Listen to this article
Infosys, India’s second-largest exporter of software and information technology services, on Wednesday forecast that earnings would rise by a third this year after reporting a 50 per cent leap in quarterly net income.
The announcement helped restore investor confidence a day after a wave of bombings in Mumbai, driving Infosys shares up more than 7 per cent to Rs3,386 and India’s Sensex index up 3 per cent to 10,930.09 at the close.
Infosys said steadily rising wages across the Indian IT industry and higher visa costs for Indian employees to work overseas cut quarterly margins by 3.3 per cent and 1.3 per cent respectively. But a 3.6 per cent depreciation of the rupee against the dollar during the quarter helped offset higher expenses.
The company beat expectations as big corporate clients continued to outsource IT work such as software development, systems integration and business process outsourcing.
“It is a better business environment than last year,” said Nandan Nilekani, chief executive. “Offshore IT spending will continue to be buoyant even if there is a slowdown in the US economy.”
Infosys highlighted robust growth in financial services and its European business.
It is considering smaller acquisitions following its recent $115m purchase of the remaining stake in BPO company Progeon from Citicorp International Finance Corp.
JPMorgan said on Wednesday that Infosys’ strong performance showed “offshore demand strength that is at its best since 2000”. It added: “A top-tier company like Infosys can continue to outperform in a positive macro environment.”
Infosys hired 8,097 employees in the first quarter ended June 30, bringing its total global workforce to 58,409.
It said its first-quarter net income rose by 50 per cent to $174m. Revenues increased 38.7 per cent to $660m.
The company raised its earnings forecast for the fiscal year ending March 2007 from $2.70 to $2.73 a share. Analysts had expected earnings of $2.51-$2.59. Infosys expects revenue to be about $2.92bn.
The company said it was working on 5,000 projects at any given time, and that 94 per cent of its business came from repeat customers.
Get alerts on Technology sector when a new story is published