Infosys defies gloom with better-than-expected results

Infosys is India's second largest offshore provider

Infosys announced positive financial results for the first quarter of the year, building industry expectations that other Indian providers, such as TCS and Wipro, might also perform relatively well despite the downturn.

Infosys revenue for the period, ending 30 June, was up 12.7 per cent from last year at 54.7bn rupees (£69m) while profit increased by over 17 per cent to 15.3bn rupees (£19m). Shares in the company rose 3.7 per cent on news of the results.

The company gained 27 new clients during the quarter, one of which is based in the UK with most of the rest located in the US. The firm also hired 3,538 employees during the quarter.

“We’ve done better than we projected in our guidance, which is certainly good news in the current environment,” said BG Srinivas, Infosys head of Europe.

“The quarter was helped by the currency movement being positive for Indian companies but even in real terms we have done well,” he said. “We will now watch and see how outsourcing providers perform elsewhere in India.”

Srinivas said the Infosys cash balance of over 2bn rupees would be spent on training, hiring, research and development and acquisitions.

However, Srinivas said Infosys was finding it difficult to purchase companies in the current climate. “In a poor economic environment, good companies don’t want to sell but we are actively looking at options in the US and Europe,” he said.

Even though Infosys’ financials beat analyst expectations, the firm remains cautious in its outlook for the near future, expecting a year-on-year revenue decline of up to 1.9 per cent for the next quarter, ending 30 September.

“We are still cautious because our clients’ positions are unchanged and demand is still down,” Srinivas said.

“The market carries mixed signals, with some talking about green shoots and others remaining doubtful,” he concluded.