IT major Infosys Technologies, on Thursday announced a profit of Rs. 1,780 crore in the third quarter ended December 31, 2010, reporting a year-on-year growth of 14.2 per cent on total revenues of Rs. 7,106 crore. The announcement, however, was accompanied by a cautious note, predicting an impact on the IT growth in the light of weaker economic recovery in the developed markets.
“There has been an all round good performance and the third quarter revenues have exceeded the guidance of Rs. 6,884- 6,953 crore,” Chief Executive Officer S. Gopalkrishnan told presspersons here.
He, however, warned that the weaker economic recovery in developed markets coupled with high unemployment and risk of sovereign default (in Europe) could impact industry growth.
“Recovery is happening with good volume growth. It is still possible that something bad may happen. We are cautious and clients are cautious. It can have a domino effect and consequences are unpredictable at this point of time. If something bad happens, repercussions will be global like what happened when Lehman (Brothers) failed,” he said.
Meanwhile, the company's revenue in the fourth quarter is expected to be in Rs. 7,157- 7,230 crore range. Revenues for this fiscal is expected to be in Rs. 27,408-27,481 crore range, showing an year-on-year growth of 20.5-20.8 per cent. Earnings per share is expected to be Rs. 118.68-118.90.
One of the trends in the third quarter, Mr. Gopalkrishanan said that the project size had come down and clients were looking more at short term projects. This, he reasoned, to the spending that happened in the first two quarters, and that they had predicted the third quarter to be slow. The company recruited 11,067 employees while it lost 5,756 employees, leaving the total number of employees at 1,27,778. Infosys also added 40 clients during the quarter.
Despite the “looming threats”, Mr. Gopalkrishnan, who predicted that next year could be a “normal year” for the IT industry, said that he was confident of the industry's ability to react to any sudden changes in the market.
“Indian IT industry has done much better than the global IT industry during the downturns of 2000-01 and 2007-08. Growth rate came down, but there were no big lay offs. Industry has managed well in the past and it would manage any unforeseen circumstances well,” he added.
The company's board has appointed R. Seshasayee, Managing Director of Ashok Leyland, as an additional director. He will hold office till the annual general meeting when his appointment as a director will be placed for approval of shareholders, a release said.
Our Corporate Reporter adds:
During the quarter ended December 31, 2010, of the total revenue of Rs. 7,106 crore (Rs. 5,741 crore), revenue from financial services accounted for Rs. 2,574 crore (Rs. 1,985 crore), manufacturing Rs. 1,392 crore (Rs. 1,106 crore), telecom Rs. 887 crore (Rs. 928 crore), retail Rs. 1,030 crore (Rs. 754 crore) and others Rs. 1,223 crore (Rs. 968 crore).
The share of revenue from North America was 64.7 per cent (65.8 per cent), Europe 21.8 per cent (same), Indian operations 2.2 per cent (2.1 per cent) and the rest of the world 11.3 per cent (10.3 per cent).
The services from application development and maintenance accounted for 38.1 per cent (39.1 per cent), consulting services and package implementation 25.9 per cent (25.8 per cent) and business process management 5.6 per cent (same). Infrastructure management, product engineering services, system integration, testing services and others accounted for the balance share of revenue.
A slump of 4.82 per cent in Infosys shares sent the market in a tizzy. The heavyweight stock had lost 5.15 per cent in the intra-day session to finally close at Rs. 3,212.30 on the BSE.
The company saw a similar downslide on the National Stock Exchange, where it ended at Rs 3,203.20, down 5.16 per cent. On the volume front, over 32 lakh Infosys shares were traded on the bourses.
