Infosys profit up 21% on US deals
MUMBAI: Indian outsourcing giant Infosys has reported a better-than-expected 21 percent jump in quarterly net profit, after winning new deals from US clients.
The Nasdaq-listed firm, hit by an exodus of staff and a loss of market share, said consolidated net profit climbed to 28.86 billion rupees ($481 million) in April-June from 23.74 billion rupees in the same period a year earlier.
Shares in the firm surged as much as 4.16 percent on the Bombay Stock Exchange in response to the results, which beat market estimates of around 27 billion rupees.
Infosys, India’s second largest IT services exporter by sales, forecast revenues would climb to 7-9 percent for the financial year that began in April.
“Growth is our top most priority. In fact, we can do much better than we have this past quarter,” Infosys chief executive S.D. Shibulal said.
“We are coming out of a tough environment where we faced multiple challenges externally and internally during the last three years,” he added.
Infosys last month announced a new chief executive and said its co-founder N.R. Narayana Murthy was stepping down as executive chairman after ending his one-year return stint as planned.
Vishal Sikka, a former top executive from German giant SAP, takes over as chief executive next month.
Employee exodus is an ongoing problem for the firm which lost nearly 20 percent of its workforce in the April-June quarter, taking the total headcount to 161,284.
“Our attrition rate is a matter of concern,” Shibulal said.
“We have taken steps to help retain talent. These include quarterly promotions, more variable compensation payouts and so on. The effect (of this) will show in the next few quarters,” he said.
Analyst Kuldeep Koul agreed attrition was a key concern, but said it seemed to have peaked.
“Ultimately, providing avenues for growth in a career is the only way to keep talent. This is possible only when revenue growth happens.
“So Infosys will have to keep growing its business (rather than focus on) profitability at this juncture,” said Koul from ICICI Securities.
Infosys, based in the southern high-tech city of Bangalore, said it had signed 61 new clients in the quarter.
“We have not lost a single client this quarter despite the numerous challenges we faced,” Shibulal said.
Infosys’ Murthy left after returning from retirement as executive chairman in June last year to help revive the company’s fortunes, which estimates its cash-in-hand to be nearly $5 billion dollars.
Infosys — created three decades ago by Murthy and six others around a kitchen table — has been losing market share to rivals such as Tata Consultancy Services and HCL.
In October, it said it would pay $34 million to the US government to settle an investigation into alleged visa fraud by the company.
Many of India’s IT outsourcing firms have reported subdued growth in recent years due to a global economic slowdown.