Mr. Rao statement. “Infosys would like to clarify that the news reports on pricing cuts seen by the IT industry being attributed to the Infosys COO are incorrect. His comments have been misrepresented,” the company said in an email statement.
Further Mr. Rao said some clients the despite getting cost benefits have not reinvested in new areas such as digital and automation. According to him, some of the reasons due to this is lack of clear tech roadmap for some clients.
Replying to a query on the deal pipeline, he said, the deal pipeline continues to be healthy.
“But one concern is that most of our large deals are renewal deals and that there has been less of net new business. It is something we have to keep an eye out for.”
Commenting on the sectors Mr. Rao said retail sector remains to be a challenging and volatile but financial services is expected to do well. He also said the consulting business which witnessed a de-growth in the last fiscal is expected to recover in the next fiscal year as the company is taking measures to build new skills.
