A survey by Infosys Technologies of its top customers reveals that information technology budgets are being slashed this year, and paints a bleak near-term outlook for India’s outsourcing industry.

S Gopalakrishnan, chief executive of Infosys, India’s second-largest software outsourcing group, said 139 of the company’s clients, representing 83 per cent of its revenue, said they would cut IT spending, some by up to 10 per cent.

“It is probably the most challenging environment in recent times – there’s no question about it. Everybody is talking about a once-in-a-lifetime challenging environment,” Mr Gopalakrishnan told the Financial Times on Wednesday.

His comments came as Infosys, traditionally the first of India’s outsourcing companies to report, forecast that it would suffer its first full-year decline in revenue this financial year.

The group said revenue in the 12 months to the end of March 2010 would fall by 3.1-6.7 per cent year on year to as low as $4.35bn, sending its shares into their biggest plunge in intra-day trading in five years.

Infosys shares ended down 2.7 per cent at Rs1,370.80 after losing as much as 7.8 per cent, the biggest fall since May 2004.

The Bombay Stock Exchange Sensitive index ended up 2.9 per cent at 11,284.73 points.

Infosys’s forecast followed results for the year to the end of March 2009 in line with market expectations.

The company said revenue for the year was $4.66bn, up 11.7 per cent from a year earlier. Net profit before exceptional items was $1.28bn, up 10.1 per cent on the same period.

Its performance in rupee terms, the currency in which it incurs most of its expenses, was better because of a depreciation in the rupee against the dollar.

“There were no surprises on the results side but the guidance was somewhat lower than we . . . and the market expected,” said Apurva Shah, head of research at Mumbai brokerage Prabhudas Lilladher.

Infosys said that much of the expected decline in revenue this year would come from a forecast 6.5 per cent fall in pricing as India’s outsourcing industry competed for a shrinking business pie.

In a price war, Mr Shah said, Infosys had more to lose because of its premium branding and pricing power in the market.

The outsourcing industry is one of the pillars of the Indian economy, providing more than $40bn in export earnings. The sector’s large workforce of well-paid middle-class professionals is one of the main drivers of domestic consumption.

But Mr Shah said the outlook for the industry over the next two years was weak. This year the economic slowdown would put pressure on earnings, while in 2011 the industry was expected to lose an important tax break, which would hurt margins.