Infosys Ltd. raised its annual sales forecast, remaining upbeat on large clients’ need to automate their systems and cut costs even as it warned of pockets of uncertainty because of a global economic downturn.
(Bloomberg) — Infosys Ltd. raised its annual sales forecast, remaining upbeat on large clients’ need to automate their systems and cut costs even as it warned of pockets of uncertainty because of a global economic downturn.
Infosys said on Thursday it expected revenue to grow between 16% to 16.5% in the year to March, compared with the 15% to 16% growth it projected in October. Analysts on average expect 21% growth. The upgrade was “driven by a growth of 17.8% in constant currency for the first nine months of FY23 and the strong large deal value for Q3” Chief Executive Officer Salil Parekh said at a news conference.
Sales at Infosys, India’s No. 2 information technology company, and bigger rival Tata Consultancy Services Ltd. swelled over the past two years as global enterprises splurged on software services to meet demand during a pandemic-fueled boom.
That growth in India’s $227 billion outsourcing industry is now cooling as employees return to the office and global recession fears increase. IT services giant Accenture Plc. kept its full-year growth forecast unchanged after its first-quarter bookings missed estimates.
Over the long term, analysts expect companies to continue to adopt more digital workflows to keep with technological shifts in cloud, big data, machine learning and artificial intelligence, bolstering the sales of Bengaluru-headquartered Infosys and its rivals.
Infosys posted a 13% rise in net income to 65.9 billion rupees ($808 million) in October-December. Analysts on average estimated a profit of 64.65 billion rupees. Sales increased to 383.2 billion rupees.
“The signs around are showing a slowing global economy,” said CEO Parekh. “Some areas such as mortgages and investment banking in the financial services industry, telco, high-tech and retail are more impacted and that is leading to delays in decision making and uncertainty in spending in these areas.”
What Bloomberg Intelligence Says
Infosys could achieve fiscal 2023 sales growth in the low double digits in constant currency, fueled by steady cloud demand. Though this figure is lower than 2022’s 19.7%, the slowdown isn’t due to competition but is a function of tougher comparisons and rising recession risk.
– Anurag Rana, analyst
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Mumbai-headquartered TCS, Asia’s largest outsourcer, reported an 11% rise in quarterly income, but warned that client sentiment was cautious.
(Updates with comments from CEO in second and seventh paragraphs)
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